Within five years, the two Asian giants will join the US and India as the most attractive places to invest in renewables, the quarterly Ernst and Young Renewable Energy Country Attractiveness predicted.

The US currently tops the renewables investment table, with India following in second place and Spain in third.

China stayed in sixth place of the All Renewables Index but proved particularly strong in wind sector, where major new projects pushed it up from sixth to fifth place. The country already has 2.6GW in wind power capacity and is expected to overshoot its own goal of reaching 5GW by 2010. According to the Global Wind Energy Council (GWEC) Chinese wind power capacity will reach 5GW by next year, and targets are likely to be increased substantially.

Progress on renewables in China is driven by large projects, such as the East China Sea Bridge offshore wind scheme set to provide 100MW of green electricity by 2009.

Continued investment in green energy projects should take it up to the top three of the index by 2012, however, E&Y predicted.

“Despite recent predictions by the International Energy Agency that China may overtake the US as the world’s biggest source of green house gasses within months, the Chinese Government is showing a commitment to renewable energy sources,” said Jonathan Johns, Ernst & Young’s head of renewable energy.

“Its investment in renewable energy is increasing at an impressive rate, with the annual installation of wind turbines more than doubling in the last 18 months.”

The US tops the index thanks to individual states setting renewables targets accompanied by incentives for investment.

“The US continues to be the global leader for investment in renewable energy, Jonathan Johns said.

“However, corporate and institutional investors have started to show a greater interest in China and India, as their economies accelerate and legislative changes are introduced that help to foster renewable energy generation.”

The UN-led Clean Development Mechanism (CDM) also provides a steady stream of funding for renewables projects in the area – China received three-fifths of the $4.8 billion in transfer payments to developing countries under the programme last year.

The UK, meanwhile, continued to slip down the table, finding itself in fifth place after it was overtaken by Germany where further support for offshore wind was added to the already strong solar and onshore wind sectors.

“The UK is rich in resource but less so in grid infrastructure,” Jonathan Johns said.

“Although the UK has an abundance of natural resource, it has not been as successful as it could have been in harvesting this energy.

“The forthcoming ROC banding review will be critical to the UK’s position,” he said. He believes that the UK heat and fuel sectors are unlikely to reach EU goals of 20% renewables by 2020 and will need to be compensated with green electricity targets well above 20%.

Newcomers to the index this year included Poland at 19th place, Brazil, Japan, New Zealand and Turkey.

Goska Romanowicz

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