The renewable energy sector is entering a new phase of subsidy-free growth across the world, according to the 53rd EY Renewable Energy Country Attractiveness Index (RECAI).

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Mainland China and the US remain at first and second positions respectively on the top 40 ranking, while France moves up two positions to third, led by a new focus on floating offshore wind capacity and a doubling of its annual targets for onshore wind capacity additions.

 

Other notable gains have been seen in South Korea (24th position, up by seven) and Vietnam (26th – up 17 places), which made strong moves with their plans to build new renewable energy projects of 4GW and 475MW respectively. Elsewhere, Norway (36th) and Finland (39th) are bouncing back with planned new investments shored up by power purchase agreements (PPAs) in a near subsidy-free environment. 

 

As renewable energy grows into an increasingly unsubsidised sector, where projects compete in the market on their economic and environmental merits, the latest RECAI examines two related characteristics of this new landscape: how projects are grappling with new-found exposure to wholesale power prices and market imbalance – known as merchant risk – and the growing role of corporate energy buyers in underwriting clean energy projects.

 

“In this more complex, subsidy-free environment, renewable developers must work harder and smarter to find the revenue certainty they need to finance or monetise their efforts,” advised Ben Warren, EY’s Global Power & Utilities Corporate Finance Leader. “Europe has led the way with unsubsidised projects in areas with good renewable resources, and multiple projects across the Nordics, UK, and Spain are being developed that are being backed by private investment and corporate PPAs to provide the required stability. 

 

“For the renewable energy market overall, however, a future without government subsidy is one that will no longer be vulnerable to sudden shifts in policy, or to retroactive changes to promised tariffs. Instead, it will be one where market forces impose discipline, drive efficiencies and accelerate the cost reductions that have allowed the sector to stand on its own two feet.”

 

Corporate purchases of clean energy rocketed last year, with PPAs supporting 13.4GW of clean energy generation – more than double the 6.1GW of PPAs in 2017 – as companies and countries become more comfortable with a subsidy-free renewable energy environment. 

 

For the complete top 40 ranking, visit: ey.com/recai