The diagram above sets out the parameters that make up our key driver categories. Each parameter comprises a series of scoring indicators (i.e., datasets), all of which generate a score out of five. The parameter score is therefore the weighted average across the relevant scoring indicators.
For example, energy supply and demand includes scoring indicators such as electricity consumption growth, reliance on energy imports and energy mix ratios, while the cost and availability of finance is based on datasets such as the number and value of new build asset finance transactions, availability of domestic credit, average credit default swap prices and interest rate volatility.
Weightings are applied to each parameter and, finally, each driver category, to derive the total RECAI score. Each technology is also allocated a weighting based on the ratio of projected dollar spend over our four-year outlook period.
Scoring indicators are based on either publicly available or purchased data, EY analysis or adjustments to third-party data. Some are revised on a quarterly basis while others are updated or benchmarked annually depending on the frequency of data or the nature of the scoring indicator.
Forecast capacity by technology, for example, is updated both as datasets are revised and on a rolling quarterly basis, such that the forecast period is always forward-looking 16 quarters from the current issue. Finance and M&A activity is also analysed on a rolling quarterly basis but is based on a 12-month look-back from the relevant calendar quarter-end.
Consequently, most countries will see some kind of score movement each quarter, but it should be noted that changes in the rankings may be driven by the relative movement of neighbouring countries as well as a market’s own score adjustment.