A group of thirteen investors have written to the UK Chancellor, highlighting their concerns over the future of renewable energy investment.
The letter, signed by thirteen high-profile UK investors, was coordinated by the UK Sustainable Investment and Finance Association (UKSIF), “to highlight investor concerns over recent policy announcements relating to investment in the renewables sector.”
“We, the undersigned, support the Government’s commitment to transition to a low-carbon economy while keeping consumer bills as low as possible,” the letter writes (PDF). “However, recent announcements in relation to renewable power have raised questions about the financial security of past UK energy investment.”
This probably understates things somewhat, considering the current political climate surrounding the UK renewable energy industry. Cuts to government incentives for wind and solar have been revealed by the UK Department of Energy and Climate Change, despite strong protest from in and around the UK renewable energy industry.
“We support the Government’s commitment to transitioning to a low-carbon economy while keeping consumer bills low,” said Simon Howard, UKSIF Chief Executive (PDF). “However, it is crucial that the Government maintains the stable policy framework we have had over the past few years if it is to keep costs down and encourage investment in energy infrastructure. Sudden changes, like those being proposed, have serious consequences for companies and for investors.”
“But with COP21 only a matter of weeks away, we believe the Government should be doing more,” Howard continued. “The UK already has its own commitments under the Climate Change Act and it is very likely there will be agreement on a new package of measures to tackle climate change in December. In meeting those commitments the Government will need to rely on the private sector to finance low-carbon energy infrastructure. These changes will highlight the short-term nature of the policy regime and will do nothing to instil confidence towards future investment.”
Many of the renewable energy industry groups that have protested the Government’s decisions to cut financial incentives have not shirked at the need to be subsidy-free at some point, but are concerned — rightfully so — that the suddenness with which the UK Government is axing financial aid will have an immediate and significant impact on the growth of the renewable energy industry, scaring off investors from a once thriving and attractive renewable energy market.
“As long-term investors, we believe the Government needs to set out clearly how it intends to continue down the path of decarbonisation,” the authors concluded. “We urge you to introduce measures that bring greater security to the energy network and increase clarity and consistency to boost investor confidence in the future, and we are prepared to work with you to achieve this.”
It was RenewableUK’s Director of Policy, Dr Gordgon Edge, who said earlier this week that punishing success will only strangle innovation and investment.
“Once again the Energy Secretary is trying to justify Government’s actions by claiming the budget is blown,” said Dr Edge. “We’d question the basis of her assertion – we’ve repeatedly asked to see DECC’s workings for these figures because we don’t agree with them, but so far without result.”
“Even if we were to agree with DECC’s calculations, any ‘overspend’ is either due to factors that are a net benefit to consumers, such as lower wholesale prices, or can be traced to DECC’s own management of the budget,” continued Dr. Edge. “As the Energy Secretary acknowledges, we’ve made great progress in the deployment of renewables – we shouldn’t be punished for being a successful industry or for the mistakes that Government itself has made.”
The authors of the letter were also quick to point out the wider-ranging benefits of a secure and prosperous renewable energy industry, beyond the immediate trend towards low-carbon energy generation. “The benefits from investment in renewables are wide ranging, especially when coupled with innovation in energy efficiency and storage,” they wrote. “These include an increase to the UK’s energy security, reduced exposure to volatile commodity prices and the creation of wealth for a more diverse community of owners rather than just utilities.”
In the end, this letter will sit alongside several others which have called for the UK Government to better support the renewable energy industry, including a letter signed jointly by government’s of Scotland and Wales.
List of signatories:
- Simon Howard, Chief Executive, UK Sustainable Investment and Finance Association
- Lisa Ashford, Chief Executive Officer, Ethex
- Matthew Clayton, Executive Director, Triodos Renewables
- John David, Head of Rathbone Greenbank Investments, Rathbone Greenbank Investments
- Paul Ellis, Chief Executive, Ecology Building Society
- Julia Groves, Chief Executive, Trillion Fund
- Karl Harder, Managing Director, Abundance Generation
- Pierre Jameson, Chief Investment Officer, Church of England Pension Board
- Tom Joy, Director of Investments, The Church Commissioners
- George Latham, Managing Partner and Chief Investment Officer, WHEB Group
- Karen McGrath, Head of Sustainability, Kempen Capital Management
- Charles Middleton, Managing Director, Triodos Bank
- Meryam Omi, Head of Sustainability, Legal and General Investment Management
- Michael Quicke OBE, Chief Executive, CCLA
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