CARDIFF, England, November 2, 2005 (Refocus Weekly) Investors are becoming more positive towards renewable energy, and have a keen interest in learning more about green power technologies.
Renewable energy is attracting “significant attention” in the UK investment community, with 46% reporting an increase in positive perceptions over the past year, according to the second survey on investors' attitudes towards renewables conducted by Gavin Anderson & Company for the Department of Trade & Industry. The survey concludes that the main reason cited for the growing optimism is the continued commitment from government to support the renewables industry, although this commitment and support is also seen by investors as the highest potential for risk, with the potential for change in public policy.
“The results of the latest survey are encouraging as they show there is a very keen interest among investors to discover more about renewable energy,” says Ken Cronin of Gavin Anderson. “A total of 88% of those surveyed said they were either ‘possibly’ or ‘definitely’ interested in the principle of investing in the sector, so the potential is huge.”
Renewables accounted for 3.1% of total energy production in Britain last year, and the government has set a target of 10% by 2010 to safeguard energy supplies and the environment. It wants 15% of energy to come from renewables by 2015.
“The UK now has a renewable energy policy that is at least recognised by most investors,” the report concludes. “However it is clear from the results of this survey that from this already good base, there is still room for improvement.”
The general election and G8 summit of world leaders last year made 2004 a difficult year to convey the message, and “it is clear that investors require more information and see government as a key source,” the survey concludes. “This indistinct messaging clearly has had an impact on investors’ belief that the government will achieve the 2010 target, with almost two-thirds of those surveyed stating they believe the targets will not be met.”
Communications to investors was seen as good, but many want more frequent contact and the survey shows that investors view public perception as key to investing in the future. While 84% of investors expect wind power to become the most significant renewable technology in Britain, others expect wave and tidal, as well as hydroelectric and fuel cell/hydrogen, to gain in popularity.
“The renewables sector has a growing reputation with investors and this survey highlights that positive and strengthening confidence,” says energy minister Malcolm Wicks, who released the results at a meeting of the British Wind Energy Association. The survey is a follow-up to a survey done in early 2004, and some of questions in the 2004 survey were repeated to assess how views had changed in the 17 months.
There was a marginal weakening of attitudes towards renewables, with 46% reporting their attitudes had become more positive, 22% saying they were more negative, and 32% remaining unchanged. The more-negative attitudes were based on the perception that renewables are expensive and poor value for money, while others noted a lack of marketing and little marketing activity, political factors (including a perceived poor track record and lack of decision-making) and environmental concerns of the general public on the siting of windfarms.
“Wind power is a colossal waste of time and money and it is not reliable so you have to back it up with fossil fuel generation,” said one respondent. “I’m not certain that the very considerable grants given to wind power are worth it when it’s never going to help us meet the Kyoto target in any meaningful way.” The majority remain interested, in principle, in investing in the renewables sector, but the level of interest is marginally below the level of 2004 and, unlike that survey, a few investors now say that they are not interested.
Among the key risks associated with investing in renewables were political factors (34% expressed concerns about a lack of government commitment and possible long-term changes after the next election) while 28% saw subsidies as a short-term measure with no evidence of commitment in the longer term. Others saw renewable energy technology as still developing and a lack of regulation and instability in the regulatory regime, while others cited concerns about profitability.
Most investors were realistic about rates of return, with 80% considering 10% to 20% as acceptable. A small minority (8%) would require ROI’s of more than 30% and the same number wanted returns of 21% to 30%. Three-quarters said the rates are achievable, and 60% say their acceptable level has not changed over the past two years, while 24% have reduced their expectations and 12% have higher expectations.
Read more at ReFocus Weekly
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