The UK has fallen in the renewable energy attractiveness stakes for the second quarter running to 6th place, the consultancy said. That is its lowest position in the global rankings since November 2012.
EY attributed the drop to conflicting signals over the future of energy policy after next year’s general election and an unexpected review of solar subsidies. Meanwhile, Canada’s position was boosted by a new auction program for utility-scale renewables.
Ben Warren, environmental finance leader at EY, said: “Policy tinkering and conflicting signals once again become too much for investors and developers to handle.
“The recent carbon tax freeze, an energy market competition probe and Conservative Party plans to scrap onshore wind subsidies post 2015 are weighing heavily on the sector’s ability to assess the long-term outlook. In addition, the launch of a government consultation on future financial support for solar has taken the shine off the UK’s otherwise booming solar market.
“As ever with the renewables sector, more damaging than the outcome of any review itself, is the uncertainty it creates and the trust it erodes. This last quarter has been no exception, with little done to foster sympathy from the renewable energy sector, which appears to be continuously caught in the firing line.”
It is a mixed picture for different technologies. The UK remains number one for investment in offshore wind and marine power but fell to 6th place in onshore wind.
Renewable UK’s chief executive Maria McCaffery accused the Conservatives of being “anti-business” in failing to back onshore wind. She said: “It’s clear from this report that the UK is losing out on vital opportunities for investment and jobs because the government is inflicting serious damage on this country’s onshore wind industry by driving investors away. It’s curious to see the Tories turning themselves into an anti-business party by failing to support British industry in this field.
“The Chancellor’s decision to freeze the Carbon Price Support which taxes pollution, combined with his party’s short-sighted perspective on onshore wind – ending financial support for the most cost-effective mainstream renewable technology we have – have severely undermined what should be one of our fastest-growing industrial sectors.”
The US tops the rankings, followed by China.
America’s renewable market is to get a boost today as Obama prepares to announce plans to cut emissions from coal-fired power stations by more than 20 per cent. However, increased shale gas production, congressional gridlock and uncertainty over tax credits and equity financing pose risks to the sector, EY warned.
Meanwhile, various forecasts show China eclipsing the US in wind and solar investment by the end of the decade, helped by a more market-based approach to renewables.