UK falls out of top five renewable energy investment markets… again
The UK has dropped out of the top five most attractive countries for renewable energy investment, according to consultancy firm EY.
In its Renewable Energy Country Attractiveness Index (RECAI), published today, the professional services giant revealed that the UK has fallen from fourth to seventh, behind the US, Germany, China, France, Australia and India in the “overall attractiveness for renewable investments.”
The last time the UK occupied seventh spot in the rankings was 2019.
The US has also overtaken the UK as the most-desired market for offshore wind investment.
This message was felt loud and clear in September, when, as industry experts feared the month prior, Britain’s wind farm auction flopped to the tune of zero bidders.
The UK is aiming to have 50 gigawatts of offshore wind power by 2030 but current estimates put the total between 12 and 15GW.
For years, offshore wind has been the country’s most successful alternative source of energy to fossil fuels. In 2022, most of the available new capacity, almost seven gigawatts, was dedicated to expanding the technology at record-low prices.
Cost pressures are holding the sector back in a significant way and Ben Warren, EY Renewables Corporate Finance and RECAI Chief Editor, believes that the UK’s recent offshore wind challenges, “echo a broader, global struggle.”
“When auctioning contracts for offshore wind generation, governments need to reflect economic conditions in the design of the auction,” he said.
“Considering moving away from cost-only auction formats and incorporating non-price factors, such as environmental considerations and job creation, may entice developer interest and a rise in bids.”
At the outset of this month, Danish energy giant Orsted halted plans for two major US wind farm projects tanking not only the share price but also short-mid-term ambitions for the company in the market.
“Current years-long waiting times are delaying the pace at which projects can begin generating power and revenue and ultimately developers need to feel that prospective projects will offer a viable, timely return on investment if they’re to contribute capital to the UK’s clean energy infrastructure,” Warren added.
The top three RECAI markets remain unchanged; the US, Germany and, through a consistent offshore wind investment programme, China.
The Nordics, meanwhile, continue to show strong energy intent, with Denmark, Sweden and Norway climbing two, three and five places respectively in the index.