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Recent political messaging risks undermining the new jobs and investments the renewable energy industry stands poised to deliver, the U.K.-based Renewable Energy Association (REA) warns in a new report.

The REA's latest twice-yearly members' business confidence survey says the government's Electricity Market Reform program, relative stability in key incentive plans and market opportunity provided by the European Union's (EU's) 2020 renewable energy target are all boosting confidence in the U.K.'s renewable energy industry.

However, the advocacy organization says Prime Minister David Cameron's pledge to "roll back green regulations" is increasing the perceived risk for investors. This increases the cost of capital and threatens the jobs and investments the U.K. needs to ensure near-term energy security and deliver long-term climate change objectives, the REA asserts.

Overall confidence, as measured by the REA’s Renewables Industry Confidence Index, stands at 48.5% - an increase of 1.3% compared with six months ago. The improvement falls short of the 75% score that would indicate a properly healthy and optimistic renewables industry, the REA says.

On the hopeful side, the REA report includes the following:
  • 42% of companies expect to increase employment over the next six to 12 months, vs. 25% in the first quarter of the year (Q1'13);
  • 33% of companies report an increase in employment over the last six months, vs. 26% in Q1'13;
  • 20% of companies report good or excellent access to finance, compared with 14% in Q1'13; and
  • Although 38% still report poor or very poor access to finance, this stood at 45% in Q1'13.
Nevertheless, the REA says 52% of respondents think the government’s preference for a 2030 carbon-only target at the European level - with no specific target for renewables - sends a poor or very poor signal to investors. According to the report, 29% of respondents are unsure about what signal this sends. If the “don’t know” responses are removed from the analysis, the proportion expressing concern rises to 73%.

"The renewables industry is poised to significantly grow its contribution to employment and economic recovery," says REA CEO Nina Skorupska. "The growing confidence in the power sector and the Electricity Market Reform program is good news, as the U.K. urgently needs new wind, solar and biomass to keep capacity margins healthy.

"However, these green shoots are still fragile, and the U.K.’s chances of meeting the binding 2020 targets appear remote. The government currently opposes a 2030 EU renewables target and is proposing to repeal the Planning & Energy Act. Reversing those stated positions would inject a huge boost into the sector and unlock much-needed new jobs and investments."

To see full copy of the report, click here.

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