Global renewable energy investment falls in 2013 - Australia drops in rankings
Friday 28 February 2014 — Global investment in renewable energy dropped 11% in 2013, according to EY’s latest quarterly Renewable energy country attractiveness index (RECAI).
The 2013 fall in global investment reflects another challenging year for the renewables sector, with policy uncertainty in particular reducing investor appetite across many markets.
Australia has dropped from sixth to eighth spot in the rankings, off the back of the expected repeal of the carbon tax and review of the Renewable Energy Target (RET) creating an uncertain investment environment, particularly in regard to large scale renewable energy.
However, Oceania Power & Utilities Leader Matt Rennie says falling renewable technology costs are starting to filter through, increasing the purchasing power per megawatt for investors and improving the cost competitiveness of some large scale renewable energy compared to grid supply.
“This is a global trend and we expect it will become more evident in Australia over time,” says Rennie.
“Business models for power companies are shifting internationally and in some areas we are seeing reductions in manufacturing costs for renewables keep pace with reductions in subsidies and tax concessions globally. However until there is more certainty around the investment environment here, it will be difficult for new large scale renewable energy projects to be given the green light.”
Rennie says the increased uptake of residential rooftop solar PV over the past few years and its impact on demand may also lead to network tariff reforms over time, from the current energy based network tariffs to greater capacity and availability charges for customers.
“Given the large number of residential solar installations already in place in Australia, network companies are recovering the fixed costs of the network from a smaller number of customers. Overseas, in countries such as Spain and Germany, capacity charges for customers with solar rooftops are already being introduced to deal with this situation,” says Rennie.
China closed the gap on the US at the top of the index, installing a record-breaking 12GW of solar capacity in 2013 and ramping up its consolidation effort to accelerate market recovery. Germany remains in third place, but lost ground following the announcement of subsidy cuts and watered-down renewables targets by the new coalition government. Rapid solar market growth and a burgeoning offshore sector helped Japan to replace the UK in fourth place.
Ambitious targets and a series of large-scale project announcements have seen India jump to seventh place. Competitive bidding trendsetters Brazil and South Africa have also risen in the index thanks to a plethora of new projects awarded in 2013 auctions.
EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities.
EY refers to the global organisation of member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit www.ey.com.
This news release has been issued by Ernst & Young Australia, a member firm of Ernst & Young Global Limited.
Liability limited by a scheme approved under Professional Standards Legislation.
Ernst & Young Australia
Tel: +61 2 8295 6427