In its annual global league table of investor attractiveness EY showed that the UK has fallen to seventh place, its lowest level for five years.
“What we are seeing is a ‘perfect storm’ of reasons prompting a fall in the appeal of the UK’s renewables market,” said EY’s environmental finance leader Ben Warren.
“The booming UK solar sector, one of only six markets globally to surpass the 5GW installed capacity, was caught by surprise by the government’s consultation in May. Legal challenges and investor petitions have been launched in response, urging the government to give the sector more time and greater policy stability to compete with conventional fuels,” he said.
In addition, around 60 per cent of the available funding has already been spent, Warren said, leaving investors and developers concerned about budgetary constraints for future projects.
“To continue to compete for international capital, the UK’s market reform and upcoming Contract for Difference (CfDs) regime will have to go a long way to repair the damage of recent policy mishaps,” Warren warned.
Policy changes also weighed on the attractiveness of Italy and Spain, EY said, with both falling several places down the index to 15th and 22nd respectively.
Warren urged Europe to aim for grid parity as the “fastest route to secure and affordable energy”.
“The role of policy-makers therefore becomes one of enablement rather than support, and they should be looking to create a level playing field across all energy sources through greater cost transparency,” he added.
Taking the top spot on the league table was China, beating the US which this year came in second place. Germany, Japan and Canada held their positions in third, fourth and fifth place respectively while India overtook the UK to claim the sixth highest place on the table.
“China’s government is placing increased emphasis on cleantech as the country battles pollution, ushering in new market opportunities for foreign investors,” Warren said.
Below the UK is France, Brazil and Australia to make up the top ten.