Austria tops league for attracting renewable energy investment

by ClickGreen staff. Published Tue 04 Dec 2012 14:59, Last updated: 2012-12-04
Austria tops Europe table for attracting low-carbon investment
Austria tops Europe table for attracting low-carbon investment

Investing in renewable technologies in Austria has come out above other European nations according to a new Energy Investment Map, launched by PA Consulting Group.

But the report found the UK is attracting key investment funds from China and the rest of the world eager to tap into the nation's low-carbon energy future.

The Energy Investment Map is an online interactive energy map which assesses the investment credentials of 14 European countries and the business case and risk assessment factors for ten different technologies. The map ranked Austria top thanks to its wind, hydro and biomass investment opportunities.

The map also shows that the increase of solar projects in the most attractive countries to invest in this technology – Spain, Germany and Italy – is slowing down due to tariff cuts and the suspension of incentive schemes. From an economic perspective, wind power projects, mainly onshore, have overtaken other renewable technologies.

The map currently ranks the UK as the fifth best country to invest in, with high Internal Rate of Return (IRR) for investment in onshore and offshore wind and less in solar photovoltaic and hydro.

The announcement of the Energy Bill has brought far greater certainty to investors interested in the UK for renewable, low carbon and conventional energy generation.

Mark Livingstone, energy expert, PA Consulting Group, explained: “We expect scores to shift once likely strike prices for low carbon contracts-for-difference and further details on capacity market auction prices are understood.”

Despite ranking fifth out of the 14 countries included in PA’s analysis, Chinese investors and international funds are showing significant interest in investing in UK infrastructure assets.

Livingstone added: “The UK is an attractive long-term prospect for electricity sector investment but is in the midst of a major policy transition, changing incentives for new generation for decades to come.

“Offshore wind and nuclear new build are both options with particularly strong support relative to other countries. Going forward, the UK government wants innovation to drive down low carbon generation costs so future support levels will decrease. Onshore wind and gas face uncertainty but are important elements in the generation mix.”

Elsewhere in Europe, Norway and Denmark rank second and third, respectively, both leading the way with their commitment to onshore wind. Renewable generation in Denmark is dominated by wind and has increased its wind generation capacity by 4,000 MW over the last decade.

Sweden ranks fourth with a high renewable index score for hydro power. This has led the country to generate more than 40 per cent of its electricity demand from renewable sources. Germany ranks sixth and is moving towards encouraging investment in offshore wind.

In contrast, France, Ireland, Finland and Spain are all falling short due to low or no feed-in tariffs (FiTs). In Germany, for example, the feed-in tariffs for wind power are almost two times higher than in Ireland. All countries except Finland have high country risk for renewable investments as a result of the debt crisis.

However, the situation in France is expected to improve as the government looks to increase the share of renewables with high incentives seeing offshore wind as the most profitable.

Olaf Remmler, energy expert at PA Consulting Group who has led the work behind the investment map, says: “Mapping risk and return in energy markets is key for utilities, operators and investors assessing energy projects along the entire value chain, be it for renewable or conventional generation technologies.

“Changes to regulatory, financial and geopolitical conditions can significantly alter the global playing field.”

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