Europe is going from leader to runner-up, as China maintains the top spot in renewable energy competitiveness. The picture emerges from EY’s biannual Renewable Energy Country Attractiveness Index (RECAI), a ranking of the 40 most competitive markets for the industry.

China overtook the US in May and is bound to keep the first place as it continues to decarbonize its economy. Its PV capacity rose 21 GW over the past six months, wind curtailment fell 7 % over a year, new targets aim to cancel or defer 106 GW of coal power and the government is making plans to ban the combustion engine. Among European countries, the best placed is Germany, confirmed in 4th position after India and the US.

“Below China and US, the German onshore wind market is probably the next largest market at the moment, with the auctions successfully attracting multiple GW of capacity. Add to that Germany has the largest repowering market in the world and the second largest offshore market after the UK. We see no significant change to this wind position for Germany,” explains Phil Dominy, Assistant Director for Corporate Finance Energy and Infrastructure at EY.

“Although new solar capacity in Germany is not reaching the heady heights of about 5 years ago, we expect that auctions will still lead to a GW or two over the next few years. This is a long way short of China, the US and India, but still the solar leader in Europe.”

France, however, is catching up. Because of new tenders and acquisitions, and strong support for renewables by President Macron, the country has climbed two steps, from 8th to 6th position.

The United Kingdom maintains the 10th place, after awarding a contract for difference (CfD) over 3 GW offshore wind at the historically low price of GBP 57.50/MWh (half 2015’s). The British government also just confirmed funding of up to 557 million GBP for new renewable energy projects in 2019. Among other EU countries, Denmark fell to 14th position, while the Netherlands rose to 16th. The new Dutch government is planning to boost renewables, especially offshore wind, as it moves away from coal.

“Generally European countries have fallen down the Index over the past 5 years, while emerging markets, such as China, India, Chile and Mexico, have climbed,” says Dominy. “Eastern European countries are yet to recover from large falls, while southern European countries such as Spain and Italy appear to now be recovering, as solar projects reach grid parity.”

All first five positions have not changed compared to six months ago. But India’s second place is becoming more precarious as wind energy power purchase agreements have been cancelled and doubts have emerged over the target of 100 GW solar power by 2022. The US stalls in third place as climate change policies are rolled back and the solar market is unsettled by the threat of new import tariffs.

On the other hand, Middle East and North African countries (Morocco, Egypt and Saudi Arabia in particular) have been climbing the index and Algeria entered the ranking in 38th position.

“The index highlights that government policy is pivotal in driving renewable energy development globally. As it becomes increasingly clear that time is running out for legacy energy supply models, countries are vying for their place in a clean energy future,” commented Ben Warren, EY Global Power & Utilities Corporate Finance Leader and RECAI Chief Editor.

Claudia Delpero