ECCC: Government must restore investor confidence in UK energy sector

In its latest report, the Energy and Climate Change Committee (ECCC) has warned the UK government about the detrimental impacts of its ‘sudden and numerous’ changes to energy policy since the election.

ECCC’s report ‘Investor Confidence in the UK Energy Sector’ has warned that investor confidence has been dented by a series of sudden policy changes since the election, which may lead to a hiatus in project developments and threaten the UK’s ability to meet its energy security and climate change objectives.

Angus MacNeil, Chair of the ECCC, said: “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?'”

Other factors affecting investor confidence include a lack of transparency in the policy decision-making process and a policy “cliff-edge” in 2020, the report states.

“The Government must set out a credible, long-term vision for the future of the UK’s energy system. The Government will this year have to produce a plan setting out how we will keep on track to reduce our carbon emissions in 2030 and beyond. This is an ideal opportunity to rebuild confidence in the direction of travel for the energy sector in the UK,” said MacNeil.

The report also argues that the Government needs to factor the impacts that its decisions are having on investor confidence more explicitly into the policy making process.

“We are calling for the Government to introduce Investment Impact Assessments for new policies to ensure that new policies don’t inadvertently discourage the investment that we desperately need,” conluded MacNeil.

The report concludes that greater transparency and clarity is needed on the Government’s existing low-carbon energy policies as a matter of urgency.

The Committee has called the UK government to provide a detailed plan for when the next three rounds of Contracts for Difference (CfD) auctions will be held, how much money will be available and which technologies will be eligible to take part.

EICC recommends the UK government should set out the amount of money that will be available in the Levy Control Framework beyond 2020, as well as publishing the assumptions and methodologies that underpin the calculations of how much money is being spent in the Levy Control Framework (LCF).

Welcoming the report, Chief Executve of the Renewable Energy Association (REA), Nina Skorupska, said: “The report shows that a lack of vision has damaged confidence and is making urgently needed new energy projects more expensive, raising costs for future generations.

“Following this report the government now faces a frustrated investor community, a concerned public, and a wall of questions that need to be urgently answered. The renewables industry seeks clarity- when will CfD auctions take place and what technologies will be eligible, what will the Carbon Price Floor rise to past 2020, and what is the government’s long-term vision?”

ECCC is appointed by the House of Commons to examine the expenditure, administration and policy of the Department of Energy and Climate Change (DECC) and its associated public bodies.