By Kari Williamson

In its latest quarterly global renewable energy Country Attractiveness Indices report (CAI), Ernst & Young says the renewable energy sector will continue to prosper in 2012 in the emerging markets, however, thanks to ambitious installation programmes securing investments.

Market pressures

The sovereign debt crisis continues to stifle renewable energy investment in the Eurozone, along with Governments scaling back their ambitions for the sector. Simultaneously capital scarcity and increased competition from Asia will continue to put pressure on developed markets for the foreseeable future.

This could lead to consolidations in the wind and solar sectors and increased vertical integration, as equipment manufacturers seek ever more innovative routes to market.

There is no change at the top of this edition of the CAI. Yet, emerging markets are powering up the league table.

South Africa has moved up 7 places to 16th on the back of a very successful first round of a new tender bidding process, totalling 1.4 GW of new capacity. South Korea climbed a point to 14th across all technologies with Government backing for bold ambitions, especially in offshore wind.

Romania (13th) and Ukraine (32nd) also increased their appeal — mainly due to strong wind markets.

Another part of the world that holds great potential for renewable generation is the Middle East and North Africa — especially for solar power. Most of the countries already have operational pilot projects as well as ambitious plans for significantly sized installations.

Top five

1. China

While China continues its prominence, some mixed signals have emerged: Increased solar targets (15 GW by 2015) to soak up excess supply, together with grid infrastructure issues that are preventing wind connections. And while domestic market growth plateaus, Chinese corporates are increasingly looking to Europe to acquire stakes in relatively low-priced targets. For example, China Three Gorges has purchased a significant portion of Energias de Portugal and LDK Solar has offered to purchase Germany’s Sunways.

2. USA

Meanwhile, the US, in second position, has completed a bumper year for the wind industry. The now-expired Treasury Grants and loan guarantee programme underpinned a surge to around 7 GW of installed capacity. And recently, President Obama appeared to indicate that the Production Tax Credit (PTC) support mechanism would be extended beyond 2012, and we have scored the US on this basis.

3. Germany

Third placed Germany gained a point due to continued funding for renewables to fill the nuclear gap. Development bank, KfW, and utilities RWE and E.ON have promised hefty investments in coming years. The solar PV market boomed in 2011 with more than 7 GW, but a 15% tariff cut and the threat of monthly reductions will suppress activity in 2012.

4. India

India remains static in fourth place with a score of 63 in the All renewables index as the Government announced plans to avoid the costly solar FITs (that have hindered Europe recently) by moving to an auction system for developers. Further, large strides continue to be made in the Indian solar industry as 400 MW were connected to the grid in the current fiscal year, albeit two-thirds less than originally planned.

5. UK

In the UK, several large offshore wind projects are in the pipeline, including the world’s largest wind farm planned in Scotland. At 1500 MW, the £4.5 billion project would deliver the same amount of power as the average coal power plant. A 300 MW plant in Kent will receive a 7-year £150 million loan from the EIB, while in the bioenergy industry a £120m 53 MW wood-fuelled
biomass plant in the county of Middlesex has received the go-ahead from the Government. As a result, the UK has climbed a place into fifth position.