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The UK will face rising global competition for energy investment beyond 2020 despite the raft of government measures designed to provide investor confidence, according to Scottish Power chief executive Neil Clitheroe.
Scottish Power’s parent company Iberdrola has directed 40 per cent of its investment towards the UK through a current pipeline of projects including wind power generation and networks which will continue to the end of the decade, Clitheroe said.
But he warned that questions remain over the UK’s ability to bring forward investment over the 2020-2025 period.
“We take decisions at a country level,” Clitheroe told delegates of a London conference on Wednesday. “We go where the returns are strong, the demand is strong and the risks are lower.”
Clitheroe underlined his point by saying that Mexico has emerged as a “fantastic opportunity” for energy investment following a regulatory shift from the country’s government.
Clitheroe praised the UK’s capacity mechanisms, saying that many European neighbours are crying out for the certainty provided by the Contracts for Difference (CfD) and Capacity Auction schemes.
“[But] the key thing is to continue doing these things,” he said.
The UK’s funding pot for the CfD regime has been set for the period up until 2020 but are yet to make funding available for projects coming forward in the next decade.
In addition to the need for further certainty in the 2020s Clitheroe urged the government to make the changes needed to the current regimes to ensure they are fit for purpose.
The UK government’s decision to impose non-delivery penalties on developers who have secured contracts through the capacity auction is a key example of the “tweaks” needed for the overall system, he said.
A recent report from EY analysts shows that the energy sector invested a record £15.1 billion in new generation, networks and supply infrastructure in 2014, an increase of 4 per cent on 2013 investment. But the future is signifincatly less certain for renewables.
“Future renewables investment is likely to be constrained by recent changes to the support regime for low-carbon technologies, the potential lack of budget for further CfD allocations to 2020 and the lack of visibility on the level of funding beyond 2020,” EY added.
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