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'High risk' of energy project hiatus

Power Lines Pylons

A lack of clear direction from the government has created a “high risk” of energy development stalling, MPs have warned.

The Energy and Climate Change Committee said a series of announcements made after the Conservative government came to power last spring had hit investor confidence.

Ministers have previously estimated that £100bn of investment is required in electricity infrastructure alone between 2014 and 2020.

But the committee said the UK fell from eighth to 11th on the Renewable Energy Country Attractiveness Index published by professional services firm Ernst & Young in just three months during the summer of 2015.

“Sudden and numerous policy announcements have marred the UK’s reputation for stable and predictable policy development,” said the committee’s latest report.

“A lack of transparency in the decision-making process has led investors to question the government’s rationale for policy changes and to wonder what will be next.”

The report, Investor Confidence in the UK Energy Sector, said there was anecdotal evidence of a pause in investment in both the supply chain and the development of new projects.

“If investment in these activities has indeed dried up, it may not become apparent until the end of the decade,” said the report.

It added: ”There is a high risk that a hiatus in new developments has been created, pending further clarity on short and longer-term policy.” 

MPs on the committee called for the government to give clarification on forthcoming contracts for difference auctions as well as setting out what would happen to the carbon price floor after 2020.

They also urged ministers to lay before Parliament a report making clear how the government intended to meet carbon targets.

The Civil Engineering Contractors Association last month told MPs that plans to cut support for green energy projects would badly damage the industry.

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