Sudden and unexpected changes to UK renewable energy policy have ‘spooked’ investors in the sector according to a report by MPs which arrives as the government announces its intention to sell off the Green Investment Bank (GIB).
The report from the Energy and Climate Change committee claims that numerous policy changes since the election, including subsidy cuts for onshore wind, solar and biomass, could push up the costs to households of building much-needed new energy projects.
Energy scheme backers have been left wondering what is next for renewables in the wake of decisions made without transparency or consulting the sector, the report claims.
The contradictory messages and the looming end to the existing budget for low-carbon subsidies in 2020 have made it hard for investors to make decisions on projects that will take many years to complete, the MPs warned
The concerns were aired as the government announces its intentions to sell off the GIB in a bid to drive more private money into green energy projects.
The bank was created in 2012 by the previous coalition government to attract private funds for the financing of the private sector's investments backed by public money related to environmental preservation and improvement.
The GIB has pushed £10.6bn-worth of investment into 70 green energy projects since it was launched.
The government said moving the bank into private ownership would give it more capital for investment and have a bigger impact than if it stayed in public hands.
Shaun Kingsbury, chief executive of GIB, said: "In three years the team at GIB have built a special business that is green, profitable and admired around the world.
"GIB is an exciting investment opportunity, providing new investors with predictable returns and significant growth opportunities."
The chairman of the Energy and Climate Change committee, Angus MacNeil, believes that billions of pounds of investment is needed in order to replace the UK’s ageing energy infrastructure, maintain secure energy supplies and meet legally-binding climate change targets agreed in Paris in December.
"Since coming to office in May, the Government has made a number of sudden and unexpected changes to policy. This has spooked investors and left them wondering 'what will be next?'" he said.
Cutting support for low-carbon energy today may turn out to be a ‘false economy in the long run’, he warned, and urged ministers to think carefully about the consequences for investors before ‘leaping’ into policy decisions.
The Department of Energy and Climate Change said it was taking action to keep bills as low as possible to protect consumers and ensure they got value for money including ‘being tough on subsidies’.
"We are taking the long-term decisions to tackle a legacy of under-investment in our energy system - creating the right environment for businesses to invest in clean, affordable energy and building an energy infrastructure fit for the 21st century," it said.