Investor and banking group Investec said on July 7 that Britain's plan to switch from the market-based renewable obligation subsidy scheme to a feed-in tariff scheme could deter investors and delay clean energy projects, reports Reuters.
The UK government announced it it’s June budget that it plans to introduce feed-in tariffs for large-scale renewable projects, such as offshore wind farms and marine energy, and could keep the Renewable Obligation Certificate (ROC) for existing projects only.
Investec believes that the sudden change could knock investors’ confidence, as although the feed-in tariff offers a guaranteed payback, it is little known in the UK.
“Even if it's good news about going to feed-in tariffs, there are two consequences for banks. One is: what if they change it again or do something different,” Mark Henderson, Head of Investec power and renewable project finance said at the sidelines of the Renewables 2010 conference.
“And the other consequence is people will delay plans if they think there's a better tariff coming up,” he said.
Earlier in the conference, Iberdrola- owned IBE.ME utility Scottish Power agreed that they did not favour feed-in tariffs.
“Feed-in tariffs: the wrong direction of travel for low carbon generation. Continued certainty for investors is required,” Rupert Steele, Regulation Director at Scottish Power said in his presentation.
At the same conference, Norwegian state-owned Statkraft STATK.UL said that feed-in tariffs would eventually provide a large volume of renewable investment but “stability in incentives” was needed.
While Britain uses a ROC system, other European countries such as Germany, the market leader, use feed-in tariffs to stimulate investment in renewable energy projects.
