Government Policies and Political Backing Impact Growth of Renewable Energy Market

By G.P. ThomasSep 6 2012

Ernst & Young has released its latest quarterly report on the global renewable energy market titled, “Renewable energy Country Attractiveness Indices”.

The indices represent scores assigned to 40 countries on the basis of the infrastructure available for renewable energy, the market growth and the countries’ suitability for technologies pertaining to renewable energy. According to the report, China is at the number one spot of the All Renewable Index (ARI) for the second quarter of 2012. This ranking is attributed to China’s expansion of its solar capacity target for 2020 to 50 GW. China has commenced domestic installations of solar panels on war footage to counter the excessive supply of panels. The country however needs to face challenges in the form of issues in grid transmission and excessive supply of solar panels and wind turbines.

The United States and Germany share the second spot on the ARI. While Germany has gained a point by virtue of the governmental policies to stabilize the solar sector with revised solar PV rates and compensation for impediments to offshore wind power generation, the US has lost 1.5 points as a result of ambiguity over the long term strategy for renewable energy and uncertainty over the extension of the vital Production Tax Credit (PTC) benefit for wind power projects. The contrast between the two economies has resulted in leveling of the playing field for US and Germany. India lost a point to occupy the fourth place in the ARI. The recent massive power blackouts in India indicate insufficient private investments in renewable energy which is expected to worsen as a result of policy reforms. Deteriorating economic conditions have pushed Italy down to accommodate UK at the fifth place although the policies announced by UK for renewable energy generation are considered to be lacking in certainty and transparency.