Greencoat UK Wind PLC (LSE:UKW), the largest listed renewable infrastructure fund in the UK, has issued a formal response to the UK Government’s consultation on inflation indexation changes in the Renewables Obligation scheme.
The submission, was made by Schroders Greencoat in its role as the company’s investment manager, argues that the proposed changes could increase consumer bills due to higher financing costs.
It stresses the importance of avoiding retrospective policy changes to maintain investor confidence. The document recommends continuing to use RPI until 2030 before moving to CPIH.
“The proposals set out in the RO consultation will not have the desired impact of reducing consumer bills. Instead, it will drive up consumer costs by increasing the cost of capital to finance new infrastructure,” Schroders Greencoat said in its submission.
The response added that consultations and changes to date have already caused an increase in the cost of capital, which it said can be seen in the share prices of the listed renewables funds, and added that these impacts will, in turn, increase the cost of the energy system that will ultimately be borne by consumers.
Moreover, it highlighted a need "to preserve grandfathering and, the principle of avoiding retrospective change" to protect the UK's reputation for predictability, stability and reliability in the way it treats investors.