Which power markets are the most attractive for renewables investments?

This year will mark a landmark year for clean energy investments as players across the value chain position themselves to take advantage of significant new developments in some of the world's most dynamic renewables markets. Over the next 10 years, over 5300 GW of new renewables capacity is expected to be built around the globe. Where the most attractive opportunities arise is continually shifting with market fundamentals, competitive dynamics and investment conditions. This year's iteration of S&P Global's Renewable Market Attractiveness Rankings assess the promise of solar photovoltaic (PV), onshore wind and offshore wind investments across 37 markets and 18 individually weighted scoring parameters. The parameters include the policy framework, supply-demand fundamentals, investor friendliness, infrastructure readiness, revenue risks and return expectations, competitive dynamics, and the overall opportunity size for each market.

Some key highlights from the full report and interactive dashboards recently published by S&P Commodity Insights include:

• While renewables markets are growing rapidly across the board, growth is increasingly concentrating in a handful of core markets. Policy drivers such as the Inflation Reduction Act (IRA) in the United States, China's 14th five-year plan, and REPowerEU in Europe are massive catalysts to reinvigorate growth in mature markets. Before these ambitious and comprehensive incentive regimes were implemented, international expansion was the go-to strategy to guarantee sufficient growth potential. Now with supply chains becoming more complex and the cost of capital becoming more arduous, mature markets that are looking to incorporate more renewables faster are becoming prime investment targets. Mainland China alone will add nearly 2 TW of capacity over the next 10 years, which represents over 40% of the global total.
• The United States builds on its lead in overall renewables market attractiveness. Although there are competitive and infrastructure-related challenges to navigate in most US markets, the combination of access to capital, ambitious growth targets, significant room to incorporate more renewables and a comprehensive long-term incentive roadmap makes the US again the top market globally. REPowerEU and energy security concerns have pushed Germany into the second position, while mainland China, Japan and France round out the top five.
• Technology trends and investor preferences make some markets more attractive to certain players than others. A market's attractiveness must go hand in hand with the operational strategy of each player. Some players will find competitive advantage in challenging development environments, while others can leverage their scale, experience, and development portfolio to outcompete competitors in markets characterized by intense competition. This year's ranking shifted more weight to utility-scale PV as it becomes the leading technology driving new additions over the next decade.
  
  

Learn more about our global power and renewables research.

Timothy Stephure is a research director on the Gas, Power, and Climate Solutions team at S&P Global Commodity Insights.

Posted 25 September 2023

This article was published by S&P Global Commodity Insights and not by S&P Global Ratings, which is a separately managed division of S&P Global.