The UK’s claim to green leadership is under threat, with the UK Sustainable Investment and Finance Association (UKSIF) finding that two thirds of UK energy companies are considering moving their investments overseas.
Publishing a report, UKSIF found 63% of UK energy companies have either moved, or are planning to move, investments out of the UK to a market they deem more supportive of their sustainability goals. Should the UK fail to implement new favourable policies, it risks losing out on a potential £115bn waiting to be unlocked for the UK energy sector.
UKSIF surveyed 100 business decision makers across the UK’s energy sector that are responsible for around £700bn in turnover, exploring their views around the current opportunities and challenges of decarbonising the UK’s energy sector. They also found nearly nine in 10 (87%) agree that changes to UK policy will be critical to making the UK an attractive investment location for green energy, while 81% feel the UK is falling behind other countries as it looks to become the most investable market for low carbon energy.
Looking ahead, there are three key measures needed to facilitate greater investment and faster delivery of the UK’s future energy infrastructure.
The first step is to overhaul planning rules, removing obstacles and cutting the time it takes to bring large energy projects online. UKSIF found that streamlining the consenting process and shortening decision makers could see 40% of energy companies increasing their investment in sustainable energy in the UK.
It is also going to be vital to ensure adequate grid capacity to reduce connection times. Enabling the regulator to permit greater private sector investment was noted by UKSIF as something that would see a rapid build out of the grid and associated infrastructure. This would allow a greater number of low carbon projects to be invested in and connected.
Finally, energy pricing mechanisms need to be reformed. This will incentivise long-term investment in UK low carbon power capacity and should include the Contracts for Difference (CfD) scheme, helping to better support UK supply chain investment. Reforming the CfD parameters will not only boost investment into the UK but also ensure renewable energy supply chains are scaled up significantly. This will ensure renewable deployment targets can be hit in the late 2020s and 2030s.
