As policy-makers scramble to stop recession tightening its grip on major economies, demographic changes and growth in emerging markets are driving renewable energy investment, say Ernst & Young in their latest Country Attractiveness Index.
The index, which has been released quarterly since 2003, ranks national renewable energy markets and their suitability for specific technologies like solar vs wind.
While developed countries are focused on slowing demand and cutting costs, emerging markets are growing rapidly and have huge energy demands. A revolution is underway, they say, and the renewable energy industry is adapting to a changed world.
"The mature renewable energy markets of western Europe and the U.S. have been hit by a perfect storm of reduced government incentives, restricted access to capital and increased competition from abroad."
Another challenge facing renewables in some countries (like the US) involves the reduction in natural gas prices, coupled with an imbalance of subsidies between clean energy and fossil fuels, says the report. The cost of gas has fallen considerably over the past few years as large quantities of shale gas have come onto the US market. Meanwhile gas prices have increased in European and Asian markets, where they are typically driven by the price of oil.
China continues to be the most attractive country for renewables, as it has since August 2010, followed by the U.S., Germany, India and Italy, all of which held their positions.
But the balance of power is shifting toward Eastern Europe, the Middle East and North Africa, Southeast Asia, and Latin America.
Brazil entered the top 10 markets for the first time and Romania rose to 13th place after entering the index a year ago. Both have fast-growing wind markets and strong energy demands.
Five emerging markets are in the index for the first time: Argentina, Hungary, Israel, Tunisia, and Ukraine.
Although China is still on top, market growth has slowed, and a more stringent approval process for wind projects is resulting in turbine oversupply, leading manufacturers to seek more exports.
Investor confidence in solar has declined in the US because of the investigation of bankrupt solar companies (Solyndra etc), and the national loan guarantee program has expired. There's continuing uncertainty over the future of the Treasury grants program and production tax credits.
The US is now four points behind China and just one ahead of Germany - the only top-10 European country to rise in the index after announcing its state-owned development bank, KfW, will provide over €100 billion to ease the transition from nuclear to renewables.
Investor confidence has been negatively affected in the UK, because of the dramatic drop in solar feed-in-tariff (FIT) rates.
Here's the index - it ranks countries by each type of renewable energy - and has a capsule descriptions for each country: