Wind projects across Europe will require more than £100billion investment over the next seven years if they are to meet power provision targets, it has been claimed.
But ongoing concerns over the changes to energy industry regulations in the UK and Germany put the industry at risk of meeting the 40GW installed capacity targets for 2020.
A new report by EY looking at offshore wind projects warns that current funding methods, through funding by existing power producers, is being hit by constrained balance sheets.
The report, published at the group’s even in Frankfurt, echoes calls from offshore industry leaders that the EU needs to set binding renewable energy targets beyond 2020.
“Regulatory risk is the key concern for third party capital,” the report’s authors warn.
“There must be clear and stable regulation with long-term stablity in the pricing.”
Achieving EU targets of 40GW of installed capacity by 2020 will take between £75billion and £100billion (EU90billion to EU123billion) worth of investment in renewable projects in the next seven years, according to the report.
Even reaching 25GW of offshore power by 2020 – just over half the deployment target – would require a further £57billion over the next seven years.
The findings come after a report earlier this year by consultants Freshfields Bruckhaus Deringer, which warned that a lack of equity for offshore power projects was putting future development in the UK, France, Germany and the Netherlands at risk.
Scottish renewable energy chiefs said increased investment in offshore projects was vital in the country to secure its reputation for innovating in the field.
“Scotland has up to 10GW of offshore wind already earmarked for development which is enough to power some 6.5 million homes,” said Scottish Renewables policy director Jenny Hogan.
“The resource we have is fantastic but it’s no surprise to the industry that financiers see uncertainty caused by major changes such as the UK’s Electricity Market Reform as a potential investment risk.
“However, it’s crucial for us to see increasing investment in offshore wind through projects such as test and demonstration sites so that we have a greater chance of leading the global race to develop next generation offshore wind technologies and establish ourselves as a key destination for offshore wind technology innovation and deployment.”
The report’s findings were welcomed by the European Wind Energy Association, which said stability was vital for the industry to progress.
“By undermining investment stability, governments are putting green growth, jobs and a world-leading European industry at risk,” said EWEA chief executive Thomas Becker.
“Stable national frameworks and a binding EU renewable energy target for 2030 will be a green light to investors and ensure the industry continues to flourish.”