Political point scoring could jeopardise energy investment
Ministers warned that the uncertainty surrounding the energy market could lead to a drop in investor confidence
Government ministers have been warned that one-upmanship and point scoring could damage the attractiveness of the UK energy market as an area to invest, according to a new report from Ernst & Young.
In recent weeks, there have been heated parliamentary debates over the way energy bills are handled, with Labour promising a price freeze and Conservative and Lib Dem MPs arguing over a review of the controversial green levies used to entice investment in the renewables sector.
However, Ernst & Young said this sort of political split could drive away billions of pounds worth of investment into the market, as well as see thousands of jobs disappear as a result.
UK retains investment ranking
The warnings from Ernst & Young come at the same time as the professional services firm said that the UK had retained its energy investment ranking for the past three months.
Its Renewable Energy Country Attractiveness Indices show the UK as sitting in fourth place, as it had in Q2, in terms of the most attractive places in the world for companies to invest in renewable energy technologies.
The UK sits behind the US, China and Germany in first, second and third places respectively.
However, Ernst & Young warned that a lack of stability in the UK government when it comes to energy policies could see the country lose out on money that it has already accounted for.
It said that £29 billion has been announced in terms of investment in the space of the past three years, but that some of this relies on solid policies and could be withdrawn unless more stability can be found in the UK government.
Brian Warren, environmental finance officer with Ernst & Young, said: “What we have also seen in the market is that primary funds secured for the construction of new renewable energy plants in the UK fell 45% between 2009 and 2012. If this trend continues, it could jeopardise billions worth of investment and thousands of much-needed jobs.”
UK facing shortfall?
There also remains a fear that the UK could be facing a shortfall when it comes to the replacement of coal-fired power stations with renewable green options and nuclear plants.
This has been a regularly debated issue in recent times, but came to the fore when the government was criticised for offering a strike price that many saw as far too high to EDF for its building of the Hinkley C nuclear plant, to be opened in 2023.
Warren said that the long-term future of this move to new energy sources is also a major concern unless politicians can iron out their differences.
“With the country facing decommissioning of old plants and a challenging 2020 renewables target, cross-party collaboration is now needed more than ever to create a tangible, cohesive, long-term strategy for conventional and clean energy that will see investment intentions crystalise into action. Securing supply for future generations of energy users is too important an issue to be subject to political squabbles.”