Professional services firm EY has ranked the United States as the world’s most attractive market for investment in renewable energy – for a large part due to the Inflation Reduction Act passed in August 2022, which is viewed as a game changer for the country’s green hydrogen industry.
Since 2003, London-based EY has ranked the world’s top 40 markets on the attractiveness of their renewable energy investment and deployment opportunities.
China, at number two this time, remains committed to accelerating its renewable energy transition as it seeks to bring emissions to a peak by 2030 and achieve net-zero emissions by 2060.
In Europe, Germany climbs one place to third position as the renewables sector is expected to triple its expansion in the coming decade, bolstered by its latest Easter package commitment to renewables.
The UK lost its spot in the top three, taking fourth place after having lost its top ranking for installed offshore wind capacity this year to China.
Other Southeast Asian markets within the index include the Philippines in 27th place, Vietnam in 36th place, Indonesia at 39th, and Thailand at 40th. Indonesia is a new entrant to the top 40 countries within the index after the country introduced a new legislation to promote renewables.
“The last couple of months have seen positive developments across Southeast Asian countries. For example, Thailand launched a 5GW tender; Malaysia is opening up to 600 MW of corporate power purchase agreements; the Philippines awarded close to 2GW through its Green Energy Auction Program tender; while the early coal retirement scheme in Indonesia is progressing and would be expected to enable a faster rollout of renewable energy. This sends a strong signal that Southeast Asia is committed to meeting its targets and creating a pipeline for developers and investors,” says Gilles Pascual, EY Asean power & utilities leader.
Overall, EY’s report shows that governments and the private sector around the world are accelerating their renewables programs to help wean themselves off imported energy amid continuing geopolitical tensions and economic uncertainty.
Another driver for renewable energy systems is the growing financial attractiveness of decentralised energy systems and smart grids. “The cost of technologies is falling and regulatory support is increasing, notably the tax benefits of the US Inflation Reduction Act and the European Commission’s REPowerEU plan,” said Ben Warren, a partner at EY and chief editor of the report.
Against all the investments pouring into renewables, EY’s report warns that there are still significant challenges to overcome, such as building weather-proofing energy infrastructure to protect it against extreme hot and cold weather, developing more effective energy storage systems to meet the intermittent nature of renewables, or to ensuring there is enough capacity to accommodate the accelerating rollout of electric vehicles.
“In addition, cybersecurity will be an issue, given the interconnectedness of decentralised energy ecosystems, with the increased potential attack surface area making such systems more vulnerable to cyber attacks,” said Warren.