Westminster “tinkering” over green energy policy has been blamed for a slump in renewable energy investment, according to a study.
A senior figure in the sector said the report amounted to “serious damage” being inflicted on the industry due to such measures as Chancellor George Osborne’s Budget tax breaks for electricity generated from coal and oil.
Government policy meant the UK has slipped further behind the likes of China and the US in the latest “country attractiveness” index produced by accountant EY.
The quarterly study found the UK is now less appealing than Canada for solar and onshore wind investments, although it tops the tables for offshore wind and marine power projects.
Overall, the UK is ranked the sixth most attractive country for renewable investment, down one place from the previous study. The US remained at the head of the table, followed by China, Germany, Japan and Canada.
Ben Warren, EY’s environmental finance leader, said: “The UK has slipped to sixth place for the first time in more than a year. 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.”
EY’s study found the UK is now ranked in eight place for investment in solar photovoltaic (PV) schemes, which convert the sun’s energy directly into electricity, and 27th for concentrating solar power (CSP), which generates steam to run electrical turbines.
The UK government last month launched a consultation into financial support for PV generation, proposing that subsidies should be cut off for large-scale schemes capable of generating more than 5 megawatts.
Jenny Hogan, director of policy at Scottish Renewables, said: “In a global marketplace developers and investors are seeking long-term clarity on the direction of renewable energy policy, but in the UK it seems like too often we see short-term political considerations taking precedence.
“The treatment of the onshore wind industry like some kind of political football, alongside continuing uncertainty about the financial support received by solar, will inevitably have consequences on the levels of inward investment.”
SSE, the UK’s biggest generator of renewable power, said in March that it had shelved the development of two onshore wind farms – at Dalnessie in Sutherland and Fairburn in Ross-shire – because they were “no longer financially viable”, and would be shelving investments in a planned 690MW facility off the coast of Islay.
Maria McCaffery, chief executive of trade body RenewableUK, 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.
“We’d urge this government, and indeed its successor, to ensure policy makers promote these vibrant technologies.”
A Department of Energy & Climate Change spokesman said: “The UK is one of the world’s most attractive places to invest in renewable energy and tops the rankings for both offshore wind and marine energy.
“UK renewables investment increased in 2012-13 while investment across the EU halved, with a quarter of EU investment coming to Britain in 2013. This government is committed to increasing the deployment of cost-effective renewable energy as part of a diverse, low-carbon and secure energy mix.”
A spokeswoman for the Scottish Government said: “The UK government’s mixed messages on renewables and protracted electricity market reforms have led to confusion and uncertainty for the renewable industry and led to a raft of investments being cancelled.
“Their management of energy policy has added to energy uncertainty at the very time when certainty is needed to continue to attract investment in new plants as capacity constraints bite. Only with the full powers of independence will we be able to harness Scotland’s full energy potential.”