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China Beats U.S. on Renewable-Energy Investor Ranking

Wind Turbines in Gansu province
Workers paint and assemble parts of wind turbines in Yumen, Gansu province, China. Photographer: Doug Kanter/Bloomberg

China overtook the U.S. to lead a quarterly index of the most attractive countries for renewable energy projects for the first time, according to a list compiled by the global accounting firm Ernst & Young.

After sharing the lead with the U.S. in the first quarter, China moved ahead of the world’s largest economy to rank as the most appealing nation for investing in wind and solar power projects, according to the report released today. The move follows the failure of U.S. Congress to pass legislation that would have required utilities to use clean energy.

The Asian nation, the world’s biggest energy consumer, has set itself a goal of generating 15 percent of its electricity from renewable sources by 2020. It almost doubled consumer subsidies for renewable-power generation in the second half of last year to $545 million, the most recent period reported.

“China is rapidly developing a market that supports its own manufacturers,” Mark Bachman, an analyst at Auriga USA in New York, said today in an interview. “In the U.S., it’s almost impossible to get 50 states to agree on renewable-energy policy and it’s likely to be so watered down as to be ineffective.”

In the second quarter of 2010, China attracted $11.5 billion in asset-financing for clean technologies, more than Europe and the U.S. combined, according to Bloomberg New Energy Finance.

Access to Capital, Subsidies

The accounting firm compared regulations, access to capital, availability of land, planning barriers, subsidies and access to the power-delivery grid when determining the ranking, which started in 2003.

“China has all the benefits of capital, government will, and it’s a massive market,” Ben Warren, Ernst & Young’s environment and energy infrastructure advisory leader, said in a telephone interview. “We would expect to see China retaining a dominant position.”

State-run China Development Bank Corp. this year agreed to lend as much as 116 billion yuan ($17 billion) to Yingli Green Energy Holding Co., Suntech Power Holdings Co. and Trina Solar Ltd., China’s biggest solar firms by market value.

The U.S. also lost ground because the expiration of a grant program at the end of this year provides “no real effective incentive mechanism for renewable energy projects,” the report said.

‘Continued Resistance’

“What we’re seeing in the U.S. is a continued resistance to committing to long-term visible and transparent support for the sector,” Warren said. “The U.S. market has always suffered from this boom-and-bust tax-based incentive regime.”

China also topped Ernst & Young’s attractiveness index for investments in wind power. The country last year had three turbine makers in the top 10 worldwide in terms of sales by megawatts, according to the Danish researcher BTM Consult APS. Those companies are Xinjiang Goldwind Science & Technology Co., Dongfang Electric Corp. and Sinovel Wind Co.

For solar photovoltaic power, China was “until recently almost totally absent,” the European Photovoltaic Industry Association said in a report in May. Installations last year almost quadrupled to 160 megawatts and could grow to 600 megawatts this year, the association said.

The Ernst & Young ranking includes 27 countries, with Germany, India, Italy, the U.K., France, Spain, Canada and Portugal completing the top 10 behind China and the U.S.

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