Energy companies’ investment in the UK is at a 20-year high, according to a new report from Ernst & Young, but policy uncertainty could risk a slowdown in the future.
The report, Powering the UK, which was carried out for the sector’s trade association Energy UK, indicates that over £10 billion was invested in power generation, networks, and gas facilities in 2011 taking the total during the last four years to £43 billion.
Over the next three years, investment could top £25-30 billion, taking the total over six years to some £60 billion.
The energy sector is now contributing £86 billion to the UK’s GDP and now supports 137,000 direct jobs – up from 83,000 in 2008. In total, more than 654,000 jobs are now linked to the sector.
According to the analysis, jobs in the energy sector have been increasing at a time when other sectors have been decreasing and are spread across the UK rather than being concentrated in London and the south east.
But while the UK is still seen as an attractive option for investment, uncertainty over future energy policy is putting the country’s position at risk.
“This sector can play an important role in getting the UK economy back onto its feet and investing in new and cleaner energy generation,” says chief executive of Energy UK, Angela Knight. “[But] there are challenges ahead and, worryingly, the investment climate is becoming more uncertain.”
Knight says that the UK government needs to “move swiftly” to put the right policies and regulations into place to give investors and the industry certainty.
“Now is the time for all with a stake in our energy future – industry, government, regulators and consumer representatives – to work together to address the challenges ahead and reach the right decisions in the best interests of the country,” she urges.
Tony Ward, who heads Ernst & Young’s energy team and co-authored the report, warns that market confidence is key.
“That confidence comes through the consistent and clear articulation of the direction and objectives of UK energy policy backed up by decisions that are in line with those objectives,” he says. “The transition to a low-carbon economy, and the further acceleration of investment, means more needs to be done - and we are not presently on track.”
For further information:
UK Energy Secretary promises Energy Bill “within weeks” (18-Oct)
UK businesses calls for 2030 carbon target to unleash investment (8-Oct)
UK Energy Bill will deter investment and add costs, warns committee (23-Jul)
29 October 2012