Following a year of record investment, global purchasing in clean energy in the first quarter of 2012 was the weakest since the pit of the financial crisis three years ago, according to a report by Ernst & Young.

Economic turmoil has weakened public policy support for renewable energy solutions in the First World, while developing countries are embracing green energy incentive programs with more gusto than ever, the accounting firm found.

The report attributes the plunge in clean energy investment to a plethora of factors. China’s wind sector continues to suffer from insufficient grid access. Uncertainty plagues the future of key renewable energy incentive programs in the U.S. India is set to abandon an important tax break incentive for wind power. In Italy and Germany, solar tariff cuts reduce short-term attractiveness.

It’s not all bad news. Renewable technologies are becoming more cost competitive, the report said. The price of solar panels, for example, fell by 50 percent in 2011. And government support for clean energy is rising in Mexico, Chile and Austria.

But the renewable energy industry, the report points out, faces significant challenges, including the Eurozone debt crisis, plummeting carbon prices and the shale gas boom in the U.S.

“As more mature technologies move closer to achieving grid parity, it looks like the sector will flourish long term,” the report states. ”In the face of these challenges, though, the short- to medium-term outlook is less sure.”

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