Renewable energy country attractiveness indices

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The Country Attractiveness Indices track and rank 40 countries' renewable energy markets across a selection of technologies each quarter.

Following a record 2011, investment in clean energy in Q1 2012 was the weakest since the worst of the financial crisis three years ago.

The gap between developed and emerging markets in the indices has noticeably reduced. In the West, fiscal challenges have dampened public policy support, while developing countries are introducing incentive mechanisms and implementing national energy strategies.

Renewable technologies are becoming more cost competitive, stimulating global activity. The price of solar PV modules, for example, fell by 50% in 2011. The sector continues to face significant challenges though:

  • the Eurozone debt crisis and reduced policy support in core European markets
  • competition from Asia
  • decreasing carbon prices
  • tax credit uncertainty and a shale gas boom in the US.

As more mature technologies move closer to achieving grid parity, it looks like the sector will flourish long term. In the face of these challenges, though, the short- to medium-term outlook is less sure.

While the rankings at the top of the All renewables index unchanged, all five of the top countries have lost points.

China’s wind sector continues to suffer from insufficient grid access, while a boom-bust scenario has returned to the US following uncertainty over the expiry of key stimulus programs. In Germany, more solar tariff cuts and grid challenges for the offshore sector reduce short-term attractiveness, and the end of a key tax break incentive in India is likely to affect wind sector growth this year. More cuts to the preferential rates awarded to renewable projects in Italy complete this trend.

The news was more positive in other parts of the index though, with several countries including Mexico, Chile and Austria announcing new clean energy generation targets or reaffirming government support through incentive schemes.

In Poland, a rapid U-turn on a bill to remove guaranteed power prices for renewable projects acknowledged the market’s importance. Japan climbed the index following rapid recovery from the Fukushima nuclear disaster and the announcement of favorable feed-in tariff levels.

Our lead article summarizes the results of a global survey of 100 US$1b companies. Increased energy efficiency, renewable energy use, and self-generation suggest that only those with a strong, diverse energy strategy will create competitive advantage in an increasingly resource-efficient, low-carbon world.

This issue we introduce a new regular feature, which this quarter looks at solar and energy efficiency supply chains. We’ll feature other subsectors in coming issues.

We also hope you enjoy the separated transactions and finance, and equity trends analysis.