US Becomes Second Most Attractive Renewables Market

The United States has moved ahead in EY’s Renewable Energy Country Attractiveness Index and is now second only to China, the UK consultancy said in the latest edition of its RECAI.

Last year, the US ranked third in terms of its fossil fuel revival efforts, Oil Price reported.

Now, it seems these will not have any substantial impact on renewable energy even when taking into account the import tariffs on photovoltaic cells and modules introduced earlier this year. According to EY, these tariffs have already been absorbed by the market.

That is contrary to the opinions voiced by the US solar industry players when the tariffs were first proposed and then imposed, with many industry representatives arguing that the tariffs would harm local solar power producers rather than the Chinese cell and module manufacturers the tariffs targeted.

What is more, the Republican tax reform bill approved at the end of last year did not envisage subsidy cuts for wind power installation, which should provide additional boost to this industry.

“In fact, the US tariffs, combined with a global trend toward renewable energy subsidy reductions, have spurred a cost-cutting rush in the solar industry, along with an innovation drive that is already paying off,” RECAI’s editor and EY’s Global Power and Utilities Corporate Finance Leader, Ben Warren, wrote in the report.

He cited Bloomberg New Energy Finance’s calculation that as of January this year, the benchmark’s cost of electricity from renewable power was down by 18% globally for both solar and wind installations to $55per megawatt hour for PV and $70 per MWh for wind power.

These positive cost developments, despite the combined headwinds of tariffs, subsidy cuts and higher interest rates, EY notes, have also prompted Big Oil to start investing more in alternatives to their core business through acquisitions, as well as organically by raising investments in wind, solar and energy storage projects.