European countries have seen an overall strengthening in their position in the latest report from Ernst & Young (EY), which ranks countries according to their attractiveness to renewable investors. However, the UK lost ground to rank 14th in the index because the renewables sector has been adversely affected by both uncertainty following the Brexit vote and the approval of Hinkley Point C. The closure of the Department of Energy & Climate Change and the creation of the new Department for Business Energy and Industrial Strategy also led to questions surrounding the Government’s commitment to renewables and emissions targets. This could be damaging for the UK because, in addition to cutting emissions, renewables contribute to energy security and provide opportunities for innovation. Some encouragement came when the Government approved 1.8GW Hornsea 2, which will be the world’s largest offshore wind farm if completed as planned.
France improved its position to rank 7th in the report, known as the Renewable Energy Country Attractiveness Index (RECAI). France is due to tender for 3GW of new solar PV capacity over the next three years, with successful bidders being paid a premium to the wholesale power price. As a result, solar capacity in France is expected to reach 10.2GW by the end of 2018 and 18-20 GW by 2023. However, France announced in October that it is abandoning its plans for a carbon tax and this change in policy has yet to feed through to the RECAI. France is facing an ageing fleet of nuclear plants, and a carbon tax would have encouraged new investment to be in clean energy. Other European countries that improved their index position were Belgium, Sweden, Ireland, and Norway. Meanwhile, Germany has maintained its position of 5th place. Recent RECAI reports have seen the USA and China take over the top positions where they remain in the latest report, closely followed by India and Chile.
The report gave particular focus to Green Bonds, which are issued for the funding of projects that have environmental benefits. These are being issued at record rates globally, with US$48.2bn being sold in the first seven months of 2016. However, global demand for these bonds is still outstripping supply as investors seek to green their portfolios.
During Theresa May’s recent visit to India, it was announced that the UK will fund low-carbon infrastructure in India, largely via the issuing of green bonds in London. The British Prime Minister also signalled the UK’s intention to join the International Solar Alliance, which is hoped will gain further support at this week’s COP22 meeting in Marrakech, the first meeting of the conference of parties since the Paris agreement entered into force on 4th November.
