Press release

24 Nov 2020 London, GB

Technological advancements need to be harnessed to reach net zero targets in a post-COVID-19 world

LONDON, 24 NOVEMBER 2020. Technological advancements, such as hydrogen and artificial intelligence (AI), will have a critical role to play in reaching net zero in a post-COVID-19 world, according to the 56th EY Renewable Energy Country Attractiveness Index (RECAI).

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Technological advancements, such as hydrogen and artificial intelligence (AI), will have a critical role to play in reaching net zero in a post-COVID-19 world, according to the 56th EY Renewable Energy Country Attractiveness Index (RECAI). The Index highlights that climate change and renewables must stay at the top of the global agenda if the low-carbon transition is to be accelerated but notes that grid stability remains a significant barrier to faster renewables adoption.

Lockdown measures in response to the COVID-19 pandemic early in 2020 resulted in the share of renewables used in the energy mix soaring across most markets, due to depressed electricity demand, low operating costs and priority access to the grid through regulation. At the same time, economic recovery rhetoric from many global leaders is focused around green growth, leading to a renewed thrust toward net zero targets.

Ben Warren, EY Global Power & Utilities Corporate Finance Leader and RECAI Chief Editor, says:

“Reduced fossil fuel consumption in recent months led to a dramatic fall in pollution levels and has driven greater focus on green growth and recovery. Further, the impact on economies across the globe seems to have accelerated the drive to net zero, and refocused investors’ minds on the environmental, social and corporate governance agenda and how to maintain resilience in their investment portfolios. This highlights the tremendous potential for renewables, and while grid stability emerges as a major barrier, a surge in technological innovation could help to address this challenge.”

As renewables adoption is expected to ramp up further, the Index examines the critical role of hydrogen and AI in supporting grid stability. The ability to convert excess renewable electricity into hydrogen – to create a chemical battery with greater storage capacity – is projected to be a game-changer. Meanwhile, by leveraging the internet of things (IoT), sensors and big data, AI algorithms can help stabilize central grids by improving predictive capabilities through demand forecasting and asset management – thereby increasing dispatch efficiency. 

Key country/market rankings

The US holds its place at the top of the RECAI. State level action has supported the recovery of the renewables sector from the effects of COVID-19 with stimulus packages likely to be promoted in the near future, as well as a commitment pending to re-join the Paris Climate Agreement. And despite the pandemic, China retains second place on the Index, propelled by a solar sector that remains buoyant. Panels with 59GW of capacity were manufactured in the first five months of 2020, representing a 16% increase on the previous year, alongside forecasts of a further 35GW-45GW of new solar capacity this year.

Australia reached its highest position on the Index in the history of the RECAI, moving to third place for the first time. This is largely due to developers and investors driving renewed growth in Australia’s renewables sector, while the market has ambitious green energy export plans. Despite policy uncertainty – and issues with grid stability and price volatility – the Index indicates that Australia could be set to become a green energy exporting leader.

India has moved up from seventh position to fourth in the ranking. Installed solar PV capacity in India has skyrocketed in the past few years, recently reaching more than 35GW. Its economic attractiveness has led to record low tariff bids, with the market revising upward its installed renewables target from 172 GW in 2022 to 510GW by 2030.

Germany, ranked sixth, has taken significant steps to support its offshore wind sector, as well as the development of green hydrogen – an emissions-free alternative fuel created using electrolysis powered by renewables. Germany has also committed to ending all coal-powered generation by 2038.

Ireland strengthened its appeal with the introduction of new Renewable Energy Support Scheme auctions, although it fell two positions overall to 14 in the ranking due to larger progress in Chile (#11) and South Korea (#13). We also see Portugal (#22) and Pakistan (#39) make significant gains.

Arnaud de Giovanni, EY Global Renewables Leader, says:

“The recovery from the COVID-19 pandemic presents the energy industry with an opportunity for green and sustainable growth. There will no doubt be challenges in the short term, but renewables are well-equipped to seize the opportunity. Energy leaders must take the lead in a coordinated effort across industries and leverage technological innovations toward enabling a sustainable future.”

For the complete top 40 ranking and analysis of the latest renewable energy developments across the globe, visit https://www.ey.com/en_gl/recai

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About the Renewable Energy Country Attractiveness Index

The Renewable Energy Country Attractiveness Index (RECAI) ranks the top 40 markets in the world on the attractiveness of their renewable energy investment and deployment opportunities. The rankings reflect our assessments of market attractiveness and global market trends. This edition reflects on the glimpse of what the energy industry might look like in the future based on COVID-19 lockdown measures, when large reductions in energy demand resulted in the share of renewables soaring across most regions.