UK makes surprise return to top ten for renewables investment

The UK has climbed back into the top 10 most attractive countries for renewable energy investment but the outlook for the industry remains cloudy amid a “lingering lack of clarity around targets and subsidies”.

In the latest EY Renewable energy country attractiveness index (RECAI), the UK has arrested a slide that had seen it fall from 4th place in 2013 down to an all-time low of 14th in October 2016, although weaker performances from other countries were the main factor in it climbing four places.

The RECAI says that the UK investment environment is more settled than recent years, which were beset by subsidy cuts, but the future post-Brexit remains uncertain. While the UK is behind schedule to meet its 2020 EU renewables target, coal-fired power has declined significantly and even reached zero for a day on 21 April.

Ben Warren, EY’s Head of Energy Corporate Finance, says: “The UK’s reappearance in the RECAI top 10 is the result of other countries falling away – notably Brazil which cancelled a wind and solar auction in December - rather than any particularly encouraging resurgence.

“The UK continues to underwhelm investors who are waiting to see if future UK policy will support and encourage the renewable energy industry towards a subsidy-free environment, where consumers can benefit from the UK’s excellent natural resources for renewable energy.

“Investors are still waiting for clarity around the post-Brexit landscape. Question marks linger around renewable energy targets, subsidies and connections with mainland power markets. Unfortunately, the likelihood of getting complete answers to those questions before the UK exits the EU are slim.”

Energy storage rapidly emerging

The reported also highlighted the growing role of battery storage

“It is difficult to overstate just how profound the impacts of wide-scale, low-cost energy storage will be on the utility sector,” said Warren.

“The impacts on the power and utility sector will be disruptive. While the sector has generally been able to adapt to new types of generation capacity such as renewables, the rapid spread of battery technology will be much harder to integrate into legacy business models. It promises to shift power toward consumers, undermine grid operators’ investment plans and allow new entrants to challenge utilities. It also presents an enormous investment opportunity.”

US slips down rankings

The RECAI also saw China and India surpass the US, which fell to third in the index following a marked shift in US policy under the new administration.

The report identifies the US Government’s executive orders to rollback many of the past administration’s climate change policies, revive the US coal industry and review the US Clean Power Plan as key downward pressures on renewable investment attractiveness.

Warren says: “Movements in the index illustrate the influence of policy on renewable energy investment and development – both productive and detrimental. Supportive policy and a long-term vision are critical to achieving a clean energy future.”

> See the full index here