Investment flows in clean energy during the first quarter of the year were the weakest since 2009, according to Ernst & Young’s Country Attractiveness Indices report released today.
While the rankings at the top of the index remain unchanged, all five of the top ranking countries have dropped points during the first quarter as debt issues and increased competition from Asian manufacturers remains at the top of mind for European policy makers and the growth in shale gas and political resistance to tax credit extensions continue to pose significant challenges to the US market.
Consolidation among industry participants, however, means M&A activity was up 41 per cent in the quarter.
Gil Forer, Ernst & Young’s global cleantech leader, said, ‘The growth of China’s wind sector continues to be stifled by insufficient access to the grid, while a boom-bust scenario appears to have returned to the US as a result of uncertainty over the expiry of key stimulus programmes.
‘In Germany and Italy, tariff cuts and grid challenges have reduced short-term attractiveness, while the end of a key tax break incentive in India is likely to dampen wind sector growth through 2012.
‘The news is more positive in other parts of the index, with several countries including Mexico and Chile announcing new national targets for clean energy generation or reaffirming government support through incentive schemes.’
In contrast to all other countries in the top ten, Japan bucked the trend in the established markets by increasing its score, after implementing an encouraging feed-in tariff.
For global IPO markets, it was the poorest quarter on record for renewable energy since the second quarter of 2009 with approximately $14.3bn raised from 157 issues, which is down by approximately 69 per cent compared with the first quarter of 2011.
Looking forward Ben Warren, Ernst & Young’s energy and environmental finance leader, said, ‘The next 12 months are likely to be characterised by further consolidation in the solar and wind supply chain, with a large number of outbound deals expected from Asia. Access to capital will remain the single biggest differentiator for companies in both the technology and infrastructure markets for the foreseeable future.’
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