EY has published its annual “Renewable Energy Country Attractiveness Index,” which “ranks the top 40 countries in the world on the attractiveness of their renewable energy investment and deployment opportunities.” There have been some interesting shifts in the Top 10.
Renewable energy optimism
The rankings reflect our assessments of market attractiveness and global market trends. In this latest edition we see COVID-19 having a short to mid-term impact, but the long-term drivers for investment in renewables remain strong, making the sector a safer haven for investment.
The US has unseated China from the No. 1 spot, because “of a short-term extension to the [Congress’ Production Tax Credit] and long-term growth in offshore wind, with plans to invest $57 billion to install up to 30GW by 2030.” China dropped to No. 2 because of a drop in renewable growth due to a decrease in government subsidies. However, EY is still optimistic about renewables growth in China.
France moved from fourth to third as it weans off nuclear and has secured strong power prices and awards of 1.4GW for wind and solar developers in its latest auction.
EY states that the sector will bounce back because of falling costs, supportive policies, the prospect of green stimulus plans, and the fast progress of the storage sector.
EY added a new COVID-19 correction parameter to their findings, which is centered on three criteria, for which the market is given a score (but does not include COVID data such as testing, cases, and deaths):
- The strength of the market’s healthcare system
- The size of the population at risk based on demographics
- Economic vulnerability
Benoit Laclau, EY global energy leader, said:
Stakeholders are looking to collaborate and invest in companies where climate change and sustainable development is embedded in their strategy. Energy leaders should take action to invest in renewables and related sustainable long-term projects, including energy efficiency, smart power networks and low-carbon transport infrastructure.
The US’ Production Tax Credit was extended for a year in December. Wind projects that began construction in 2019 are eligible for a 40% credit, and those that start construction in 2020 will be eligible for a 60% credit. However, the PTC didn’t include an extension for solar or storage.
Keep in mind that EY makes these evaluations on an annual basis. If the US wants to keep its coveted No 1 slot, which it hasn’t held since 2016, then it needs to build a significant extension of those PTCs, include solar and storage this time, and provide even more support for the green energy sector into its stimulus plans — which so far, hasn’t happened. And a surprise retroactive rent bill for solar and wind on federal lands isn’t going to help.
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