A recent report, the Energy Transition Readiness Index (ETRI) 2023, produced by the Association for Renewable Energy and Clean Technology (REA), highlights concerns regarding current UK Government policies, indicating a tendency to prioritize short-term political considerations. The report underlines how this focus is contributing to increased investment uncertainty in the country's energy transition.
According to the ETRI 2023, investors in the UK's energy transition are seeking clear patterns of governance and regulatory stability to instill confidence in their investments. However, the report suggests that the existing signals are not robust enough to meet this criterion.
The analysis, sponsored by Eaton and Foresight Group, assesses and compares electricity markets in 14 European countries. While the UK has seen a slight improvement in its overall rankings since the previous year's report, it is still trailing behind some European nations that have more effective flexibility markets, offering transparent and straightforward access.
The report emphasizes that the key to achieving high levels of flexibility lies in encouraging investment in demand-side response capabilities, including energy storage. Additionally, open markets for flexibility are crucial, and although the UK is making progress in this area, it still has a way to go.
Survey respondents who contributed to the report expressed the view that the energy transition in the UK could move forward more swiftly if measures equivalent to the US Inflation Reduction Act were introduced.
The REA stresses that slowing down the energy transition could have severe long-term financial consequences. Frank Gordon, the Director of Policy at the REA, underscored the importance of shifting UK policy away from short-term priorities to meet ambitious decarbonization goals and improve investment certainty. Gordon also stressed the need for government action to address investment barriers and remove obstacles facing the renewable energy industry. The report emphasizes that urgent action is essential to accelerate the UK's readiness for the energy transition and ensure it stays on the right path.