Australia is the fourth most attractive country for investment in renewable energy projects, according to Ernst & Young’s Renewable Energy Country Attractiveness Index (RECAI).
Based on high levels of project activity and investment, Australia is ranked behind US, China and Germany on the RECAI. New wind power projects in Australia are as much as 18% cheaper than new gas and 14% cheaper than new oil plants.
Now in its 10th edition, the RECAI ranked countries on a revised methodology that reflects in investment drivers and the maturation of the renewable energy sector. The new methodology includes an increased focus on the role renewable energy has in energy supply, supply and demand, cost competitiveness of renewable energy, the importance of decarbonisation and an increased emphasis on the economic and political stability of individual markets.
In analysing Australia’s renewable energy market, Ernst & Young highlighted the fact that Minister for Climate Change Greg Combet confirmed in March that government would maintain the renewable energy target (RET) at 41TWh, or equivalent to 20% of total electricity consumption by 2020, and that the government further accepted the recommendations of the Climate Commission that the frequency of scheduled reviews of the RET should be every four years and not every two years. Balancing that is the political uncertainty surrounding the carbon pricing regime – if successful in the September federal elections, the current opposition Liberal-National Coalition has pledged to repeal the package.
Investment in Australian renewable energy projects is led by Asian investors, particularly Chinese investors. However, the report notes that new project announcement have declined year-on-year since 2009, partially attributed to new, cumbersome regulations for wind farms at the state level. RECAI had the US as top of the list because of high barriers to entry for external investors in China.
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