Autumn Statement: Investors need certainty over future funding for renewables, says expert

Gary McGovern of Pinsent Masons, the law firm behind Out-Law.com, was commenting as the government delayed an announcement on the future of the Levy Control Framework (LCF) until the Budget in spring 2017. The LCF means that some of the cost of low carbon energy generation can be passed to consumers through their energy bills, but the current arrangements expire in 2020/21.

"Given investment cycles and long lead-times for energy projects, the 2020/21 close of the current LCF is really not far away," McGovern said. "Many developers will already be looking to business plans for development post-2020 and deciding which markets are most attractive."

"We need a clear picture of the budget level beyond 2020/21 to safeguard the future of UK renewables. A clear understanding of the LCF, the timetable of future CfD [contracts for difference] auctions and which technologies will benefit would demonstrate a continued appetite for clean tech. This will be important if UK renewables is to avoid capital going overseas to emerging renewable markets offering greater stability," he said.

CfDs are the UK government's main subsidy mechanism for renewable energy projects and provide guaranteed payments to operators of approved renewable generation technology. The government recently confirmed that the application process for the second CfD allocation round will open in April 2017; however, this will be restricted to competitive bids from "less established" technologies including offshore wind, wave, tidal stream and geothermal projects.

The UK needs to attract an estimated £100 billion worth of private investment into cleaner energy generation and 'smart' power over the next 15 years if it is to maintain secure energy supplies. The government is committed to phasing out unabated coal-fired power entirely by 2025, by replacing it with cleaner methods of energy generation.

"After recent subsidy upheaval, the renewable energy industry requires government to take a more transparent and consistent approach," said Gary McGovern. "Long-term transparency and stability and a clear direction of travel is critical to promote investor confidence, allow informed investment decisions and safeguard investment for years to come."