For the past 12 years, U.K.-based EY has published a list of the best countries for renewable energy investments based on government policies, renewable projects, climate change regulations, energy demand, and overall economic stability.
As of the second quarter of 2015, the U.S. has surpassed China to become #1 on this list. This is due mainly to President Obama’s Clean Power Plan, which sets ambitious targets for emissions reduction for the next 15 years.
Below the U.S. and China, India also took Germany’s #3 position. India’s state and market reforms, along with increased foreign investment, put it in a position to ramp up renewable capacity.
Germany, on the other hand, has begun a new auction regime, which will not slow investment, but will slow the completion of several projects.
Brazil and Chile became #8 and #9 on the list for renewed interest in solar energy technologies.
Unfortunately, these moves meant someone had to be knocked off the list. This quarter it was the U.K. that dropped from the top 10 and landed as #11.
This comes in large part from the country’s recent cut of renewable energy subsidies, specifically for onshore wind and large-scale solar PV projects.
The U.K. government asserts that this will help save consumers money, but EY energy corporate finance leader Ben Warren cites that the country’s continued exploration into shale gas and carbon capture storage is doing the opposite.
“Investors don’t know what the government is trying to achieve,” said Warren.
In response, the U.K. Department of Energy and Climate change explained: “As [renewable energy] costs continue to fall and we move towards sustainable electricity investment, it becomes easier for parts of the renewables industry to survive without subsidies.”
This may be true, but it may also be too soon to cut that line of government support. There will be no chance for “sustainable investment” if investors lose confidence in the market and put their money elsewhere.
A similar worry is creeping up on the U.S. The country’s own renewable subsidies are being cut in 2017, which could negate the investor confidence brought on by the Clean Power Plan and scare investors into other renewable markets.
Governments will have to be aware of the state of their country’s renewable markets before cutting subsidies and consequently cutting investments.
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Until next time,
Keith Kohl
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