- The US tops EY’s latest battery energy storage investment index, driven by a 30% tax credit from the Inflation Reduction Act.
- China, with solid subsidies and cost-cutting plans, and the UK, with favourable energy market reforms, rank second and third, respectively.
- Canada and Japan enter the top ten for renewables attractiveness, focusing on offshore wind, while Spain drops due to grid constraints.
The US tops Ernst & Young’s (EY) latest Renewable Energy Country Attractiveness Index (RECAI) for battery energy storage system (BESS) investment, thanks to a 30% tax credit from the Inflation Reduction Act (IRA).
China ranks second, driven by strong government support and subsidies to cut BESS costs by 30% by 2025. The UK takes third place due to its energy market design and a new energy bill that classifies BESS as a generation asset.
Investor interest in BESS continues to increase. This technology offers crucial solutions for overcoming gridlock challenges that impede clean energy progress.
The US, China, and Germany hold the top three positions regarding the attractiveness of renewables. China and Germany have switched places since the last report. The top ten include France, Australia, the UK, India, Denmark, Canada, and Japan. Spain drops out of the top ten due to grid constraints, while Canada and Japan enter the ranking, driven by their offshore wind ambitions. Belgium climbs to 17th place, aiming to triple its offshore wind capacity by 2040.
Denmark, Greece, and Chile lead the chart when adjusted for gross domestic product (GDP).
Corporate power purchase agreements (PPAs) start slowly in 2024 but now favour buyers. In Spain, companies with fixed-price PPAs struggle as excess renewable energy drives prices close to zero. In contrast, Italy rises to ninth place in the index. High market prices push more companies to sign PPAs despite regulatory hurdles.
This edition of EY’s RECAI highlights the growing importance of BESS in the global energy landscape. BESS technology is critical in managing renewable energy and enhancing grid reliability. The US leads due to the IRA’s tax credit, which boosts BESS’s investment attractiveness.
China is committed to reducing BESS costs and expanding its use through significant support and subsidies. The UK’s new energy bill increases its market appeal by treating BESS as a generation asset, encouraging investment and development.
Countries moving into the top ranks, like Canada and Japan, focus on offshore wind to strengthen their renewable energy profiles. Belgium’s ambitious offshore wind expansion plans reflect a broader trend of rising investment in renewable infrastructure.
EY’s report underscores the shifting dynamics of renewable energy investment, with BESS playing a pivotal role in the future of global energy systems.