Global investment in renewable energy decreased 11% in 2013, but an abundance of opportunities in new markets, new technologies and new sources of capital all signal brighter times ahead, according to EY's latest quarterly Renewable Energy Country Attractiveness Index (RECAI).
‘The 2013 fall in global investment reflects another challenging year for the renewables sector, with policy uncertainty in particular reducing investor appetite across many markets,’ says Gil Forer, EY's global cleantech lead analyst. ‘However, it also reflects a maturing sector, with falling technology costs filtering through to lower investment requirements.’
The U.S. maintained the top spot on EY's index, but the company notes that China closed the gap, installing a record-breaking 12 GW of solar capacity in 2013 and ramping up its consolidation effort to accelerate market recovery. The report says Germany remains in third place, but the country lost ground following the announcement of subsidy cuts and watered-down renewables targets by the new coalition government. Rapid solar market growth and a burgeoning offshore sector helped Japan to replace the U.K. in fourth place, while the U.K. continues to be hampered by political infighting and mixed policy measures, the report adds.
Prolonged energy strategy consultation and anti-renewables legislation have resulted in ranking falls for France and Australia, respectively, while ambitious targets and a series of large-scale project announcements have seen India jump to seventh place. The report notes that competitive bidding trendsetters Brazil and South Africa have also risen in the index, thanks to a plethora of new projects awarded in 2013 auctions.
Looking ahead, EY says industry growth this year will require governments to depoliticize the energy debate in order to support stable and long-term policy measures. In addition, EY anticipates a stronger focus on asset optimization and new ways to extract value or reduce costs.
The report says emerging markets now attract about half of new investment in the sector. According to the report, markets to watch this year include Ethiopia, Kenya, Indonesia, Malaysia and Uruguay.
Also, the report says that following the urgent call for new sources of capital and new investment vehicles in 2013, the theme of innovative financing will remain at the fore this year.