Updated: China overtakes UK as top location for renewables investment

The UK government's repeated claims that it is one of the best locations in the world for renewable energy investment received a reality check today with the publication of a report from consultancy Ernst & Young, claiming that the UK has slipped out of the top five most attractive renewable energy investment locations.

The latest version of Ernst & Young's Renewable Energy Attractiveness Indices show that the UK has slipped out of the top five for the first time in the indices five year history to be replaced by China.

The government has repeatedly touted the UK as an ideal location for renewable energy investment, citing generous subsidies, a strong manufacturing base, recent attempts to streamline planning processes and the commitment to hit the EU's target of generating 15 per cent of energy from renewable sources by 2020 as creating the ideal investment environment.

However, Jonathan Johns, head of renewable energy at Ernst & Young, said that delays to the Energy Bill had resulted in the UK slipping from fourth to sixth in the list of top locations. He added that a further consultation period for the controversial bill could result in two years of relative inactivity in the UK renewables sector, further undermining the UK's attractiveness and leaving it just 10 years to meet the EU's targets.

In contrast, China has benefited from its government's commitment to ensure 15 per cent of energy comes from renewable sources coupled with a rapidly expanding manufacturing base. "China's stellar growth in renewables can be attributed to the speed at which it has built up its supply chain capability, to the point where it is likely to have nine gigawatts of manufacturing capacity in a few years," Johns said. "China is also likely to become a significant exporter of wind turbine equipment in a few years, adding to its already strong presence in the solar industry."

The report warned that with the US, Germany, India, China and Spain now all established as more attractive locations for renewables investment, the UK was in danger of slipping further down the index unless it created more "tangible incentives for investors".

It also voiced concerns that the recent spike in fossil fuel prices could result in "mixed fortunes" for the renewables industry, with Jones warning that while the rising cost of energy was helping make renewables a more competitive proposition soaring energy bills were making politicians think carefully about the impact of renewables incentive programmes on taxpayers.

However, a spokeswoman for the department for Business, Enterprise and Regulatory Reform (BERR) insisted that the government was committed to ramping up the incentives for renewable energy developers through the Energy Bill and was also working to remove planning and grid obstacles. "The UK is still an attractive place to invest and renewables are a good long term investment," she added. "A ten fold increase in renewable energy will bring on around 160,000 jobs and an estimated £100bn of investment from the private sector."