Wednesday, 26 May 2021
According to EY's recent 57th Renewable Energy Country Attractiveness Index (RECAI) which estimates global renewables capacity investment, the US ranked as the most attractive destination for renewable energy projects while the UK came in fourth place.
The Renewable Energy Country Attractiveness Index (RECAI) ranks the world’s top 40 markets on the attractiveness of their renewable energy investment and deployment opportunities. The rankings reflect EY's assessments of market attractiveness and global market trends.
As per the report, In 2020 global renewable energy capacity investments grew two per cent to $303.5bn worldwide, with investments in the RE sectors continuing to grow despite the COVID pandemic.
The US retained its number one position in the Index which EY attributed to President Joe Biden promoting a new era of energy policies to deter the country away from fossil fuels and begin reaccepting the Paris Agreement. According to the report in 2020, the US installed 19 GW of solar representing a 43% annual increase while also energizing a record 2.2 GW of energy storage systems and the offshore wind sector continues to grow at a rapid pace.
The UK ranked as the fourth most attractive country in the world for investing in renewable energy projects having jumped one spot compared to last year. EY attributed this to the UK's Crown Estate Round 4 seabed leasing that concluded in February, granting project developers the rights to provide under 8GW of new offshore wind capacity across six projects. This caused record prices and spiked interest from potential investors. The UK government has also approved the development of the largest battery storage project and pledged £92m in funding for innovative green technologies.
Spain retained its 10th place compared to the previous year's ranking. Spain had its second RE auction in January 2021 that awarded 2 GW of solar PV and 1 GW of wind capacity. In the oversubscribed auction, 32 out of the 84 companies that participated were successful. However, EY emphasised that the record-low prices from the auction could affect future project delivery with average prices of 24.47 Euros/MWh for solar PV and 25.31 Euros/MWh for wind, representing a 43% decrease compared to current long-term price estimates according to the Spanish government.
Poland ranked 22nd on the index and increased by 6 spots compared to last year. This was mainly due to the wide increase in RE investment in the country. The Polish government awarded 1.7 GW of onshore wind and solar capacity to 96 developers through CfD auctions in 2020. Poland has also adopted a new act to promote offshore wind with the aim of developing 5.9 GW offshore wind capacity by 2030 under a CfD mechanism and almost 11 GW by 2040 through competitive auctions reflecting USD 35b of investment.
Ben Warren, EY Global Power & Utilities Corporate Finance Leader and RECAI Chief Editor, said:
“The impact of the COVID-19 pandemic on economies across the globe seems to have refocused investors’ minds on the environmental, social and corporate governance agenda and there is a growing trend toward considering the climate crisis and the energy transition when deploying capital. As a result, interest in renewable energy development has risen among institutional investors who have pledged to incorporate climate-risk concerns into their decision-making processes, resulting in new models of investment to locate opportunities that satisfy their risk and return expectations.”