Renewable Energy Generation (REG) has become one of the most high-profile casualties of the government’s recent cuts to renewable energy after it sold-out to the US investment manager, BlackRock.
The company runs several onshore wind farms across the country and is listed on London’s Aim market. The company pointed to the recent changes to the government’s renewable subsidies as one of the core factors behind the deal, which was valued at £67.5m.
Ministers have been accused of “dismantling” the green energy sector in the UK, after they decided to cut back the number of subsidies that it will be paying to renewable energy sources. Onshore wind power, along with solar power, has been one of the most affected industries.
David Cameron’s government has said that it wants to cut all subsidies to onshore wind farms by 2016. They have also said that they want to give more power to local people to oppose the construction of new wind farms.
The energy secretary, Amber Rudd, gave a speech recently that outlined her desire to focus more on offshore wind farms, as opposed to onshore.
REG said: “Any one of these factors alone would have a significant impact on the group, but taken together the impact is profound.”
“Further adverse policy changes since the 2015 general election have also contributed to a deterioration of investor confidence in the renewables sector,” it said.
“The proposed legislative and planning changes have, in the directors’ opinion, further impacted the willingness of the banking sector to provide long-term debt to UK onshore wind projects.”
There has been a similar trend across Europe, where many other governments have decided to lower the level of financial aid that they supply to renewables. The Spanish renewables company, Abengoa, declared that it was bust last week; the company pointed to green subsidy cuts back in 2013.
A director at the Smith School of Enterprise and the Environment, Ben Caldecott, said that the purchase may have been made due to the long term potential of renewable energy.
“UK energy policy, despite what some trade associations might say, is actually quite stable, particularly for operational, cash flow producing infrastructure with long-term contracts.”
“One explanation for the deal is BlackRock may have identified a portfolio of assets being negatively impacted by broader policy concerns, but that actually has sound fundamentals.”