India ranks third on Renewable energy country attractiveness index

New Delhi, 15 May, 2016

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India yet again held its position at the third spot for the second year in a row in the ‘Renewable energy country attractiveness index’ released by EY globally. This is primarily due to strong focus of the Indian Government on renewable energy coupled with the actual timely implementation of renewable energy projects.

The US (1), China (2) and India (3) held their positions at the top of the index with the size and scale of renewables activity surpassing other countries. The so-called “emerging” markets now represent half of the countries in the 40-strong index, including four African markets featuring in the top 30. Just a decade ago only China and India were attractive enough to compete with more developed markets for renewable energy investment. Chile (4), Brazil (6) and Mexico (7) also climbed higher in the index top 10, while Germany (5) and France (8) fell in the latest ranking.

Kuljit Singh, Partner, Infrastructure practice EY said, “The report also demonstrates that low solar bids (which appear unviable) are not a phenomenon that is restricted to India, but other countries such as Mexico, Dubai, etc. have also been reporting very low solar bids. As is the case with India, wind continues to be at a pricing premium to solar in rest of the world – but both these technologies are racing towards grid parity which may lead to not so desirable consequences for traditional utility business models.”

The report also suggests that with a growing number of jurisdictions contracting utility-scale renewable energy through competitive auction processes, renewable energy is increasingly proving its mettle against conventional energy generation. Renewable energy auctions in India, South Africa and Peru, all saw bids that fossil generators would struggle to match. The falling cost of renewables and their growing ability to challenge and displace fossil fuel generation without subsidy, once long-term power purchase agreements (PPAs) from creditworthy counterparties, are an option in any market.

The report also highlights Chile as one of the first markets to enable economically viable renewables projects to compete directly with all other energy sources. At the same time, Brazil’s renewables sector is showing surprising resilience amid an economic downturn and its underdeveloped solar market remains a potentially lucrative lure. And Mexico’s recent power auctions have opened the door to multi-billion dollar opportunities under a new liberalized energy market.

Meanwhile, European markets appear to be scaling back their ambitions as they address the challenges of marrying up increasingly mainstream renewables with a legacy of centralized conventional power generation.

Argentina was the highest-scoring new entrant. The transformation of the country’s economy and rollout of an ambitious renewables program under its new pro-market government brings it into the index in 18th position, and reinforces how quickly new markets can redirect the focus of developers and investors.

To download the report, click here.

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About the report

The Renewable energy country attractiveness index (RECAI) ranks 40 markets on the attractiveness of their renewable energy investment and deployment opportunities, based on a number of macro, energy market and technology-specific indicators. The index methodology has been refreshed in the May 2016 edition to reflect a greater focus on energy imperative, policy stability and routes to market. To see more details on these measures and the background to our methodology please go to ey.com/recai.

The index rankings tracks 40 markets worldwide: Argentina, Australia, , Belgium, Brazil, Canada, Chile, China, Denmark, Egypt, Finland, France, Germany, Greece, India, Indonesia, Ireland, Israel, Italy, Japan, Jordan, Kenya, Mexico, Morocco, the Netherlands, Norway, Pakistan, Peru, the Philippines, Poland, Portugal, South Africa, South Korea, Spain, Sweden, Taiwan, Thailand, Turkey, the UK, the US and Uruguay.