Investors lose interest in UK renewables, says EY
The attractiveness of the UK renewables market in the eyes of investors and developers has decreased dramatically – falling back to levels last seen in November 2012, according to EY's latest Renewable Energy Country Attractiveness Index (RECAI).
The quarterly report, which ranks the investment potential of forty countries' renewables markets, has ranked the UK in 6th place behind the US, China, Germany, Japan and Canada.
According to the report, the UK has slipped a place for the second consecutive quarter. This is mainly due to conflicting signals over the future of support for renewables beyond the 2015 election, as well as the proposed cap on solar power projects eligible for Renewable Obligation support being introduced two years earlier than planned. At the same time, a new auction program for utility-scale renewable energy supports Canada's move up into fifth place. And in Asia China, Japan and India continue to strengthen their positions and close the gap on their Western counterparts in the top 10.
Continuous policy amendments are still hindering renewable energy development across many markets, but changing energy mix dynamics, a need for new sources of capital and innovative business models are also creating significant opportunities for developers and investors.??
In the US, expectations of a renewables-led energy transformation this decade are mounting as the US energy market finds itself at a crossroads. At the same time Indonesia and the Philippines entered the index for the first time. Elsewhere in the top 10, revised incentive schemes, large-scale projects and ambitious capacity programs see Japan and India poised to take over their closest rivals in the index. However, mixed signals for Japan following the release of a draft national energy plan that favors nuclear and coal, and persisting macroeconomic challenges and solar trade disputes in India are preventing a climb up the rankings in the immediate term.
Strong capacity forecasts and approval of a new feed-in tariff regime for wind projects have helped France up to eighth place above Australia, where a potential cancelation the Renewable Energy Target is slowing investment. A rapidly growing solar sector and the promise of further capacity auctions in 2014 sees Brazil enter the top 10 after auction cancellations pushed it down the index in early 2013.