EY laments ‘antagonistic’ policy landscape as UK hits fresh RECAI low

Big four consultancy firm EY has demoted the UK to a new lowest position of 13 in its Renewable Energy Country Attractiveness Index (RECAI) and slammed the government’s “noncommittal, if not antagonistic” approach to policy.

Last September the UK dropped out of the RECAI top ten for the first time amidst sweeping investment uncertainty caused by renewables cuts enacted by the new Conservative majority government, and EY has now suggested this uncertainty has grown further.

The latest report, published today, has claimed that further delays in making a final investment decision on the Hinkley Point C nuclear project have left the UK facing a possible energy supply deficit within the next decade and has criticised the government’s plans should that project fall through.

In a letter sent to the Energy and Climate Change Select Committee last month, energy secretary Amber Rudd revealed that the government’s back-up plan to fill Hinkley Point C’s generation capacity would be the capacity market, which itself has been the subject of much criticism.

While critics of the policy claim its mechanics leave it open to subsidising diesel generators over cleaner sources, last week the government revealed in an impact assessment that bringing it forward a year could cost bill payers an extra £38 per year.

“Indications that the government’s ‘Plan B’ would be the capacity markets, rather than increased renewables generation, reinforce the already hostile policy environment for renewables,” the report stated.

It also references concern over the impact a possible Brexit would have on the risk profile attached to UK investments should the country vote to leave the European Union on 23 June.

No fewer than 10 major renewable energy support frameworks have been cut or amended since the Conservatives’ general election victory last May, including the Renewables Obligation, the small-scale feed-in tariff and the Contracts for Difference mechanism.

Those policy decisions have seen the country overtaken by both Australia and South Africa in EY’s latest analysis, the former of which EY said had seen its renewables market resurgent after “near-paralysis caused by several years of hostile policies”.   

The index echoes the fears raised by the select committee in March after its inquiry found that investors had been spooked by the government’s renewables subsidy overhaul, potentially sending bills spiralling.

Unlike the findings of the report, Rudd and energy minister Andrea Leadsom have continually asserted that confidence in the UK market remains high.