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Offshore wind has been a great British success story. Over 700MW of capacity was connected in 2013, equivalent to 47% of the total installed in Europe - that鈥檚 enough to power nearly 400,000 homes. Remarkably, the UK produces over 50% of European offshore wind energy, which is nearly three times as much as our nearest competitor, Denmark.

This leadership position unfortunately cannot be sustained. The UK鈥檚 pipeline of projects under construction is declining, whereas other markets, notably Germany, are growing strongly - driven by a radical rebalancing of their energy markets in favour of renewables.

Recently, UK offshore wind has been in the news for all of the wrong reasons. Three major investments have been cancelled since November 2013, just as guaranteed energy prices had been tweaked in favour of offshore wind generation.

Furthermore, Centrica has sold its interest in a major scheme to its Danish competitor, Dong Energy. In all, a total of 3.2GW of new capacity has been wiped from the UK energy pipeline in a little more than 12 weeks, and there has barely been a note of alarm in the press. What does all that tell us about the UK鈥檚 energy future?

First, cancellations will have a knock-on effect on the wider economics of offshore wind. The 2013 Energy Act has set a trajectory for the offshore industry to deliver 鈥渃ost-competitive鈥� power by 2020.

Cost reduction depends on economies of scale, and the loss of work of this volume of work - equivalent to perhaps 800 large turbines - is a big blow to these ambitions, particularly as all low-carbon energy technologies are competing for a share of the 拢7.6bn allocated by the government to incentivise investment.

Second, the cancellation of UK projects reduces the incentives for investment in UK-specific manufacturing and installation capability. The market is currently dominated by European players, and local capacity will only be developed if the pipeline of work can be relied upon.

Third, investors continue to be footloose, with countries, investment classes and individual projects all competing for scarce and highly selective finance.

Larger, more risky offshore wind projects are increasingly dependent on equity investment and project funding, so these problems won鈥檛
go away.

Taken together, the UK鈥檚 leading position in offshore wind is at risk. Moreover, these cancellations could well be another indicator of the deeper problems in the economics of the UK energy sector.

In all, a total of 3.2GW of new capacity has been wiped from the UK energy pipeline in a little more than 12 weeks, and there has barely been a note of alarm in the press. What does that tell us about the UK鈥檚 energy future?

Finance is at the heart of many of these challenges, including the inability of decision-makers to address the true cost of investment in new, higher-risk sources into the UK energy mix. Presently, the price guarantee for power from offshore wind has been set at 拢155/MWh for 2014, three times the current price of legacy power and well above the strike price for new nuclear. On the assumption that the UK will continue its journey to a low-carbon future, the energy mix has to change, and will become more expensive. This is implicit in the assumption that offshore wind projects will be competitive at a price of 拢100/MWh by 2020.

Unfortunately, while the paying public needs to prepare for the reality of higher energy costs, the political debate has been focused
on simpler, close-up issues such as the marginal cost of energy efficiency measures and price control. Is it possible to discuss the real cost
of future energy when electors can鈥檛 pay their bills?

Politicians certainly aren鈥檛 helping matters. The EU commission is challenging the UK鈥檚 support to Hinkley Point as inappropriate state aid, and by promising a further round of energy market reforms, Labour has introduced further uncertainty into investment markets.

Little wonder that senior figures at Iberdrola, the owner of Scottish Power, have described the UK as being an increasingly hostile environment for investors in energy. Certainly, it is highly unlikely that any major investment decisions will be made prior to the 2015 general election.

This scenario of delay and missed opportunity feels so familiar that it would be easy to dismiss it as business as usual. However, the UK has a really successful track record of attracting investment into infrastructure and utilities.

The problems now being seen in the energy sector could be early signs of a bigger change in the balance of investor power, with further implications for the funding of key energy and water infrastructure, as well as new power sources.

Whether the UK鈥檚 energy solution relies on shale gas, nuclear or offshore wind, it will be expensive to deliver, and will require funding from competitive markets. The message from UK offshore wind in 2014 is that both funding and the UK鈥檚 energy future are not yet secure.

Simon Rawlinson is head of strategic research and insight at EC Harris