Red tape in UK defeats eco fund

The British team behind the launch of a €200m (£170m) investment fund for renewable energy has turned to Eastern Europe because of regulatory barriers to green energy projects in the UK.

By Rowena Mason Published: 7:56PM BST 28 Jun 2009
The new fund, which will be announced this week, is planning to finance biomass, wind and solar energy in Finland, Romania and Estonia, with estimated returns of 20pc-50pc per year.
Hadley Barrett, chief executive of the Oxford Renewable Energy Fund (OREF), said his team had contemplated trying to develop green projects in the UK but the obstacles have proved too great.

A lack of political will, poor energy infrastructure and lengthy planning procedures means the fund would not generate satisfactory returns.
"There is an awful lot of confusion for renewable energy investors in the UK, where the Government first gives its support then takes it away and cannot make up its mind on policy," he said. "If you are doing it right, you can make very good money out of renewable energy, but certainly not in the UK."
The fund, whose backers are a combination of high net worth individuals and institutional investors, will list in the Channel Islands. OREF's previous funds have all returned between 45pc and 100pc per year.
"We are no eco-warriors," Mr Barrett added. "This is about making money from renewable energy e_SEnD in a sustainable way – but that is not possible in the UK at the moment."
The fund launch in Eastern Europe comes after BP last week decided to close its Alternative Energy office in London. BP is expected to cut its investment in alternative energy this year to as low as $500m, compared with $1.4bn last year. It follows the departure of Vivienne Cox, BP's head of alternative energy, earlier this month.
Sources in the oil and gas industry said many multinational energy companies were now turning to the US, where they believe President Obama is planning to pump money into new alternative energy projects.
In the UK, consumers are expected to bear an extra £112bn on renewable energy generation, £52bn on power plants, £40bn on upgrading the network, £13bn on smart meters and £16bn on reducing carbon emissions.