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In 2020, well over 200 GW of wind and solar PV capacity was
added globally, further reinforcing the importance of renewables in
the global power mix. While the lion's share of 2020 capacity
additions came from just two markets—China and the United
States—close to 50 markets recorded double digit growth in the
past year.
Sound fundamentals and the availability of an attractive yet
phasing down subsidy positioned the United States as the most
attractive market for renewables investment according to IHS
Markit's new Global Renewable Markets Attractiveness
Rankings. In contrast, Mainland China, which accounted for
over half of the world's total non-hydro renewables additions last
year, ranked third on the attractiveness ranking—just behind
number two Germany—as difficulties in accessing the market
weighed down its overall score.
In individual technology rankings, the United States also
retained the top ranking in investment attractiveness for onshore
wind and solar PV. The United Kingdom—which failed to crack the
top ten in the combined rankings due to its relative lack of
support for developing onshore wind and solar PV—ranked as the
most attractive market for offshore wind investment.
France and Spain secured the fourth and fifth spot,
respectively, based on strong market fundamentals backed by stable
procurement mechanisms and long-term clean energy targets. Similar
factors also boosted the ranks of Japan (Rank 8) and the
Netherlands (Rank 9), further supported by their strong impetus
towards offshore wind—expected to be the fastest growing
renewable energy technology in the next decade.
The ongoing transition to competitive procurement and a growing
need for grid-parity renewable energy has forced investors to look
beyond financial incentives, and focus on factors including
economic stability, market liberalization, and investor
friendliness. With renewables increasingly forced to compete on
cost with other generating technologies, investors are on the
lookout for established yet fast growing markets to minimize
risk.
Recent announcements of 100% carbon neutrality targets from
major emitters like mainland China, Japan, and South Korea are
important milestones in the path towards net zero and will provide
a strong upside to renewables build. Even so, while strong
ambitions are perceived positively by investors and testify to a
market's commitment towards renewables, this needs to be backed by
a well-conceived implementation framework and adequate
infrastructure.
A growing number of markets are facing infrastructure
preparedness issues on their quest to decarbonize. These include
India (Rank 6) where onshore wind build has suffered from lack of
grid and land access, Australia (Rank 7) where disconnect between
federal and state ambitions have increased investor uncertainty,
and Vietnam (Rank 12) where mushrooming wind and solar additions
have started to expose fault lines in the national grid.
IHS Markit's Global Renewable Market Attractiveness Rankings is
an interactive tool which allows identifying the most attractive
markets for renewables investment globally. Utilizing an integrated
proprietary methodology, the rankings provide comparable views of
35 markets globally for renewables, solar PV, onshore wind and
offshore wind investments. The markets covered in this first
release are expected to account for over 90% of the nonhydro
renewables build till 2030 globally.
The markets are evaluated on the basis of a comprehensive
scoring approach comprising nearly 20 parameters ranging from
direct stimulus mechanisms such as renewables ambitions and support
mechanisms, to more indirect influences including market
fundamentals and opportunity size.
The Global Renewable Market Attractiveness Rankings is
produced by the IHS Markit
Global Power and Renewables service and will be updated
biannually.
Indrayuth Mukherjee is a senior research analyst at IHS
Markit. He specializes in renewable power markets globally with a
special focus on wind energy.
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Jul 05
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