UK renewable investment attractiveness up

The UK has become more attractive place for investment in renewable energy, according to the latest report by auditors Ernst & Young.

In its latest Renewable energy country attractiveness indices, the firm lists the UK as the joint fifth most attractive country for renewable energy investment, tied with Spain.

This represents a one position rise, which is the result of announcements in the Pre Budget report that the renewables obligation, which offers incentives to renewable installations, would be extended by ten years to 2037.

Other factors boosting the UK's attractiveness were the Energy Act and Planning Act, which received Royal Assent earlier this month.

While the Planning Act will facilitate the granting of planning permission for large projects, the Energy Act will offer small-scale projects incentives in the shape of feed-in tariffs.

However, the UK's appeal was affected by the dropping value of sterling, which affects construction and technology costs.

Head of renewable energy at Ernst & Young, Jonathan Johns, said: "The falling value of the pound is making UK renewable projects increasingly expensive as imported technologies from Europe continue to rise as a result of the exchange rate.

"The declining price of oil is compounding the problem by reducing project revenues as wholesale energy prices fall, resulting in many projects becoming uneconomical. It is unlikely that falling commodity prices such as steel and copper will compensate enough."

He also said that the economic downturn had affected the US most strongly, leading to the country being replaced at the top of the list by Germany.

The UK is committed to generating 15 per cent of electricity from renewable sources by 2020.

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