Woodford threatens to shun renewable energy on 'anti-equity culture'

Neil Woodford's Invesco Perpetual has threatened to shun UK renewable energy companies unless regulators increase the returns available to investors and provide greater certainty over future policy.

Invesco Perpetual - which holds more than £4.5bn in energy companies including National Grid, Centrica, United Utilities, SSE, Drax and International Power - warned it would not be willing to provide the future funding needed to meet the Government's green policies unless changes are made, the Times reports.

Woodford said the views of investors were being ignored despite being asked to provide more money to support Britain's infrastructure.

"Unless reforms to the electricity market are appropriately structured and give greater clarity and incentives around renewable investment, we will not support this incremental investment and will seek to achieve our desired returns from rising prices in an increasingly constrained supply market," Woodford said in a 14 July letter to energy regulator Ofgem's chairman Lord Mogg.

Woodford believes domestic energy companies would not be able to deliver the £200bn investment needed for Britain to generate 35% of its electricity from renewables by 2020, as along as harsh price controls are imposed by Ofgem and water regulator Ofwat,

"We have to shoulder an increasingly anti-equity culture at Ofgem and Ofwat, whose public stance along with that of the Government seems to be predicated on the achievement of the impossible ‘more investment with lower prices'," Woodford said.

"We are left to conclude that there is an unbridgeable gap between the regulators' perception of what is a fair return on equity and what we require on incremental investment."