China has been rated the most attractive country for renewable energy investment.
Although it is the world’s largest emitter and is heavily dependent on coal, China is shifting towards clean energy and aims to source 20% of its energy in 2030 from low-carbon sources, said EY’s 2018 Renewable energy country attractiveness index (RECAI).
In July China exceeded the government’s 2020 goal of 105 gigawatts (GW) of total solar capacity, hitting 130GW. This represents 32.4% of all installed solar capacity globally.
The US and Germany have risen to second and third position respectively, overtaking India, which falls to fourth position.
The UK and the Netherlands have risen to seventh and ninth respectively, while Taiwan re-enters the top 40 ranking.
One of the key threats identified in the report is the trend for rising protectionism across the renewable energy sector.
India’s 2022 solar power target looks increasingly over-ambitious and is provoking investor concerns, after the government threatened a 70% tariff on imported solar panels.
In January the US imposed 30% tariffs on imports of solar photovoltaic (PV) cells and modules, though the US market remains resilient.
Many of the world’s largest oil and gas companies are making significant investments in low-carbon energy.
But while concerns around climate change and the rise of electric vehicles (EVs) will drive long-term ambitions to invest in renewable energy, the pace of transition among oil majors remains uncertain.
Ben Warren, EY global power & utilities corporate finance leader and RECAI chief editor, said: “Rising interest rates are likely to increase the cost of cheap capital that has underwritten the dramatic roll-out of renewable energy capacity over recent years.
“Government subsidies for clean power are being reduced around the world and financiers are anticipating tougher times ahead for project developers.”
However he added that these developments would only be minor stumbling blocks in the advance of the renewable energy sector.
While renewables investment in the UK fell in 2017, the UK climbed three places to seventh position as the market adapted to subsidy-free solar PV.
Warren said: “While the current economic climate has driven a relentless focus on costs, that focus is paying dividends with the global cost of electricity from renewable sources falling year-on-year.
“Combined with the plunging cost of battery technology, we anticipate further rapid growth of the evolving renewable energy sector in the coming years.”
Top 10 countries for renewable energy attractiveness:
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