Report: Tightening Budgets Lead To Renewable Energy Challenges

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The legacy of the global financial crisis continues to create challenges across the global renewable energy market, according to Ernst & Young's latest Renewable Energy Country Attractiveness Indices.

Although new investment in clean energy reached unprecedented levels in 2010, climbing 30% to $243 billion, some countries and technologies are finding the economic conditions deeply challenging, leaving the market in an overall state of flux, according to the report.

Although falling stocks, inflationary pressures and indications of an unevenly balanced supply chain have led to some concerns over whether its meteoric growth rate can be sustained, China remains the clear global renewable leader and is still experiencing growth in its wind and solar markets. For example, China's total installed wind capacity grew 64% during 2010 to reach more than 42 GW.

China's closest competitor, the U.S., has approved a one-year extension of the Treasury Department's cash-grant program, providing some much-needed respite to its renewable energy market.

Last year, the U.S. installed 5.1 GW of wind power, barely half of 2009's level and less than one-third of China's 16.5 GW in 2010. However, President Obama used his State of the Union address last month to set an ambitious 80% clean energy target for 2035.

‘Where energy policy is less directly linked to job growth in the clean energy sector, we are finding governments and policy-setters increasingly focused on delivering a low-carbon economy in the most affordable manner, possibly at the cost of longer-term economic value,’ says Ben Warren, Ernst & Young's U.K. environment and energy infrastructure advisory leader. ‘Time will tell whether white flag waving in terms of [carbon dioxide] reduction ambitions and the pursuit of investment in some of the more mature renewable energy markets will prove costly.’

In terms of technologies, 2010 was a good year for offshore wind, with new capacity growth of 51%. However, onshore wind was down 7% globally, with a 14% fall in Europe.

SOURCE: Ernst & Young

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