China tops the latest renewable energy country attractiveness index (RECAI) for the third time consecutively, with the U.S. and Germany overtaking India, which falls from second to fourth position. The UK and the Netherlands are notable climbers (to positions seventh and ninth respectively), while Taiwan re-enters the bi-annual top 40 ranking.

The 51st issue of the RECAI highlights the trend for rising protectionism across the renewable energy sector. India’s 2022 solar power target looks increasingly over-ambitious amid investor concerns, in response to the threat of a 70% tariff on imported solar panels and low power bids. And in January of this year, the U.S. imposed tariffs on imports of solar PV cells and modules set at 30%. However, RECAI points to the resilience of the U.S. market, which climbs from third to second position as the solar tariffs are mostly absorbed and wind projects are not subject to subsidy cuts under the recently passed U.S. tax reform bill.

“Rising interest rates are likely to increase the cost of cheap capital that has underwritten the dramatic roll-out of renewable energy capacity over recent years. Government subsidies for clean power are being reduced around the world and financiers are anticipating tougher times ahead for project developers. However, movements in the Index suggest that these developments are just headwinds as the renewable energy sector continues to mature and markets expand,” Ben Warren, EY Global Power & Utilities Corporate Finance Leader and RECAI Chief Editor said.

Despite a large fall in renewables investment in 2017, the UK climbs three places to seventh position with the market adapting to subsidy-free solar PV, onshore wind projects and moves to repower old wind farms.

Rapid expansion of renewables sees the Netherlands climb from 15th to 9th position since the last Index was published in October 2017. Recent offers for unsubsidized offshore wind and a growing solar PV market have been strong contributors to the sector, while the government seeks to meet its 14% renewable energy European Union target by 2020.

Re-entering at 31st position, Taiwan has returned to the top 40 for the first time in two years as the government announces its intention to go nuclear-free and takes action to increase renewables to 20% by 2025 – with a particular focus on offshore wind projects.

“While the current economic climate has driven a relentless focus on costs, that focus is paying dividends with the global cost of electricity from renewable sources falling year-on-year. Combined with the plunging cost of battery technology, we anticipate further rapid growth of the evolving renewable energy sector in the coming years,” Warren said.

The latest RECAI also explores the trend for many of the world’s largest oil and gas companies to increasingly make significant investments in low-carbon energy. But while the Index points to concerns around climate change and the rise of electric vehicles (EVs) as drivers for long-term ambitions to invest in renewable energy, the pace of transition among oil majors remains uncertain.

For the complete top 40 ranking and further insights on the impact of blockchain on renewable energy, as well as in-depth analysis of the sector in Australia, Poland and Egypt, visit ey.com/recai.