MPs slam government’s lack of long term vision in energy policy
A parliamentary committee has slammed the government’s lack of long term vision in energy policy, claiming it is damaging investment in power generation schemes and could lead to higher bills.
The report by the energy and climate change select committee has concluded current policy faces a “cliff-edge” by 2020 unless drastic action is taken to remedy a series of issues, including a lack of transparency, sudden and numerous policy announcements, inconsistent and contradictory approaches and insufficient consideration of investor impacts.
The select committee also found that the impact of a “lost decade” of power generation could result in higher energy bills.
Giving evidence to the committee, Statkraft UK, which invests in hydropower, onshore and offshore wind farms, said: “The biggest risk is that UK is seen as risky and unreliable destination for long term capital-intensive investments — precisely what EMR [Electricity Market Reform] was designed to avoid. This won’t stop investment, but it will make everything more expensive for investors and — ultimately — consumers.”
The parliamentary report comes after influential lobbying group Energy UK also criticised government policy for putting investors off investing in UK infrastructure due to policy uncertainty and as such the government was missing out on a “golden opportunity” to develop a world-leading low-carbon energy sector.
The committee said the attractiveness of the UK as a destination for international investment is being called into question following a number of “sudden and numerous policy announcements” and a lack of transparency over a string of policy changes.
The reported noted that in 2014, almost two thirds of investment in renewable energy across the EU was ploughed into UK projects, noting that “financial investors invested nearly €6.4bn in equity in EU renewable infrastructure in 2014, of which nearly €4.0bn was invested in the UK”.
Giving evidence to the committee energy producer E.ON said the combination of policy changes had “left a void”. E.ON said: “Investors have been left questioning the future direction of Government policy and its commitment to long term targets”
Angus MacNeil MP, chair of the energy and climate change committee said: “Billions of pounds of investment is needed in order to replace ageing energy infrastructure, maintain secure energy supplies and meet our legally-binding climate change targets.
“Since coming to office in May, the Government has made a number of sudden and unexpected changes to policy. This has spooked investors and left them wondering ‘what will be next?’”