US and China still top renewables markets in ‘volatile times’ - EY

The US and China hang onto their titles as the top destinations worldwide for renewable energy investment despite accelerating geopolitical tensions, in the 60th edition of advisory firm EY’s renewable energy country attractiveness index (Recai) report. Meanwhile, Greece shot up the rankings thanks to a successful tender and Vietnam fell the furthest after failing to attract sufficient investment levels.

US maintained its top investment position after passing the Inflation Reduction Act, pic credit: Ørsted

Management consultancy EY uses its index to rate how attractive countries are as an investment destination for individual renewable technologies and for renewables overall.

In its latest edition, the report focused on how governments around the world have been accelerating their renewables programs in the face of continuing geopolitical tensions and economic uncertainties.

EY described the current geopolitics as “volatile and uncertain”, and added: “The transition to renewable energy has become even more urgent amid soaring gas prices, geopolitical tensions, supply chain shortages and extreme weather events.”

Its most pertinent findings were that distributed energy resources (DERs) and smart grids will be key to securing energy supplies and getting the world to net zero by 2050. And, near-term policy interventions are helping reduce risks in the system, but “more regulatory support is needed across the board.” Finally, cybersecurity will need to be prioritised as energy infrastructure incorporates greater levels of new technology.

In pole position of the Recai index was the US, for which the Inflation Reduction Act, passed in August 2022, was cited as being a “game changer” for the country’s emergent green hydrogen industry.

Next came China, which is set for a “record year” according to think tank China Renewable Energy Engineering Institute, which has projected that the market will have installed a record 156GW of wind and solar power this year.

Up one from last year was Germany in third position, having swapped places with the UK. The government’s approval of the Easter Package and its ambitious annual auction volumes and wind energy installation targets have been cited as the reason for the country’s improved position.

In fourth was the UK. China has recently overtaken it as the nation with the highest installed capacity of offshore wind but the UK does still have the biggest offshore pipeline. Its fourth allocation round of its contracts for difference scheme saw many successful offshore wind projects and investment flows have also been strong.

This year’s biggest movers and shakers were Greece and Indonesia who moved up four and three places within the index, respectively. Greece awarding 538MW of capacity in its most recent renewables tender, and Indonesia’s plans to retire 15GW of coal-powered generation were found responsible for the countries’ improvement.

In contrast, Vietnam and Turkey had the biggest drops in positions. The former fell six places in the index because it has been struggling to attract sufficient investment to meet its capacity targets, the report found. The latter dropped five places from last year because of the devaluation of its domestic currency, the Turkish lira, which diminished investor competitiveness.