A report by Energy UK, issued on Monday 20 February, has stated that the UK Government’s targets to address climate change and energy security through the build out of clean, homegrown energy can only be achieved by ensuring that the UK continues to attract international private sector investment into low carbon projects.
However, the report warns that the investment climate for UK low-carbon generation has seen a significant deterioration. Energy UK attributes this difficult environment to inflation, interest rates, supply chain difficulties, and increased competition from abroad, along with the government’s recent Electricity Generator Levy (EGL), which it states has caused concerns for the viability of new clean energy projects.
The report estimates that overall costs for new low carbon generation projects have increased by 20-30%, which it states are further held back by “systemic regulatory uncertainty, and lengthy delays to planning and grid connections”. To this end, Energy UK makes a number of recommendations to the government, including a rethinking of the EGL, to include an investment allowance similar to that afforded to the oil and gas sector, and reformation of the Capital Allowance Regime to provide enhanced incentives for low carbon investment.