UK needs to invest $334 billion to meet energy targets: E&Y

25 February 2009

Auditors, Ernst & Young (E&Y), said Tuesday that Britain will need £234 billion ($334 billion) investments in new energy infrastructure in order to meet carbon reduction and renewable energy targets set for 2020. A study carried out by the auditors also warned that available investment could move on to different sectors or projects abroad if energy companies failed to reassure investors about future returns.

In a study for large UK-based multinational utility Centrica, Ernst & Young said the level of investment needed was double the value of the UK's total energy supply asset base.

"The landscape in which this investment must be raised has altered fundamentally as the credit crunch and economic down turn take hold," the report said.

Centrica commissioned Ernst & Young to update its 2008 ''Costing the Earth'' study, published last summer, which looked at the cost implications for UK energy customers of meeting carbon emissions and renewable energy targets by 2020.

This previous study had estimated costs at £165 billion.

The new study, ''Securing the UK's energy future--meeting the financing challenge,'' reflects increased development costs for energy projects over an extended period to 2025. It includes capital costs for new nuclear and renewables capacity, plus the cost of increased levels of gas storage and import infrastructure.