Emerging Markets Attract Clean Energy Investment, Reveals Index

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Written By: Emma Websdale

Emerging markets such as Kenya, Brazil and Thailand are becoming increasingly attractive to clean-energy investors, reveals Ernst & Young’s (EY) latest Renewable Energy Country Attractiveness Index (RECAI).

3077103572EY’s most recent global quarterly publication, which ranks 40 countries on the attractiveness of their clean-energy investment and deployment opportunities, reports that emerging markets that are making strides in large-scale deployment and tackling deployment barriers are attracting market investors, with 2013 “experiencing a wave of investor public offerings” (IPOs).

Jumping up in the index are the emerging economies of Brazil and Chile, where renewables have played a large part in Brazil’s 2013 power auctions. Chile has continued to attract large-scale projects, including the world’s largest unsubsidized photovoltaic (PV) power plant, in an effort to meet its newly doubled renewable-energy target of producing 20% of the country’s power from renewable sources by 2025.

India and Japan have also moved up the index, after growth in feed-in-tariffs (where owners of small- or large-scale solar and wind arrays receive a guaranteed price for their electricity over 20 years, ensuring that investors get a return on their capital) and large-scale auctions have helped both countries to achieve stronger renewable deployment.

The EY report has also found that markets such as Turkey and Thailand are attracting significant interest. Thailand has jumped to 23rd place after increasing its renewable-energy use to meet its 14-gigawatt (GW) target by 2021. Meanwhile, Turkey’s high market electricity prices have resulted in an oversubscription for its renewable-energy auctions.

In addition, the report says that China’s introduction of additional tax breaks and subsidies for solar is helping the country to meet its 35-GW target by 2015.

“Renewable technology innovation therefore represents an opportunity”, said Ben Warren, Global Cleantech Transactions Leader in the EY report. Given [that in the] UK we are currently exploiting only a fraction of the world’s natural renewable resources, we need to stretch our ingenuity and utilize all the elements around us to maximize the potential of renewable energy, rather than just relying on the cheapest sources today.”

Kenya entered the latest index rankings for the first time, sitting in 40th place. Despite this recent entrance, the report advises that Kenya’s market is one to watch because its robust support framework for renewables could allow the country to become a hub for renewables in the East Africa region.

Other emerging markets that are attracting a growing share of global clean-energy investment are Latin America and the Caribbean. According to a joint study from the Inter-American Development Bank (IDB) and Bloomberg New Energy Finance (BNEF), both regions together represented 6% of the total $268.7 billion global figure.