Investment activity has fallen in UK renewables since the outcome of the general election, according to representatives from the investment sector.
In the latest evidence session conducted by the energy and climate change select committee as part of its investor confidence inquiry, a number of witnesses claimed investment interest had diminished since the Conservatives won their majority in May 2015.
According to Alejandro Ciruelos, UK head of project & acquisition finance for Santander Global Banking & Markets, the UK had fared well over the last five years, attracting the largest amount of project capital over the last three years of around €12 billion.
“Historically, investor confidence in the UK has been very positive,” he added.
However, the series of policy announcements and withdrawal of support for renewables since the election has caused a change in the UK’s international standing as an attractive place for investment. Committee chair Angus MacNeil pointed to the recent EY Renewable Energy Country Attractiveness Index report, which saw the UK drop out of the top ten.
Ciruelos conceded: “The recent changes in policy and focus on affordability…rather than saying investor confidence has been undermined, perhaps the capital interest in the UK has faded away.”
Carol Gould, head of power and renewables at the Bank of Tokyo-Mitsubishi, claimed there is now significantly less interest in developing future projects. When pushed by committee member James Heappey for specifics, Gould claimed she had seen around 95% less discussions with developers around future onshore wind projects in the UK, as well as a lot less regarding solar.
This was backed up by Ciruelos, who claimed he had also seen a drop in the number of discussions around new green field solar developments.
Peter Dickson of Glennmont Partners claimed that these reductions were not necessarily down to the detail of policies brought in since May, but were instead a result of the message they send across the globe.
“We have seen a lot of changes in legislation which have been followed by headlines in the press which tend to go internationally which have expressed a fairly negative sentiment about the support that the UK government is giving for the sectors that attract a lot of attention, particularly in the renewables sector,” he explained.
“As a consequence, the image of the sector for investment has changed quite considerably, and I think that is driven a lot by sentiment. The volume of changes and the discussions around it has become quite negative, and it has created a negative sentiment.”
However, Dickson did point out that while the scale of changes affecting renewables was unexpected, the investor community was prepared before the election for reductions due to manifesto pledges promising cuts to central government support.
“There was already a feeling that the Conservatives had a level of antipathy towards renewable energy,” he added.
The panel suggested the UK government, through the Department for Energy and Climate Change, needs to provide a plan for renewables moving forward. Chris Hullatt, chief financial officer and co-founder of Octopus Investments, claimed investors want to see “clear and consistent policy” as “many countries are struggling to understand government involvement in UK energy policy.”
“There is going to be billions deployed into this sector in the coming years and I think it’s important that the government focusses on the direction of travel and opinion among investors,” he said.
Hullatt added this would be particularly important for the UK’s solar sector as “the supply chain is currently at risk of being frittered away if there is a stop-start approach to the availability projects.”