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LONDON, England, November 15, 2006 (Refocus
Weekly)
The United States has edged out Spain as the most
attractive country for renewable energy investment.
“Observers of the renewable energy sector cannot help but notice
the shifting balance in the global market for renewables,” says the
latest ‘Renewable Energy Country Attractiveness Indices’ produced by
Ernst & Young. “The sheer size and resources available to countries
such as the USA, China, India and Brazil, make them formidable
markets for domestic and foreign players.”
“We are witnessing unprecedented awareness and support for
climate-friendly policies in the USA, the most energy and emissions
intensive region in the world, from both politicians and the general
public alike,” it explains. A series of initiatives “raise the
prospect of renewable energy joining the mainstream alongside
conventional power sources” to push the U.S. from second place into
first, bumping Spain which has held top place in the index since
March 2005.
The quarterly report ranks 20 countries on five indices: all
renewables, wind, solar, biomass and other, and a renewables
infrastructure index, to provide a score for the suitability for
individual technologies in each country. The overall index is based
on 85% for wind (70-30 ratio for onshore-offshore), 5% for solar and
10% for biomass and others (includes small hydro, landfill gas,
wave, tidal and geothermal, but excludes energy from waste).
The U.S. scored 71 overall, with 72 for wind and 75 for solar, while
Spain was 68 (69, 72). India was in third place with 63 (64, 61), UK
in fourth with 62 (64, 48), Germany in fifth with 61 (61, 71) and
China in sixth spot with 57 (60, 42). There was a four-way tie for
the balance of the top ten, with France, Italy, Portugal and Greece
all scoring 56 on the overall index.
Ernst & Young calls the U.S. rise a “surprise move” that reflects
the “significant growth opportunities in the wind sector” in that
country. “Higher targets for emissions in California, and
unprecedented support across an increasing number of states
employing the RPS mechanism, are seen as key drivers behind the
score.”
China rose two places due to the level of investment that is flowing
into the renewable energy market in that region, and the policy
revision in Greece has given investors hope for the development of a
significant pipeline of wind projects awaiting approval. Norway’s
improved score reflects a modest new subsidy regime announced in
October while Italy dropped due to uncertainty over the future of
its green certificate mechanism.
Britain’s high ranking in the long-term wind index is due to the
“large amount of unexploited wind resource, strong offshore regime
and attractive tariffs available under the ROC system; conversely,
although Denmark has the highest proportion of installed wind
capacity to population level, it scores relatively low because of
its restricted grid capacity and reduced tariff incentives,” the
report explains.
Investment in green power capacity in the U.S. totalled US$3.5
billion last year, and is expected to increase this year and
continue rising in future, with energy security cited as the main
policy driver, the report adds. China’s renewables installation will
be in line with economic growth, but investment in renewables is the
highest in the world, with $17 billion invested in 2005.
“Increased public desire for renewable energy brings with it a
responsibility: to meet public demand and legislated targets for
renewables capacity, whilst ensuring that such capacity is not at
excessive public cost,” it explains. Green certificate systems
“will, inevitably, favour the cheapest technology - namely onshore
wind,” but the report warns that “political uncertainty without
orderly transition prejudices investment,” and Spain, Italy, Britain
and the Netherlands must cope with that issue.
“The good news is that all markets appear to show sensitivity
towards existing investors, and regulators are becoming increasingly
appreciative of the battle emerging over manufacturing capacity,” it
notes. “There is no doubt that competition for resources will become
increasingly intense as it becomes clear that there is no
alternative but to have renewables as a key part of a country’s
energy mix.”
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