Power markets in Asia are becoming increasingly attractive for renewable energy investments, according to EY.
In its latest index showing the attractiveness of countries for renewable energy development, EY says that China, India and Japan are continuing to strengthen as markets and are closing the gap on their Western counterparts in the top 10 of the index.
Although the USA has retained its first place in EY's rankings, market liberalization is helping China to challenge that position. This trend is being helped by continued policy uncertainty in the West, where key markets such as the UK are slipping down the EY rankings.
China stands in second place and it could eclipse the USA in both solar and wind by the end of the decade, says EY. The growth in China is being driven by a more market-based approach as well as the introduction of more ambitious renewable energy targets.
"The dual objectives of driving local manufacturing and tackling air pollution create an extremely favourable outlook, which is reinforced by a willingness of the Chinese government to open up the sector to provide greater competition, and therefore opportunity, for in-bound investors," said Ben Warren, EY's Global Cleantech Transactions Leader.
EY also believes that revised incentive schemes, large-scale projects and ambitious capacity programs could help Japan and India to take over their closest rivals in the index rankings. Indonesia and the Philippines have also appeared in the rankings for the first time.
However, mixed signals for Japan following the release of a draft national energy plan that favours nuclear and coal, and persisting macroeconomic challenges and solar trade disputes in India are preventing a climb up the rankings in the immediate term.
In the USA, the continued growth of the solar market, a reinvigorated capital market and the prospect of 45 GW of coal retirement are painting a "promising picture" for the renewables sector. However the country risks another cycle of boom-bust investment because of uncertainty over tax credits and equity financing.
The UK has slipped one place down the rankings for the second consecutive quarter and is now in sixth place, its lowest level since late 2012. The reasons cited by EY include the decision to freeze the carbon floor price support, plans to end financial support for onshore wind and an announced review of support for large-scale solar.
Sian Crampsie
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