|  2012-11-29

Renewable energy country attractiveness indices

What will future generations say about 2012? New markets have ricocheted across the renewables sector, injecting some much-needed optimism and competition into an industry that remains scarred by the enduring legacy of the financial crisis. With more developed markets buckling under the pressures of continuing economic tumult, political change and social pressures, it is perhaps of little surprise that the top-ranking countries in our index have seen scores fall even further in Q3.

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wind energy

Renewable energy country attractiveness indices

Global highlights


What will future generations say about 2012? New markets have ricocheted across the renewables sector, injecting some much-needed optimism and competition into an industry that remains scarred by the enduring legacy of the financial crisis. With more developed markets buckling under the pressures of continuing economic tumult, political change and social pressures, it is perhaps of little surprise that the top-ranking countries in our index have seen scores fall even further in Q3.


Grid issues, strong partisan views, mixed policy signals and austerity measures are just some of the tensions that are slowing the pace of expansion across our top five countries. This issue sees the US fall to third place behind Germany, as policy uncertainty continues to undermine the sector. Even Germany, so long a beacon of optimism, has seen rising energy costs for consumers prompt its policy-makers to rein in support for renewables. However, it is premature to write off these markets so easily. Each is simply trying to carve out a sustainable role for renewables in the face of competing agendas and short-term barriers. Emerging markets on the other hand — with untapped resources and high level of government support — are already learning from their predecessors’ mistakes, with many opting for capacity tenders in favor of financial incentives.


Increasing energy demand in these regions has strengthened government investment in clean energy. Our two new entrants to the index — Saudi Arabia and the United Arab Emirates (UAE) — are also supported by strong government initiatives, a proven track record in energy infrastructure, and robust financial markets. However, these markets others will also need to find ways to attract more private investment if they are to avoid over reliance on government-driven growth.


The real casualties of 2012 have been the sector’s manufacturers. Oversupply, falling technology costs, reduced demand in some European markets and ensuing trade protectionism have resulted in supply chain paralysis across some markets. Many manufacturers are likely to be left out in the cold as governments rationalize financial support and corporates favor divestment and restructuring. In the long term, greater cost-competitiveness should create a sustainable growth platform for both developed and emerging markets as well as manufacturers. Until then, however, Darwin’s “survival of the fittest” will inevitably result in some sector players becoming extinct along the way.


Also in this issue...


Lead article: Energy demand is now a key driver in shaping the landscape of the global energy market, creating a thirst for new energy sources.


Technology articles: An analytical insight into global trends in the biofuels market and a look at the role of anaerobic digestion in waste treatment solutions.


Feature articles: We look at the emerging market of Latin America and ask whether anaerobic digestion is a promising technology for waste treatment. We also present the findings of our recent MENA clean-tech survey.

Renewable energy country attractiveness indices - A shift in the global power base is under way


This year marks a turning point for renewable energy markets across the world. The latest investment data at Q3 indicates that total investment in 2012 is likely to be lower than that in the previous year, a situation that has not arisen for at least eight years. The last decade has witnessed significant growth and capacity build out in Europe, and significant financing and investment growth in the US. However, the next phase of renewable energy market leadership is likely to take place across a wide range of emerging markets in countries where economic growth and revised energy priorities will drive a sustained increase in the deployment of wind, solar, biofuels, smart transportation and energy-efficiency technologies.  Further, these markets are likely to influence the direction and execution of cleantech financing, partnerships and transactions across the world.


Emerging markets get back to basics


The prediction that these emerging countries will be at the forefront of growth in the sector underscores the importance of the long-term drivers of the resource-efficient, low-carbon transformation that is under way globally. Resource scarcity, urbanization, population growth, energy security concerns and economic development objectives are key drivers that continue to propel the global market for cleantech solutions.


These drivers are most acutely felt in emerging markets and therefore it is no surprise that the contribution of renewable energy is forecast to rise across many countries in Asia Pacific, Middle East, Africa and Latin America.


Energy security


Long-term security of energy supply remains a national priority for both governments and corporates operating in these emerging high-growth economies, especially where fossil fuel resources are scarce. Countries that are primarily dependent on petroleum — both domestically produced and imported — are seeking strategies to diversify their energy mix and have already begun formulating national strategies to invest in the build out of renewable projects.


At a secondary level, companies that find themselves processing materials such as water, cement, pulp, steel and aluminium, will need to secure significant amounts of energy to continue to produce and export these materials. Further, optimal resource sites for new generating assets — especially in resource-rich countries — may well be in remote environments away from key demand centers, where the build out of grid and existing capital intensive infrastructure is likely to be difficult. As such, distributed generation such as wind and solar is likely to become increasingly attractive. Distributed renewable energy, also referred to as “on-site” or “off-grid” energy, addresses the potential challenge faced by some emerging markets of providing energy access to remote or less developed communities where there is a lack of national or regional infrastructure. However, the scale of such installations is inevitably smaller than grid-connected projects.


Employment


Emerging markets have also seen the clean energy sector as a means of developing an increasingly entrepreneurial market and workforce. The development and deployment of a range of different renewable technologies is seen as an important vehicle for creating high quality jobs and developing a diverse set employment skills that are particularly critical for countries with a younger workforce and rising middle class.

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