The FINANCIAL — Policy shifts around the world have prompted a major shuffle of EY’s Renewable energy country attractiveness index (RECAI), with the US replacing China at the top of the list after losing the position a year ago, the new report reveals.
President Barack Obama’s much-awaited Clean Power Plan (CPP) in the US 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 renewable energy investment over the next 15 years, according to EY.
Ben Warren, EY’s Global Power & Utilities Corporate Finance Leader and RECAI Chief Editor, says:
“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.”
Policy changes are having a negative influence, however, where they slow or stall momentum in markets where grid parity is almost within reach, such as the UK, Germany, Spain and Australia, each falling in the RECAI rankings this issue.
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.
Among Europe’s other renewables powerhouses, a wave of policy revisions to reduce or remove support for onshore wind and solar projects in the UK threaten to paralyze the industry. The country fell out of the RECAI top 10 for the first time in the publication’s 12-year history.
Latin America’s hottest markets have, meanwhile, cemented their position in the RECAI top 10. Government proactivity in addressing key challenges, such as low tariffs, and an increasing focus on its untapped solar market moved Brazil into eighth place. Chile also moved up the RECAI, into ninth position, following the success of renewables in the country’s technology-neutral energy auctions and a continuing flow of large-scale project approvals.
Warren says: “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.”
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