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The Topic: Attracting investment ATTRACTING INVESTMENT THE TOPIC 8 | 21ST - 27TH APRIL 2017 | UTILITY WEEK M oney has been vital to an explosion in renewables deployment. As a result of the billions of pounds that have been poured into aiding its growth the renewables industry has leapt from aspira- tion to dominance in a few short years. Onshore wind and solar technologies have been the most successful in reducing costs and are being widely deployed. In fact, from almost no investment before 2011, solar is expected to total £11.9 billion between 2011 and 2020, while onshore wind will see investment of £8.1 billion and off- shore wind a total of £12 billion. However, despite these high figures, renewables investors have become increas- ingly wary of the UK. This is reflected in the UK's fall in the EY Renewable Energy Coun- try Attractiveness Index, falling from a high of 4th in 2013 to its current low of 14th. The uncertainty caused by changes to the Renewables Obligation regime, and the removal of the Levy Exemption Certificates, coupled with the closure of the Department of Energy and Climate Change (Decc) and the approval of Hinkley Point C, are behind the decline. However, EY states that some respite was achieved when the government approved 1.8GW Hornsea 2 offshore windfarm, which will be the world's largest offshore windfarm when completed. EY energy corporate finance leader Ben Warren says: "A non-committal approach to energy policy is putting the attractiveness of the UK's renewable energy sector on a landslide. "The current approach is going against the grain of almost universal global sup- port for renewables and is masking the UK's advantages – a growing energy imperative as ageing power plants are retired, strong natu- ral resources and efficient capital markets. "In the absence of real changes to the direction of policy support and greater demand for renewables in the energy genera- tion mix post-2020, the only way for the UK in our index seems to be down." Onshore wind has suffered particularly hard blows, with subsidies being scaled back. Hopes of a revival are few and unless the general election changes things, the gov- ernment has stuck to the previous pledge to "halt the spread" of onshore projects. So much so that Bloomberg New Energy Finance analyst David Hostert says: "Without Renewables in the doldrums Offshore wind is thriving, but elsewhere in the renewables sphere the UK is seen as a much less attractive destination than it was a few years ago. some form of change in support, we could see investment drop off a cliff aer 2019." Solar has also suffered from subsidy cuts, but offshore wind is currently favoured by the government, with significant investment and new projects being brought forward. In the first six months of 2016, the UK attracted more than £10 billion of investment into the offshore wind sector, roughly three- quarters of all European investment. Renewable UK's deputy chief executive, Maf Smith, said the performance underlines the UK's status as the leader in the offshore wind sector. "Offshore wind has been a real success story for the UK, and these latest figures are further evidence of this – invest- ment in UK infrastructure so far this year are worth over £8.5 billion across their lifetime. "We know there's more to come as well – the UK will invest over £20 billion in wind energy in the next five years. Throughout the country, offshore wind is creating jobs and revitalising coastal areas," he added. What the government wants to achieve is enough investment to drive down costs, so subsidies can be scaled back and ultimately removed once the technologies are at or close to grid parity. For this to be achieved, steady policy adjustments and subsidy reductions are required, rather than sudden changes and cuts, which put off investors and dam- age the UK's reputation as a safe place to put their money. The UK is achieving this with offshore wind, but for onshore wind and solar, while investment is still coming in, critics will charge that too much has been cut too soon, damaging the pipeline of potential invest- ment coming in. "A non-committal approach to energy policy is putting the attractiveness of the UK's renewable energy sector on a landslide." • Ben Warren, EY energy corporate finance leader Source: Bloomberg New Energy Finance UK clean energy investment £bn Offshore wind Onshore wind Solar 8 6 4 2 0 2007 2008 2009 2010 2011 2012 2013 2014 2015