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  • UK Investors call on the government to support investment in renewables

    11 September 2015

     

    • Thirteen investors write to Chancellor to highlight concerns over future renewables investment resulting from unsupportive Government policy.
    • Group focuses on the benefits to the UK of a stable renewables investment framework.
    • Emphasis also placed on the need to decarbonise the UK economy in light of likely deal at COP21 in December.

     Thirteen investors have today sent a letter coordinated by the UK Sustainable Investment and Finance Association (UKSIF) to the Chancellor, George Osborne, to highlight investor concerns over recent policy announcements relating to investment in the renewables sector.

    The letter focused on the benefits of renewable energy to the UK. These include increased energy security, reinforcement of the electricity network and benefits to consumers from integration of clean energy sources while ensuring the grid remains balanced.

    Investors also made clear the need to decarbonise the UK economy, particularly with COP21 taking place in December. They called for a low risk environment in the UK energy sector to help meet the estimated £200bn of required investment by 2020 – of which only a quarter has been met so far.

    Simon Howard, UKSIF Chief Executive said:

    We support the Government’s commitment to transitioning to a low-carbon economy while keeping consumer bills low. However, it is crucial that the Government maintains the stable policy framework we have had over the past few years if it is to keep costs down and encourage investment in energy infrastructure. Sudden changes, like those being proposed, have serious consequences for companies and for investors.

    But with COP21 only a matter of weeks away, we believe the Government should be doing more. The UK already has its own commitments under the Climate Change Act and it is very likely there will be agreement on a new package of measures to tackle climate change in December. In meeting those commitments the Government will need to rely on the private sector to finance low-carbon energy infrastructure. These changes will highlight the short-term nature of the policy regime and will do nothing to instil confidence towards future investment.

     

    List of signatories:

    Simon Howard, Chief Executive, UK Sustainable Investment and Finance Association

    Lisa Ashford, Chief Executive Officer, Ethex

    Matthew Clayton, Executive Director, Triodos Renewables

    John David, Head of Rathbone Greenbank Investments, Rathbone Greenbank Investments

    Paul Ellis, Chief Executive, Ecology Building Society

    Julia Groves, Chief Executive, Trillion Fund

    Karl Harder, Managing Director, Abundance Generation

    Pierre Jameson, Chief Investment Officer, Church of England Pension Board

    Tom Joy, Director of Investments, The Church Commissioners

    George Latham, Managing Partner and Chief Investment Officer, WHEB Group

    Karen McGrath, Head of Sustainability, Kempen Capital Management

    Charles Middleton, Managing Director, Triodos Bank

    Meryam Omi, Head of Sustainability, Legal and General Investment Management

    Michael Quicke OBE, Chief Executive, CCLA

     

    Notes to editors

    Government Policy

    Before the election the Conservative manifesto committed to ‘halting the spread of subsidised onshore windfarms’ (p.56). The budget announcement of the removal of the Climate Change Levy exemption for renewable energy was not included in the manifesto (1.6262). Neither were proposals for the early closure of the renewables obligation for solar PV, the removal of feed-in-tariff pre-accreditation or the postponement of the next contacts for difference auction.

    About the UK Sustainable Investment and Finance Association

    UKSIF is the membership network for sustainable and responsible financial services in the UK. We promote and support responsible investment and other forms of finance that advance sustainable economic development, enhance quality of life and safeguard the environment. We also seek to ensure that individual and institutional investors can reflect their values in their investments.

    UKSIF was created in 1991 to bring together the different strands of sustainable and responsible finance nationally and to act as a focus and a voice for the industry. UKSIF’s 240+ members and affiliates include financial advisers, institutional and retail fund managers, pension funds, banks, research providers, consultants and NGOs. For more information about UKSIF, please visit www.uksif.org.

    The Letter (Available in PDF on request)

    Rt Hon George Osborne

    Chancellor of the Exchequer

    HM Treasury

    1 Horse Guards Road

    SW1A 2HQ

     

    c.c.

    Huw Irranca-Davies, Chair, Environmental Audit Committee

    Chris Leslie, Shadow Chancellor

    Angus MacNeil, Chair, Energy and Climate Change Select Committee

    Amber Rudd, Secretary of State for Energy and Climate Change

    Andrew Tyrie, Chair, Treasury Select Committee

     

    10th September 2015

     

    Dear Chancellor

     

    Boosting confidence in the UK investment framework

    Over the past decade industry, government and investors have worked effectively together under a relatively stable policy framework to secure timely and cost-effective investment in essential national infrastructure. This supportive investment environment has resulted in progress in modernising and decarbonising our energy supply while creating tens of thousands of jobs.

     

    We, the undersigned, support the Government’s commitment to transition to a low-carbon economy while keeping consumer bills as low as possible. However, recent announcements in relation to renewable power have raised questions about the financial security of past UK energy investment. By threatening previously secure cash-flows several of these announcements have a quasi-retrospective element which will raise concerns particularly for low-cost capital and risk compromising further UK energy investment. Experience in other EU countries supports this interpretation. In particular, the removal of the Climate Change Levy exemption for renewable power and grandfathering rights and considerable cuts to subsidies for solar power run this risk. The unknown delay to the auctions for CfD contracts was also not expected.

     

    The benefits from investment in renewables are wide ranging, especially when coupled with innovation in energy efficiency and storage. These include an increase to the UK’s energy security, reduced exposure to volatile commodity prices and the creation of wealth for a more diverse community of owners rather than just utilities. There are also benefits to the

    electricity grid more generally, including reinforcing the electricity network by providing distributed generation capacity, reducing bottle necks and enabling consumers to benefit from the integration of clean energy sources while making sure the grid remains balanced.


    As we head towards climate negotiations in Paris it is clear that the imperative to decarbonise energy systems is growing. Less than a quarter of the estimated £200 billion of required investment in the UK energy sector needed by 2020 has been made. A low risk environment is important for ensuring the cost of national infrastructure investment remains low. It is also clear that the renewable energy sector will have an increasingly important role to play in future.

     

    As long-term investors, we believe the Government needs to set out clearly how it intends to continue down the path of decarbonisation. We urge you to introduce measures that bring greater security to the UK energy network and increase clarity and consistency to boost investor confidence in the future, and we are prepared to work with you to achieve this.

     

    Yours sincerely,

    Simon Howard, Chief Executive, UK Sustainable Investment and Finance Association

    Lisa Ashford, CEO, Ethex

    Matthew Clayton, Executive Director, Triodos Renewables

    John David, Head of Rathbone Greenbank Investments, Rathbone Greenbank Investments

    Paul Ellis, Chief Executive, Ecology Building Society

    Julia Groves, Chief Executive, Trillion Fund

    Karl Harder, Managing Director, Abundance Generation

    Pierre Jameson, Chief Investment Officer, Church of England Pension Board

    Tom Joy, Director of Investments, The Church Commissioners

    George Latham, Managing Partner and Chief Investment Officer, WHEB Group

    Karen McGrath, Head of Sustainability, Kempen Capital Management

    Charles Middleton, Managing Director, Triodos Bank

    Meryam Omi, Head of Sustainability, Legal and General Investment Management

    Michael Quicke OBE, Chief Executive, CCLA

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