Feb 28: According to Ernst & Young's latest quarterly Renewable Energy Country Attractiveness Index (CAI), In 2011, American renewable energy investment in solar and wind technologies dominated the global market, propelling the United States past China into the leadership position. The company also issued a new forward-looking report -- United States Renewable Attractiveness Indices -- that benchmarks the U.S. state investments that were the driving force behind the shift, offering insight into the nation's diverse renewable energy markets, energy infrastructures and their suitability for individual technologies. Most notably, the report highlights that, despite uncertain macroeconomic conditions, renewable energy -- particularly in states like Massachusetts, Colorado, Texas and California -- is positioned very favorably to benefit from future investments.
On the global scale, Ernst & Young indicates that while 2011 saw record levels of new investment into clean energy, especially solar technologies, the outlook for 2012 is far less certain. The renewables sector will continue to prosper in 2012 in the emerging markets, thanks to ambitious installation programs securing investments, while more established markets will face increasing financial constraints, especially within the Eurozone. The company explains that 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 will lead to almost inevitable consolidation of the wind and solar sectors and increased vertical integration, as equipment manufacturers seek ever more innovative routes to market.
Regarding the COP17 agreement in Durban to sign up to an unspecified legally binding treaty by 2020, Earnst & Young indicated the agreement "was welcome but weak." They said, "It did not remove carbon and climate change wholly from the agenda, but it hardly provided an imperative to invest. The subsequent withdrawal of Canada, Japan and Russia from the Kyoto Protocol, fresh after the home planes had landed, foretells the difficulties to come. The 2015 to 2020 negotiations will thus take place at a time when a material increase in global emissions by the new growth economies is likely to have outstripped any reductions in the West, even after any impacts from a recession. Higher rises in global temperatures than the two to three degrees currently contemplated may by then be on the cards -- if emerging scientific consensus is accepted."
On the U.S. front, Earnst & Young indicate, "While California's dominance of the All Renewables Index was anticipated, the top five rankings of states like Colorado, Massachusetts and Texas demonstrate a commitment to growing energy infrastructures across the nation. For instance, New Mexico and Colorado came in second and third respectively in the 'All Renewable Index' because of consistent growth and strong potential across all renewable energy technologies. Massachusetts and Texas tied for fifth with a strong draw for solar and wind investment respectively."
Michael Bernier, Senior Manager, National Tax, Ernst & Young LLP said, "The State Attractiveness Indices data enables us to look at specific states and regions and understand what they are doing with renewable energy development and infrastructure on a microscopic level. It enables us to fine-tune the discussion about the overall U.S. market. Moreover, this report uncovers the new national leaders in energy infrastructure. Massachusetts, for example, is a top-five solar market due to a multitude of state-level initiatives, even though it is not the sunniest market. Like Colorado, Massachusetts is building up its research and development in addition to its manufacturing facilities. These factors make renewable energy development in these states possible and further investment probable."
In addition to providing a baseline for future reports which will be released semiannually, the United States Renewable Attractiveness Indices looks at issues that will enhance or impair further development in the renewable energy markets, such as incentives like the Production Tax Credit, wind power's key incentive. The continuance of this tax credit would have a significant impact on what has become a thriving domestic manufacturing sector.
Access a release from Ernst & Young (click here). Access the global report (click here). Access the U.S. report (click here). [#Energy/Renewable]
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