The United States has overtaken China as the most attractive country in the world for renewables investment and the global clean energy sector is expected to bounce back quickly despite the coronavirus pandemic, research showed on Tuesday.
In an annual ranking of the top 40 renewable energy markets worldwide by consultancy EY, the United States was ranked first for the first time since 2016, followed by China.
U.S. growth was largely due to a short-term extension of a production tax credit for wind projects and plans to invest $57 billion to install up to 30 gigawatts (GW) of offshore wind by 2030, the report said.
Wind projects which began construction in 2016 need to be operational by the end of the year to qualify for the U.S. tax credit which is forecast to create a surge in installations this year.
China’s growth in renewables has slowed, as the government looks to wean the market off subsidies. This, coupled with reduced demand as a result of COVID-19, has caused China to drop to second in the index from first last year, but forecasts remain optimistic for long-term growth, the report added.
France was ranked third, followed by Austria, Germany and Britain. India slumped to seventh place, having been third last year, due to warnings it might miss its 175 GW installation target by 2022.
Despite delays to some projects due to logistic issues amid the coronavirus pandemic, the global renewables sector is expected to bounce back quickly as the long-term drivers for investment remain strong, the report said.
"There was much discussion around environmental, social and governance issues earlier this year and this, along with climate change, is still the dominant long-term driver for renewable investment," said Ben Warren, EY global power & utilities corporate finance leader and chief editor of the report.
"As a result of the pandemic, pollution levels have fallen dramatically through reduced fossil fuel consumption. A greater focus on a sustainable long-term energy future, therefore, works in favor of clean energy, in particular wind and solar, together with storage," he added.
(Reporting by Nina Chestney; Editing by Emelia Sithole-Matarise)