UK climbs to fifth for global renewables market outlook
The UK has leapfrogged Germany to rise to fifth in the rankings for national attractiveness of renewable energy investment and deployment opportunities.
EY has today (24 November) published the 56th edition of the Renewable Energy Country Attractiveness Index (RECAI), which ranks countries based on the performance of renewables markets in relation to investment opportunities.
The UK has climbed to fifth in these rankings and now sits behind the US, China, Australia and India. According to the rankings, the UK has been buoyed by public commitments to large-scale offshore wind, which has seen the UK Government commit to having 40GW of offshore wind capacity by 2030. The performance of unsubsidised solar has also improved the nation’s rating.
In addition, the £350m proposed investment to cut carbon through hydrogen and carbon capture and storage, is also boosting investor confidence in the UK. On hydrogen, the RECAI notes that the technology will have a “critical” role to play in reaching net-zero in a post-Covid-19 economy.
EY ranked the UK sixth in its May 2020 edition of nations and seventh in its 2018 RECAI, up from tenth in the previous iteration of the bi-annual ranking. The consultancy broadly attributed this improvement to the investment landscape settling as the market adapted to the RO closure and preparations for the FiT closure progressed.
RECAI chief editor and EY’s global power and utilities corporate finance lead Ben Warren said: “With a verbal commitment from the UK government to support wind power, backing up the rhetoric with a well thought through industrial policy could put the UK at the forefront of one of the most exciting and transformative industries in the world.
Energy storage, the decarbonisation of heat and transport, and intelligent energy management and trading capabilities to support the transition to net-zero are just some of the areas where the UK has strength and expertise. All of this would benefit from a more cohesive and strategic energy and environmental plan. Continued backing for the UK offshore wind industry, a world leader in its own right, is a good place to start, but this is just the tip of the iceberg. Support and commitment across the whole of the renewable energy mix is needed if the UK is to meet its low carbon targets.”
The US holds its place at number one in the RECAI rankings, following Covid-19 stimulus packages that have supported renewables in the country. Joe Biden’s presidential win is expected to boost investor confidence further, with the US set to re-enter the Paris Agreement and set a net-zero target.
China holds onto second position, with the Chinese solar market performing strongly during the pandemic. Australia has climbed to third in the rankings, largely due to export plans for renewable energy. India has also climbed from seventh to fourth. The RECAI notes that India’s solar PV capacity has skyrocketed, reaching more than 35GW. Germany falls below the UK into sixth, with the commitment to ending coal-powered generation by 2038 driving the country’s green markets.
The RECAI notes that lockdown measures implemented for large parts of 2020 helped increase the share of renewables used across the globe, due to low electricity demand and operating costs. The Covid-19 pandemic is set to deliver the biggest disruption to the energy system since the 1930s, with global electricity demand to fall by 5% while the level of emissions for 2020 are set to fall by 8% - the largest annual decrease in emissions ever recorded, according to the IEA.
“Reduced fossil fuel consumption in recent months led to a dramatic fall in pollution levels and has driven greater focus on green growth and recovery,” Warren added. “Further, the impact on economies across the globe seems to have accelerated the drive to net-zero and refocused investors’ minds on the environmental, social and corporate governance (ESG) agenda and resilience in their investment portfolios.
“This highlights the tremendous potential for renewables, and while one of the major barriers presented is grid stability, there is a surge in technological innovations to help address this challenge.”