Power Play

In 2016, total investments in renewables in the three countries was $134 billion, surpassing investments in fossil-fuel based capacity. Nevertheless, the United States and China have to double investments in low-carbon power while India has to almost triple them.

According to the Allianz Climate & Energy Monitor, federal-level policies in China and India are better than those in the United States. The two Asian countries overshoot their annual renewable energy targets regularly and are exiting coal. China, which has ambitious plans to scale up renewables, has topped prior targets, driven by wind and solar deployment and a steady reduction in the use of coal.

By 2020, China aims to raise its renewable power installed capacity by 38 percent from 2015 levels - equaling investments of $361 billion and 680 GW of installed capacity.

For comparison: Germany, which ranked first in the Allianz Climate & Energy Monitor 2016 for its renewable energy policies, currently has roughly 100 GW renewables installed. A new park of 10 wind mills has around 0.04 GW capacity.

India is also developing its renewable energy capacity at a rapid pace. Last year, solar and wind installations exceeded the annual goal by 43 percent and 116 percent, respectively. For 2022, India plans 175 GW of installed capacity.

Both countries are looking to exit coal-based power generation: China is cancelling plans for new fossil-based power plants and swiftly decommissioning existing coal power plants, while India is considering plans to stop building new coal power plants after 2022.

On a macroeconomic level, the United States offers a better investment environment in general than do China and India. Renewable investors also like the mature market and there is staunch support on state-level for renewables.

Last year, more than 16 GW of wind and solar capacity was installed in the United States, accounting for 60 percent of all new capacity. However, in the recent past, the new U.S. administration has taken action to support coal again and cut back on key climate regulation instruments such as the Clean Power Plan. More steps in this direction are expected.

But renewable energy still has good prospects as technology costs keep falling and progressive states such as California and Texas continue their renewable agenda.

Thomas Liesch
Allianz Climate Solutions
Phone: +49 89 3800 12889

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