The index rankings reflect EY assessment of the factors driving market attractiveness in a world where renewable energy has gone beyond decarbonization and reliance on subsidies.
- We have defined the questions being asked, based on what we see as global market trends affecting investment and deployment priorities, and the challenges and success factors impacting EY clients.
- Is there a long-term need for additional or replacement energy supply? If so, is there a strong case for energy from renewable resources in particular?
- Is policy hindering or helping the ability to exploit renewables opportunities in a country?
- Are essential components in place to ensure project delivery, such as long-term contracts, grid infrastructure (including storage) and availability of finance?
- What does the strength of natural resource, track record and project pipeline reveal about the outlook for particular renewable technologies?
- Even if all other elements are in place, does the macro stability and investment climate enable or impede the ease of doing business in a country?
These index pillars therefore put emphasis on fundamentals such as energy imperative, policy stability, project delivery (including capital availability) and diversity of natural resource – factors that will increasingly become key market differentiators as markets move toward grid parity, and “artificial” motivations, such as government targets or the ring-fencing of technologies, become less critical.
Note that the COVID-19 impact parameter (introduced in the May 2020 issue) has been removed from the RECAI, as we have assessed that the majority of COVID-19 impacts have now been incorporated into the datasets that we use.
Determining the country rankings
Each parameter within the five pillars comprises a series of datasets that are converted into a score (from one to five) and weighted to generate parameter scores. These are then weighted again to produce pillar scores, with an overall RECAI score and ranking. Weightings are based on the EY assessment of the relative importance of each dataset, parameter and pillar in driving investment and deployment decisions. Each technology is also allocated a weighting based on its share of historical and projected investment levels.
Separate from the main index, EY technology-specific indices rankings reflect a weighted average score across the technology-specific parameters and a combined score covering our other macro and energy market parameters. This is because some markets may be highly attractive for specific technologies but face other major barriers to entry.
Datasets are based on publicly available or purchased data, EY analysis or adjustments to third-party data. We are unable to publicly disclose the underlying datasets or weightings used to produce the indices.
If you would like to discuss how EY RECAI analysis could help your business decisions or transactions, please contact the report’s senior advisor, Phil Dominy.