Energy investment at risk over government's lack of commitment, industry warns

Speaking to the Guardian newspaper, the heads of some of the world's biggest wind companies said that they were reviewing investments or seeking clarification from the Department of Energy and Climate Change (DECC) on future energy policy.

Magued Eldaief, managing director of General Electric (GE), told the newspaper that a proposed £100 million investment was "on hold" until the company had "certainty and clarity regarding the policy environment that we are in".

"One of the most important things for us is political certainty, so we can justify the business and investment case for a facility in the UK. But we think there are some [political] headwinds which do not help, especially in terms of the subsidies discussion," he said.

GE was one of several companies that told the newspaper they were seeking "clarity" before committing to factories, research facilities or other developments in the UK. Major wind turbine manufacturer Vestas said that it was "waiting to see whether its customers were able to sign orders" before committing itself to a proposed turbine factory in Kent while Mitsubishi, Gamesa and Siemens also expressed their concerns.

Earlier this month more than 100 Conservative MPs wrote an open letter to the Prime Minister urging him to "dramatically cut" support for wind turbine generation. The MPs also called for David Cameron to tighten up planning laws to give local residents more power to stop new wind farms being developed in their area.

The letter overshadowed the appointment of new Energy Secretary Ed Davey, who had replaced predecessor Chris Huhne announcing that there would be "no change in direction or ambition" despite the "change at the helm".

The DECC has already proposed cutting the financial support available to onshore wind generation projects by 10% from 2013 as part of its review of renewables obligation certificates (ROCs); however, financial support for electricity generated through wave and tidal stream technologies will be more than doubled. The renewables obligation is the main financial support mechanism used to encourage the development of large-scale renewable electricity generation projects.

The Government is also asking for views on reducing subsidies for its various feed-in tariff (FiT) schemes. FiTs provide a financial incentive to businesses that generate electricity from renewable sources, and vary according to the renewable technology used.

Renewable energy expert Nick Shenken of Pinsent Masons, the law firm behind Out-Law.com, said that the companies' comments to the paper were unsurprising.

"This is simply industry telling us what everyone has known for some time - policy uncertainty creates investment uncertainty. It isn't enough to have a low carbon green agenda - industry wants some certainty around how the aim of a low carbon economy will actually be achieved. Uncertainty around 'the how' clearly remains a concern for industry," he said.

"There are precious few certainties at the moment, but support for and commitment to onshore wind at a policy level was felt to be one of them. The open letter from Conservative MPs questioning that doesn't help overall perception, notwithstanding the quick re-affirmation of support given by Ed Davey."

Responding to the article, Davey said that a responsible energy policy "rules in all of the key low carbon technologies... ruling any of them out would be folly".

"Abandoning [onshore wind] now would force us to rely more heavily than envisaged on offshore wind before that becomes cheaper, adding a further £5 to every annual household bill by the middle of the decade. Built in the right places, and with the benefits for local communities we're introducing, onshore wind has a crucial role to play," he said.

"We need a portfolio of all the available technologies and the investment and jobs that comes with it. That's what the coalition is united behind and it's what MPs from all parties voted overwhelmingly in favour of last year."

The Government's Electricity Market Reform (EMR) programme, which it has claimed will bring about the widest reforms of the electricity market since privatisation, intends to attract investment to increase security of supply while encouraging low-carbon generation sources and reducing the impact on consumer bills. Legislation reflecting the contents of the EMR is due to be approved in 2013, although many of the changes are not expected to be in force until 2014.