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

The report highlights how climate change and renewables must stay at the top of the global agenda if the low-carbon transition is to be accelerated as we navigate the pandemic. It further notes that while there is tremendous potential for renewables, grid stability remains a significant barrier to faster adoption.

The COVID-19 lockdown measures early in 2020 resulted in the share of renewables used in the energy mix soaring across most countries because of depressed electricity demand, low operating costs, and priority access to the grid through regulation. At the same time, economic recovery rhetoric from global leaders has a consistent and prevailing theme around green growth leading to a renewed thrust towards net zero targets.

Sponsors

Sponsors

Sponsors

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 (ESG) agenda and resilience in their investment portfolios. This highlights the tremendous potential for renewables, and while one of the major barriers presented is grid stability, there is a surge in technological innovations to help address this challenge”.

UK jumps one place on the index to 5th

The UK moved up one place on the index buoyed in part by the UK government’s commitment to invest £350m to cut carbon emissions, as part of its ongoing efforts to achieve net zero emissions by 2050. The scheme includes £140m ringfenced for industrial hydrogen, carbon capture and storage projects.

The UK has also continued its commitment to large-scale offshore wind projects, including the proposed 1GW Inch Cape project. This project will be fully merchant, demonstrating attractive economics for projects of this type. Furthermore, Scotland has launched its first round of seabed auctions with 10GW of capacity available for new offshore wind projects.

The planning consent given to the 350MW Cleve Hill Solar PV project in Kent, the largest of its kind in the UK, also represents a vote of confidence in solar from the UK government.

Ben Warren, commented: “With a verbal commitment from the UK government to support wind power, backing up the rhetoric with a well thought through industrial policy could put the UK at the forefront of one of the most exciting and transformative industries in the world. Energy storage, the decarbonisation of heat and transport, and intelligent energy management and trading capabilities to support the transition to net zero are just some of the areas where the UK has strength and expertise. All of this would benefit from a more cohesive and strategic energy and environmental plan.

“Continued backing for the UK offshore wind industry, a world leader in its own right, is a good place to start, but this is just the tip of the iceberg. Support and commitment across the whole of the renewable energy mix is needed if the UK is to meet its low carbon targets.”

Hydrogen has a part to play

As renewables are expected to ramp up further, the report examines the critical role to be played by 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, AI algorithms – with their use of the internet of things, sensors and big data – can help stabilize central grids with improved prediction capability through demand forecasting and asset management, and consequently increase dispatch efficiency.

The United States holds its place at the top of the RECAI, with significant support from COVID-19 stimulus packages designated to renewable energy projects and a commitment pending to re-join the Paris Climate Agreement. Despite the pandemic, the Chinese solar sector remains buoyant and continues to remain in the second spot on the index. Panels sufficient for 59GW of capacity were manufactured in the first five months of 2020, representing a 16% increase on the previous year, alongside forecasts of 35-45GW of new solar capacity to be installed this year.

Australia has reached its highest position on the index in the history of the RECAI, reaching number three for the first time. This is largely due to developers and investors driving renewed growth in Australia’s renewables sector, while the country has ambitious green energy export plans. Despite policy uncertainty – and issues with grid stability and price volatility – the future looks bright for the industry, and Australia could be on its way to becoming a green energy exporting superpower.

India has moved up from seventh position to fourth. 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 country 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. In addition, Germany has committed to ending all coal-powered generation in the country by 2038.

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 this sustainable future.”

For the complete top 40 ranking, as well as an analysis of the latest renewable energy developments across the world, visit ey.com/recai.