Chinainvested US$34.6 billion in clean energy projects during 2009 – almostdouble US investments in the same period. China has more installed windpower capacity than any other country in the world. And the Asian poweris now tied with America as the most attractive location in which toinvest in renewable energy projects, according to the Renewable EnergyCountry Attractiveness Indices, published by project finance advisorsErnst & Young in June.

According to Ben Warren, Ernst & Young’s Environment and EnergyInfrastructure Advisory Leader, China’s performance results from itsdetermination to “build a dominant position in the global market fortechnology manufacture and supply.”

The Ernst & Young investment attractiveness score is calculatedfrom assessments of each country’s renewables infrastructure(electricity market regulatory risk, planning and grid connectionissues, and access to finance) and its renewables resources (onshore and offshore wind, solar PV and CSP, geothermal and biomass).

While China strengthened on the indices, the US has dropped back dueto the increasing likelihood that the much-awaited climate and cleanenergy bill will not be passed before the November mid-term elections.

The federal government had a direct effect on the performance ofrenewables sector industries in the US last year, according to theanalysis. The stimulus package that allowed operators to convertproduction tax credit or investment tax credit into Treasury grants wasvital in allowing pipeline projects to be completed during 2009.However, E&Y believes the stimulus has been less effective inmaintaining momentum into 2010. The rate of installation of windcapacity dropped in the first quarter of 2010 to its lowest since 2007.

The Ernst & Young analysis cites a number of points thatstrengthen the position for the US renewables sector. The need forhedges against unstable oil and gas prices, the need for energy security of supply, and an expectation that deepwater oil exploration will beslower, more regulated, more costly and less profitable, all promote the wisdom of investment in renewables.

But how should potential US investors in solar, for instance, reactto the rise of the Chinese with their plan for “a dominant position inthe global market?” (punctuation inside quotation marks)

The US media commentators on this subject can be split into twocamps, according to China energy consultant Chris Brown. One camp viewsChina as a global solar powerhouse that will eventually beat the US into submission. The other camp believes the Chinese are not serious aboutdeveloping a domestic solar market because of the difference in pricebetween coal-based and solar electricity generation.

The answer when viewed from ground level in China is  lot morecomplicated, says Brown.  There are some impressive solar policies inplace in China, but there is a lot of regional variation. “The mostinteresting solar policies are happening at the provincial level,” hewrites.

There are also some major implementation problems. China faces manyof the same challenges as the United States. The infrastructure forelectricity transmission between Chinese provinces is very limited. Ithas not managed to create a nationwide comprehensive feed-in tariff. And there are also energy storage issues that restrict the country’simpressive ambitions.

“When the China kicking our ass crowd points to the money Beijing isputting into clean tech, we need to closely watch how the money andpolicy trickles down to the local level.”

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