This is an excerpt from EERE Network News, a weekly electronic newsletter.

March 02, 2011

Economic Conditions Still Challenge Renewable Energy Growth: Report

Despite record global investment in renewable energy in 2010, the continuing impacts of the global financial crisis are placing renewable energy markets in a state of flux, according to a recent analysis by Ernst & Young. The company's latest Renewable Energy Country Attractiveness Indices, released on February 28, still place China in the top spot, thanks largely to the country's 64% growth in wind power capacity in 2010. China reached 42 megawatts (MW) of wind power capacity in 2010, but Chinese companies are dealing with falling stocks, inflationary pressures, weak research and development capabilities, and limited grid capacity that may not be able to continue supporting the country's rapid growth in both wind and solar power. And, Ernst & Young has received reports of unconnected wind power capacity in China. Closely trailing China in the indices is the United States, which gained status by extending its Treasury grant program through 2011, but its renewable energy markets still face long-term uncertainty.

Across Europe, the picture is mixed, with tightening government budgets, falling technology costs, and (in some quarters at least) booming solar markets. This has led to a series of reductions in feed-in tariffs, especially for solar. The United Kingdom ranks fifth in the indices, bolstered by electricity market reform, although an ongoing review of its feed-in tariffs is creating uncertainty. Feed-in tariffs provide a fixed, guaranteed price for power generated from specific resources, such as solar energy, and they have been a key factor in encouraging renewable energy development across Europe. India also ranks high in the indices, tying with Germany for third place, thanks to the development of a 250-MW tidal-current power plant and to government obligations to purchase solar power. See the Ernst & Young press release and the indices report PDF.