Government policy changes hit clean technology sector’s confidence

Ernst & Young finds only 14% of those working in renewables and energy efficiency upbeat about jobs and growth

Solar panel installation

The government’s decision to cut feed-in tariff rates for solar panels has been criticised as ‘highly damaging’. Photograph: Sean Yong/Reuters

The UK clean technology sector has suffered a crash in confidence over the past six months in reaction to abrupt changes in government policy on renewable energy and continued uncertainty over the industry’s long-term prospects.

Clean energy, energy efficiency, smart grids and other green products have been promoted by the government as drivers of economic growth. But only 14% of cleantech professionals expect significant growth and new jobs – down from 65% in November – according to the latest quarterly survey of more than 600 people, conducted by Ernst & Young.

“Compared with the level of ambition, clarity of policy direction and scale of investment being delivered by a number of other countries, the UK is in danger of being left behind,” Steve Lang, Ernst & Young’s UK Cleantech leader, said. A recent report found that Britain slipped in 2010 from third to 13th globally in terms of green investment.

Lang attributes the slump in confidence to the “highly damaging” move to cut feed-in tariff rates for solar panels after investors had already sunk money into new projects, which sent shockwaves across the whole green sector. He also cited the government’s wide-ranging electricity market reform as a cause of uncertainty, along with cabinet rows over the purpose and scale of the green investment bank.

Different trajectory

Greg Barker, minister at the department of energy and climate change, said last week: “We are having to put this country on a different trajectory, and that means a slight hiatus while we change course, but when we have changed course and our new measures are in place we will be primed for success.”

One businessman, Colin Calder of PassivSystems, which provides heating control systems for homes and offices designed to cut energy use, said that the problem was not with technology or investment but with a regulatory landscape that hindered new businesses. He added: “The business community urgently needs government to focus on business models [that can] develop a sustainable energy market with lower risk premiums.”

While only 8% of those surveyed by Ernst & Young said that they were optimistic that the government would establish the conditions for success in cleantech in the next 12 months, twice as many (39%) thought investment levels would rise in 2011 compared with those who thought they would fall (17%).

“Even though investor confidence in the UK has taken a hit over the past six months, the cleantech sector as a whole continues to represent a very attractive future market given the global transformation towards low carbon,” Lang said.

Since the survey was conducted, the government has committed to a carbon budget for the 2020s and revealed details of the green investment bank. But Leonie Greene at the Renewable Energy Association said: “The green investment bank is welcome but cannot be a substitute for a robust support framework for renewables, and the carbon budget is somewhat academic in that it is way off.”

The feed-in-tariff changes are the “big strategic mistake”, Greene said. “Germany is expecting 50% of their daytime electricity to come from solar by 2020, but the UK thinks it’s some sort of Mickey Mouse gizmo for green-minded homeowners.”

The Guardian

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