The UK is rising up the rankings of the best countries to invest in renewable energy projects, largely because of new government initiatives and incentives.
The latest global Renewable Energy Country Attractiveness Indices from Big Four accountancy firm Ernst & Young shows that even in advance of plans for a green investment bank announced in last week's Budget, the UK has climbed two places in the unofficial league table to tie with Spain in fifth place.
The UK's recent strong performance comes on the back of the government's proposals to extend the Renewables Obligation incentive scheme up to 2037, increase investment into the grid network, and grant new development licences for giant offshore wind projects.
The Department of Energy and Climate Change's new index-linked feed-in tariffs, which come into effect from today, were also cited as providing a major boost to small-scale renewable energy firms.
However, despite improvements in the investment climate, Ernst & Young warned that access to capital remains a significant challenge for the global renewable energy sector.
The economic downturn has resulted in project financiers retreating to their domestic markets and preferred client relationships, with less-established renewable energy markets and independent or start-up developers losing out as a result, the report warned.
It added that the level of investment required across all energy sources and energy infrastructure in the UK is expected to reach £200bn over the next decade.
Ben Warren, Ernst & Young's environment and energy infrastructure advisory leader, told BusinessGreen.com that recent UK government announcements signalled a more strategic approach to providing the right investment environment to boost renewable energy deployment.
"Where the UK is falling behind is in terms of deployment," he said. "The key barriers are still planning and grid connection, but given the lack of avail able land in the UK, a big bet is being taken on offshore wind and carbon capture and storage."
Warren said government and policy makers needed to focus on providing comprehensive, transparent and consistent regulatory policies to allow the UK to compete effectively with other energy markets around the globe.
"It's a race for capital and we're at a tipping point in the energy markets, " he said. "Wind in particular has huge potential for great employment benefits for UK plc. The government needs to focus on reducing the risk of some of these infrastructure investments."
According to the Ernst & Young rankings, the US and China retained their positions as the top two locations in the world for renewable energy investment. The 2011 US Budget announced in February included a commitment to double renewable energy-generating capacity by 2012. China, meanwhile, has amended its renewable energy law in efforts to increase the purchase of clean power.
The Netherlands has moved up three places to fifteenth, thanks to a new sustainable energy incentive scheme and a €5.3bn (£4.7bn) financial commitment in 2010 to support offshore tariffs to stimulate the rollout of offshore wind projects. But Germany has fallen two places in the table following news that solar photovoltaic cells may face steeper than normal cuts in tariffs.
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