Britain Loses Top Energy Rating After Slashing Subsidies

(Reuters) – Britain has lost its top-notch energy policy rating from the U.N.-accredited World Energy Council after the government prematurely cut some renewable energy subsidies, creating uncertainty about how it will address support in future.

The World Energy Council has downgraded Britain to an AAB rating, from AAA, in its annual “energy trilemma index”, which ranks countries’ energy and climate policies based on the issues of energy security, equity and sustainability.

The downgrade reflects the damage the subsidy cuts have caused to Britain’s reputation as an attractive renewable energy market.

Earlier this year Britain scrapped subsidies for onshore wind farms, closed support for small-scale solar projects and changed the way other renewable energy projects qualify for payments, saying they were becoming too costly for taxpayers.

“The UK government must give more predictability to investors in the way the electricity market reforms are progressed,” said Joan MacNaughton, executive chair of the World Energy Trilemma study.

Britain rewards low-carbon energy projects, such as wind farms, through a contracts-for-difference mechanism that predetermines a minimum price for electricity generated.

“More transparency is needed about the future approach to contracts for difference and the levy control framework,” MacNaughton said.

The levy control framework helps determine the government’s budget to allocate subsidies to low-carbon energy projects.

The changes in government support for renewable energy have already cost hundreds of jobs in Britain and the prospect of lower returns is expected to scare off renewable energy investors.

(Read more from Reuters here)