Growth in the solar sector in the past year has been faster than anticipated, so we have revised the weighting applied to each technology in calculating the ARI to reflect this. We have also adjusted the proportion of offshore wind and CSP in the respective indices.
For the first time, we show the ARI to one decimal place. The index’s expansion to 40 countries, and its increasingly noticeable contraction, which has reduced the gap between traditionally “developed” markets at the top and “emerging” markets lower down, has produced an increasing number of joint positions. Presentation to one decimal place aims to minimize this, and allow greater visibility of each country’s relative attractiveness as determined by rank.
China retains the top ranking but falls a point amid concerns that wind sector growth is stalling as the grid infrastructure catches up with impressive recent growth. A boost in installations in the solar sector is expected as the focus becomes more domestic, using excess panels in the supply chain. The scope for increased foreign investment in the sector will likely be limited in the short term though.
The US continues to suffer from political wrangling, the electoral cycle and uncertainty around its long-term energy strategy. The expiry of key funding programs at the end of 2011, and the PTC for wind projects’ pending expiry at the end of this year have left its renewable energy sector in limbo. All of this has produced a two-point drop in the index.
Germany also drops a point but retains third-place. To cope with a high rate of new solar installations, the Government has brought forward further FIT cuts and introduced more frequent reductions. Germany’s offshore wind sector also faces significant challenges connecting to the grid.
Following expiry of a key tax break for wind projects, India also falls an index point. Q1 saw mixed messages for the solar sector, keeping the solar index neutral overall.
Italy has also fallen a point following the release of two decrees that would slash solar subsidies by 35% and those for most other renewable technologies by 15%.
The UK and France remain in sixth position with no overall score change. The UK’s solar sector received a blow following the Department of Energy and Climate Change’s proposals for further FIT cuts. The renewable energy sector as a whole, and offshore in particular, received a boost from plans for significant spending programs to improve the transmission infrastructure for renewable energy source projects. The UK’s marine sector also saw a flurry of activity in Q1.
In France, April saw the award of round one contract as part of its first offshore wind tender, with state-owned utility EDF in partnership with Alstom winning three for offshore wind sites. The fourth was won by a consortium led by Spain's Iberdrola. The companies will build c.2GW of offshore wind capacity at an estimated cost of €7b.
Canada has dropped a point following Ontario’s intention to reduce premium rates for wind and solar power in a two-year review of a program covering 4.6GW.
Japan has jumped to ninth place following April’s announcement of government recommendations on the 20-year preferential prices for solar, wind, geothermal, biomass and hydropower, ready for 1 July 2012 implementation. The rates are tipped to rank among the world’s most attractive support mechanisms, with tariffs likely to help investors generate very attractive returns. The Government also granted geothermal developers access to national parks to conduct surveys and build plants. The parks contain an estimated 80% of Japan's estimated 23GW of geothermal resource.
While Brazil’s wind sector is battling project delays, its solar sector is experiencing strong growth thanks to new regulation, favourable funding programs and a growing project pipeline. As a result Brazil’s index position remains unchanged.
Spain has fallen three places to join 13th as a result of an increasingly stagnant wind market and mixed signals for solar. The ongoing suspension of premium power rates for solar PV, and proposals to slash subsidies for CSP power plants may be offset by signs of upcoming subsidy-free solar projects.
Poland has risen a place following a Government U-turn as a result of strong industry objections to a December bill which would have removed the guaranteed purchase price for green power and cut onshore wind support by 25%. This suggests the Government agrees that the market is to move away from a guaranteed purchase price.
Mexico has climbed two places following the passing of a climate change law in April, which includes, with emissions targets, the stipulation that 24% of its electricity should come from RES by 2024. Its wind capacity passed the 1GW mark this quarter, with a further US$20b (€15b) of investment expected over the next 10 years.
The Netherlands dropped a point following the launch of its new subsidy scheme in March, which forces renewable energy technologies to compete for a limited budget. There is concern that this will result in an overemphasis on cheaper technologies at the expense of less mature ones, and under diversification of the energy mix.
Austria received a boost following EC approval of its 2012 Green Electricity Act, which will support additional funding and contains government assurances not to change FITs.
Taiwan has fallen a point following an announcement that it has increased preferential power prices for biomass projects but cut the rates paid for wind and solar installations.
Chile jumped a point following a very strong Q1. The Government is evaluating a bill that would require 20% of Chile’s electricity to come from RES by 2020, up from the current 5% mandate. The bill could trigger development of as much as 4GW of RES capacity by 2020, and US$10b (€7b) investment. Q1 also saw significant activity across both solar and geothermal markets.