China's renewables market has become the most attractive destination for investors looking to invest in the sector, knocking the U.S. market from the top spot, according to EY's latest Renewable Energy Country Attractiveness Index. The quarterly report ranks 40 renewables markets on the attractiveness of their energy prospects.
In a significant reshuffle at the top of the index, EY says China has returned to No. 1 for the first time since May 2013.
‘China's government is placing increased emphasis on renewable energy as the country battles pollution, ushering in new market opportunities for foreign investors," explains Gil Forer, EY's global cleantech leader. "Aggressive policy targets, an increased focus on consolidation and the roll-out of pilot carbon emissions trading schemes also support the country's pollution reduction initiatives and reflect the renewables sector's strategic economic value.’
As for the U.S. renewables market, the report says that despite significant deployment and investment opportunities in the country, congressional gridlock and drawn-out approvals have had a negative effect on the country's ability to provide investors with long-term certainty, causing the U.S. to fall to second place. Furthermore, the report says both the U.S. and Europe continue to lose ground to emerging markets
Elsewhere in the index, only two of the traditionally attractive markets managed to hold on to their previous rankings. Germany and Japan remain static – in third and fourth place, respectively – as their markets reflect on the latest legislative and energy strategy updates.
In contrast, the report says mixed signals and policy tinkering have prompted yet another drop in the rankings for the U.K. and Australia, to seventh and 10th place, respectively. At the same time, Italy and Spain are seeing the repercussions of retroactive changes to support mechanisms, with both falling several places down the index, the report adds.
On the other hand, the report says dynamic emerging markets are becoming more prominent in the index. India jumped to sixth place as an energy sector overhaul by the new government looks set to galvanize public and private renewables investment. In what is becoming a consistent theme, the report says Brazil, Chile, South Africa and Kenya have again risen up the index, thanks to robust deployment pipelines and consistent policy support while major project financings in the Netherlands and Israel have prompted a boost in the rankings for these markets.
‘The significant movement in our index reinforces the view that attractive renewable energy prospects are no longer the remit of only a few mature markets – they are truly global, providing opportunities in both developed and developing markets," says Forer. "This shifting landscape will drive corporations and governments to review their energy strategy to ensure long-term competitive advantage.’