Spain, the top-ranked renewable-energy market for investors five years ago, dropped out of the top 10 after suspending subsidies for new clean power generation, an Ernst & Young survey found.
China held on to the lead position as investors looked away from Europe, where debt-burdened governments have reduced aid for solar and wind power projects, Ernst & Young said today as it published the Renewable Energy Country Attractiveness Index. Spain tied with Australia as the 11th best place to invest.
“The sovereign debt crisis continues to stifle the euro zone, and also policy setters’ ambitions in relation to renewable-energy deployment,” the consulting firm said in a statement. “Capital scarcity and increased competition from Asia will continue to put pressure on Western players for the foreseeable future.”
Spain exited the top 10 for the first time since the index began in 2003. The country’s government halted subsidies to renewables in January as it sought to reduce the budget deficit and rein in state-backed electricity-system borrowings that reached 24 billion euros ($32 billion) at the end of last year.
The outlook in Spain and other European economies for 2012 is “less certain” after 2011 saw record-high investment in renewables, particularly in solar power, Ernst & Young said. The company ranked the U.S. in second place, followed by Germany and India. The U.K. leapfrogged Italy into fifth spot, while France, Canada, Sweden and Brazil rounded out the top 10.
Ernst & Young’s assessment criteria include regulations and planning barriers, as well as access to capital, land and power grids.