The UK’s Investment Attractiveness


May 30, 2013

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Just another index, just another report?

Irrespective of your view, the latest findings from Ernst & Young’s latest Renewable Energy Country Attractiveness Index, make for good news for the UK’s offshore wind industry.

Despite the continued uncertainty surrounding future UK policy support for renewables, the country, nevertheless, finds itself at the top spot in the global accountancy firm’s rankings, knocking Germany into second place.

Should it be a surprise? Perhaps not.

We’re frequently reminded of the scale of the UK’s ambition in offshore wind – with Great Britain possessing the world’s largest offshore project, London Array, recently granting permission for the 504MW Galloper project, and with work pressing on at the 389MW West of Duddon Sands development, amongst others.

Additionally, a host of utilities, lead by Dong, have big plans for Round 3, and there is already the burgeoning of a secondaries market evidenced by Greencoat Capital’s acquisition of a 24.95% stake in RWE’s Rhyl Flats project.

But there is a larger argument here that perhaps sits above indices and rankings for investment: that is, it is the developers who have the true potential to make or break a country’s ‘investment attractiveness’.

Most of the major utilities and developers have the flexibility to commence or cease operations globally, whether under their own banner or through the creation of a subsidiary.

This flexibility enables them to either make or break markets.

Witness, for example, the rapidity by which developers and utilities exited the Bulgarian wind market following an overnight change in subsidies.

The same flexibility, of course, applies the other way. Developers and utilities have significantly contributed to determining the attractiveness of investment for the UK’s offshore wind sector.

What this means in practice, is essentially, that governments have to realise that globalisation is as much a feature of the wind energy market as any other sector.

Once developers and utilities decide that a market is viable, and they will likely see a return on their investment, only then can countries start to reap the economic benefits of a ‘domestic’ industry through the creation of a local supply chain.

With this in place, the case for continued investment is, of course, strengthened.

Ultimately, governments need to ‘know their audience’ for their clean energy policy decisions.

Keeping the developers on side will, as E&Y’s report shows, pay dividends.

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