The Energy and Climate Change Select Committee has urged the UK government to introduce ‘Investment Impact Assessments’ to ensure new policies do not inadvertently discourage investment.
In its Investor Confidence in the UK Energy Sector inquiry report, the ECCC said ministers need to improve cross-Whitehall understanding of investors’ perspectives and the impacts of its policies and decision-making process on the investor community.
ECCC chair Angus MacNeil said investor confidence has been dented by a series of policy changes since last May’s general election, which will lead to a hiatus in project development and threaten the UK’s ability to meet its energy security and climate change objectives.
“The Government has made a number of sudden and unexpected changes to policy,” he said. “This has spooked investors and left them wondering ‘what will be next?'”
The report also concludes that greater transparency and clarity is needed on the Government’s existing low-carbon energy policies as a matter of urgency.
The ECCC called on DECC to provide a detailed plan for when the next three Contracts for Difference auctions will be held, how much money will be available and which technologies will be eligible to take part.
In addition to setting out much will be available in the Levy Control Framework beyond 2020, the ECCC also wants published the assumptions and methodologies that underpin the calculations of how much money is being spent in the LCF.
The Renewable Energy Association said the report showed a “lack of vision” has damaged confidence and is making new energy projects more expensive.
“The government talks about reducing costs to consumers, but their decision to instead support nuclear and subsidise new diesel and gas in the capacity market is adding new expense,” said REA chief executive Dr Nina Skorupska.
“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,” she added.
The CBI said the ECCC’s report underlined the importance of stable policy to attract investment.
“The government needs to work with business to achieve this, and we’ve seen some positive steps recently, including moves to look at some measured reforms to the Capacity Market,” said CBI business environment director Rhian Kelly.
Image: George Osborne (HM Treasury)
