All renewables index at August 2012
Source: Ernst & Young analysis
1.Previous ranking in Issue 33 is shown in brackets.
2. Combines with each set of technology factors to produce the individual technologies indices.
3. This indicates US states with renewable portfolio standard (RPS) and favorable renewable energy regimes.
4. Score and ranking potentially impacted this issue be a methodology to remove adjusted weightings for landlocked countries.
The All-renewable index ranks the attractiveness of renewable energy markets across 40 countries worldwide.
China remains at the same level in this issue. While the trade war with the US may impact China’s export market, it is not yet clear whether the import duties will impact RES generation in the country or not. A recent report by the IEA suggests that China could contribute around 40% of the total increase in global RES capacity over the next five years. Further, while the country is still challenged by oversupply of wind turbines and solar panels, there are signs that the country is taking action to address the grid transmission issues.
The US has fallen a point and a half in the ARI due to ongoing uncertainty over the country’s long-term RES strategy and political wrangling that is likely to make the development of a cohesive energy policy difficult. A lack of signaling on the likelihood of an extension to the critical PTC for wind projects, and a series of solar sector setbacks have exacerbated this policy limbo.
Germany has increased a point in the ARI and is now level with the US in joint 2nd place. This quarter demonstrated the Government proactively addressing barriers to offshore wind development and establishing some sense of stability in the solar sector.
All renewables index at August 2012
In India, severe blackouts have resulted in speculation that the country has attracted insufficient private investment to modernize its power infrastructure and that renewable energy investment may suffer amid wider power system reforms. This quarter saw few RES project announcements, reinforcing the current period of uncertainty following the expiry of key wind incentives and delays under the National Solar Mission program. Further, it is reported that Indian banks are close to reaching the 15% cap on domestic advances to the power industry, leaving limited scope to boost lending to solar projects. As a result, India has fallen a point in the ARI.
The UK has risen to fifth place in the ARI as a result of Italy’s fall in the rankings, but has experienced a score decrease overall. While a number of policy and subsidy announcements were made this quarter with the aim of establishing “transparency, longevity and certainty” for the country’s RES sector, the general consensus appears to be that the Draft Energy Bill, ROC bandings and decarbonization strategy announcements have fallen short of this objective and, to an extent, even created greater uncertainty.
France has fallen a point in the ARI due to ongoing investigations into the validity of certain wind and solar tariffs, which could impact the attractiveness of the country’s subsidy schemes, at a time when the government’s medium-to long-term plan for renewables remains unclear. The fall of Italy in the rankings results in France moving up to sixth place, despite the score decrease.
Italy has fallen a place in the ARI to take joint sixth position with France, due to worsening economic conditions putting pressure on access to finance for clean energy infrastructure projects, and confirmation of solar FIT cuts and installation caps in early July.
Japan has climbed further to ninth place in the ARI following confirmation of the generous FIT rates proposed earlier in the year in respect of wind, solar, biomass and geothermal projects. The new tariffs came into effect on 1 July and are expected to be the catalyst for significant growth across the country’s RES sector.
Brazil has fallen to tenth place in the ARI, mainly due to the withdrawal of funding by the national development bank (BNDES) in respect of projects utilizing turbines supplied by companies who have failed the bank’s local content requirements.
Australia has increased a point in the ARI following the introduction of a AU$10b (€8b) CEFC, providing loans, guarantees and equity investments for cleantech and renewable energy projects. The shift to a low carbon economy under the country’s new carbon trading scheme should also complement the RET.
Spain has fallen in the ARI, due to worsening economic conditions, as reflected by a Standard & Poor credit rating downgrade to BBB+ from A and worsening default credit swaps. Q2 also saw government proposals for a major hike in the electricity tax rate, likely to hit both RES and non-RES projects.
Poland has gained a point in the ARI following the latest draft of the Renewable Energy Act (REA), which sets out technology-differentiated GC coefficients alongside other revised provisions. The specific subsidies are expected to boost investment in RES, particularly in offshore wind, large-scale hydro and solar PV, which receive more than 1.5 GCs/MWh.
South Africa approved 19 RES projects totaling more than 1GW of capacity as part of its second round Renewable Energy IPP program. The 19 projects, worth an estimated US$3.4b (€2.7b), comprised nine solar PV projects with a total capacity of 417MW; seven wind power projects totaling 562MW; two small hydro projects totaling 14MW; and one CSP project of 50MW. This brings total investment under the auctions to around US$8.8b (€7.1b).
Denmark’s ambitious new targets to generate 35% of energy from renewable sources by 2020, increasing to 100% by 2050, has increased its score in the ARI.
Morocco has risen a point in the ARI as a result of strong market activity throughout Q2, including CSP project financing and wind tender submissions.
Turkey has increased a point in the ARI thanks to significant solar activity in the quarter, and a commitment by the European Investment Bank for €150m of loans to finance renewable energy and energy efficiency projects as well as exports.
Bulgaria has fallen a point in the ARI following the announcement that renewable energy FITs would be slashed from 1 July to ease pressure on electricity prices and adapt to lower technology costs. Alongside the FIT cuts, the energy regulator has also increased end-user electricity prices by 13% and approved a 34% hike in transmission grid tariffs.
Chile has gained a point in the ARI due to strong signs of increasing market activity through Q2 across the wind and solar sectors, including the announcement of an upcoming CSP project tender.
Argentina, while not dropping a full point in the ARI, has fallen in the infrastructure index following the nationalization of oil company, YPF SA, raising concerns this could undermine the country’s goal of diversifying its power supply and could push up the cost of loans for infrastructure projects as banks seek to offset risk. Further, the move has caused speculation over the fate of electricity companies who are potentially already on the brink of collapse following a decade of frozen electricity tariffs.
The Czech Republic has fallen again in the ARI following confirmation that generous RES subsidies are to be abandoned from 2014 and the announcement of the Government’s intention to extend its own tax on solar power beyond 2013.
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