The US has leapfrogged China to the top slot in a highly-regarded annual analysis of the best countries in the world for renewable energy investment.
Last year, the US slipped to second place behind China in the Renewable Energy Country Attractiveness Index (RECAI), complied by consultancy EY.
However the latest issue of the report which is published today sees the US back at number one.
The driver behind the US regaining the top spot is President Barack Obama’s long-awaited Clean Power Plan (CPP), which EY states “sends a strong message of accountability at the state-level for the shift to a low-carbon economy and is expected to galvanize a significant increase in renewable energy investment over the next 15 years”.
Ben Warren, Energy Corporate Finance Leader at EY said: “The CPP is the most comprehensive, far-reaching and flexible emissions legislation in the US to date and gives a clear steer on the country’s long-term energy strategy. Targets alone will not construct new projects, but long-term visibility increases investor confidence that demand is there, and maintains momentum as we hurtle towards universal grid parity for renewables.”
India’s economic, political and energy market reforms, as well as ongoing significant foreign investment, moved the country into third position ahead of Germany, where a new auction regime is not expected to accelerate the pace of deployment in the coming years.
EY highlights which countries are ‘hot’ and which are ‘not’, and one of the hottest is Chile, which moves into ninth place in the RECAI and where there is a call for renewables to account for at least 45 per cent of power contracted in future tenders.
This has been prompted by “the success of renewables projects in helping to drive down average energy prices in Chile after a landmark decision last year to allow intermittent energy supplies to compete with traditional power plants in the country’s national energy auctions”.
EY highlights that “with bids already being accepted for a May 2016 auction, recent months have seen a flurry of activity in this already buoyant market, with SunPower Corp, Alstom and Brightsource, SunEdison and Enel Green Power, to name a few, all announcing major project developments in the country”
Brazil moved into eighth place thanks to “government proactivity in addressing key challenges, such as low tariffs, and an increasing focus on its untapped solar market”.
France is also named as ‘hot’ following the adoption in July of its long-awaited energy transition law to cut the proportion of nuclear in its power mix from 75 per cent to 50 per cent, generate 40 per cent renewable electricity by 2030 and overhaul its subsidy regime.
In May France also become the first country in the world to introduce a carbon reporting obligation on financial institutions.
The government has also recently launched tenders for floating offshore wind and marine energy pilot projects, and doubled the capacity of solar PV to be tendered in 2015 to 800 MW.
If Chile and France are hot, then Australia, Spain and the UK are positively tepid according to EY, which highlights all three as problem areas for renewable investment thanks to policy U-turns on support for wind and solar power projects.
EY’s Warren said: “Policy changes still have an immense impact on renewable energy deployment and the RECAI movements reveal some policymakers are listening to market signals more than others.
“In today’s world, where the majority of the population is facing some form of energy crisis, public support for low-carbon energy solutions and the increasingly compelling economics, flexibility and scalability of renewables cannot be ignored. Policymakers must recognize the strategic imperative of a diverse energy mix to help address economic and societal goals, as well as environmental ones.”