RECAI: Index highlights

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RECAI scores and rankings at March 2015

Index highlights

Significant national and state level policy, project and investment activity has pushed India to fifth place, ahead of Canada. This is driving, and driven by, ambitious government targets creating a solid project pipeline and accelerating demand for a domestic supply chain. A strong energy and environmental imperative and broader government reforms improving the investment climate are also helping create an attractive renewables market.

The progress of France long-awaited Energy Transition Bill, and a series of technology-specific tenders, signal more long-term strategy certainty and a healthy project pipeline, and help it move up to seventh place.

This rise comes at the expense of the UK , which falls to eighth place. Despite increasing the budget for projects bidding in the first round of the CfD scheme, there is still concern that funding, particularly for future rounds, is insufficient to meet the UK’s 2020 targets or achieve energy security. The offshore sector also continues to face project cancellations, prompting some speculation that Germany could overtake the UK as the top offshore market in 2015.

Chile moves up to 11th place after renewables developers took almost 20% of the 11TWh awarded 15-year contracts in late 2014, after an amendment to tender rules allowing intermittent suppliers to sell power in hour-long spans for the first time. Further changes to the auction process are expected before the next auction in March. Chile has also approved South America’s first carbon tax, and is still seeing high levels of project activity, with almost 80 wind and solar concessions worth an estimated US$7b approved in late 2014.

South Korea’s ambitious ETS has been scaled back, contributing to a fall to 12th place. While carbon trading will begin in 2015 as planned, the government aims to reduce emissions by 10% below business as usual levels by 2020 across industries, down from the originally planned 30%.

Italy’s shock retroactive solar tariff cuts came into effect on 6 November 2014, prompting more than 1,000 legal challenges. The sector looks set to receive yet another blow, with indications that in 2015 FIT support will be revised to exclude new solar projects because the technology can already compete on cost with conventional energy. The instability this has created has contributed to another fall in the index, to 15th place.

Sweden’s move up to 20th place reflects its new coalition government’s ambitions to reform energy policy by decommissioning old nuclear plants and targeting 100% renewable generation, particularly through increased support for offshore wind and biomass.

Thailand drops to 21st place, pending the release of a revised electricity generation framework and investment rules for the 2015–2036 period, including potential adjustments to its generous FIT regime. The clean energy sector has also recently faced corruption allegations over solar development licenses, while grid connection issues have delayed half of all large-scale PV projects.

Mexico continues its climb up the index to 23rd place, thanks to a dedicated energy transition bill reinforcing political support for renewables, and a number of large-scale projects underpinning solid capacity forecasts. With the US oil and gas producers that were expected to come to Mexico following recent sector liberalization now reducing investment budgets for 2015, the country’s attractive renewables prospects will likely be big news.

The firming up of Morocco’s CSP ambitions have helped move it up to 27th place, with January seeing contracts to build the 350MW second phase of the Ouarzazate power project awarded to a consortium led by Saudi Arabia’s ACWA, critical to helping Morocco achieve its 2GW 2020 solar target. The start of operations at the 301MW Tarfaya wind plant, Africa’s largest, and the tendering of 850MW of wind capacity also show Morocco is on track to meet its 2020 2GW wind target, and sets a precedent for large projects.

Poland’s renewables sector is finally receiving policy clarity, as the long-debated Renewable Energy Bill makes its way through parliament, helping take Poland up a place to 28th position. This will mark the end of the green certificate scheme and introduce a number of annual competitive auctions to help investors adjust to market conditions. The shift in support regime is expected to save almost US$2b by 2020.

A looming energy crisis in the Philippines highlights its significant renewables potential, with high power prices, a relatively attractive FIT regime, and liberalized electricity market creating solid foundations. Substantial wind and geothermal spending commitments by First Gen, its second-largest electricity producer, and SunEdison’s plans to develop up to 300MW of utility-scale solar over the next three years show momentum is building.

With the 300MW Lake Turkana wind project finally set to begin construction after receiving funding guarantees, and the Kenya Electricity Generation Company seeking to build two geothermal facilities totaling 210MW, Kenya’s rise up the index to 34th place reflects significant large-scale investment opportunities. It is also considering switching to auctions from its current “first-come, first-served” FIT policy, which could award stable price PPAs to a wider range of projects.

Egypt has returned to the index after falling out of the top 40 in May 2013.