The UK is failing to take advantage of its strong economic position in the European power market and is no longer the best place to develop renewable energy.

The claim, made by Ernst & Young in its quarterly report for Winter 2005, is based on data showing the country has slipped from the top spot to fourth in an index tracking the world's most attractive national environments for renewable energy.

Ernst & Young said the report showed intense over-seas competition and grid hold-ups were hampering the UK's development potential for green energy technologies.

Jonathan Johns, head of renewable energy at Ernst & Young, said: "The UK renewables industry has Europe's best wind, wave and tidal resources yet it continues to miss out on its economic potential as the debate on whether or not the UK will meet its 2010 targets rages on.

"Just one year on the UK has plunged from the top spot to fourth position behind Spain the US and Germany."

Despite pressures from wind farm opponents, "not-inmy-backyard" campaigns and the nuclear lobby, Mr Johns said the biggest issue currently facing onshore wind energy was the capacity of the National Grid.

This was particularly of a concern in Scotland, where many onshore wind farms are to be developed, he said.

However, news was much brighter for the biomass industry which had returned to favour, Mr John said.

Biomass - organic matter that is either grown or recycled for fuel - is a popular choice of green energy for the West Midlands, which has no access to the coast or large hills for wind farms.

Businesses such as Green Finch in Ludlow, Shrewsbury-based Marches Wood Energy Network and Eccleshall Biomass in Staffordshire are also developing biomass systems in the region.

The rise in interest was driven by increasingly competitive fuel costs as gas prices soared, Mr Johns said.

However, the future of offshore wind energy in the UK was particularly bleak, Mr Johns warned. Although many offshore wind farms are ready to be constructed, a shortage of wind turbines meant costs were being kept high, Mr Johns said.

If these issues continue, renewables could play an increasingly small role in UK's future he warned.

"With the globalisation of the renewables industry funds will move across borders if conditions look better on the other side," Mr Johns said.

"The UK is currently losing investment to central and eastern Europe, Spain, France, Germany and the US where development risk is lower and attractive returns can be made." ..SUPL: