Could the Options for the UK as a Renewable Energy Hub Fall After Brexit?
- January 7, 2019
- By Admin: Frovenses
Continued uncertainty due to the Brexit process has affected many industries in 2018, including the UK renewable energy sector. The UK’s position among renewable energy has been slightly shaken, with investors developing a ‘wait and see’ attitude. The backing away of the UK government from solar energy has not helped matters. Rather, it has only increased apprehensiveness among investors.
The growth of the sector has really slowed down, all because of worries instigated by Brexit and the resulting change of government policy, leading to uncertainty about the tomorrow of renewable energy in the United Kingdom. A few years back, the renewables sector was enjoying a surge in transactions, thanks to increased capacity in power production, coupled with improving efficiency. The negatives associated with the conventional sources of power, which are seriously linked with climate change also contributed to the growth of the renewables sector.
However, things turned for the worse when the Conservatives reigned supreme in the House of Commons during the 2015 elections. This led to cuts in the solar energy sector, which turned away potential investors, who chose to look elsewhere. EY, a Big Four firm that tracks the sentiments of investors through its Renewable Energy Country Attractiveness Index (RECA), reported that the UK government’s policy change negated the gains achieved in the sector over the years, impacting negatively on the country’s attractiveness.
For the very first time, the new policy towards the solar energy sector caused the UK to spiral out of the top ten of EY’s index. Further antagonism with the sector in 2016 caused the country to fall even further down the index. Up to date, the UK government is yet to arise strongly and assure investors of its concrete support of the renewables sector. Although the country had risen again on ranking, uncertainty surrounding Brexit has once again engineered another fall down the ranks. On EY’s ranking of fourth countries, UK now ranks eighth from the seventh position it held recently.
Researcher’s at EY attribute the slide to fears that, should the UK fail to secure a deal with the EU, electricity exports will be dealt a blow, as well as imported technology, such as foreign solar panel battery options, whose cost may go up. Given that the March 2019 secession deadline is at hand, yet there is an impasse, has increased the likeliness of a No Deal Brexit, especially because Theresa May, the UK’s Premier, is experiencing a backlash from parliament, including the DUP, which has supported her since 2017 when she won in that year’s election.
Investors are also worried that the UK government may choose to invest more in the conventional power sources than in renewables. This is already reflected in the recent budget that offered little to encourage the growth of the renewables sector. Surrounded by all these issues, yet with full knowledge of the effectiveness and efficiency of the renewables sector, it remains to be seen how the UK government pulls itself up again as role model for environment friendly renewables at the expense of conventional power sources. Investors will be watching every move the government makes. Every move and policy will lead to either a further slide down the EY index or a new lease of life to the sector and a rise up the index.