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Governments accelerating renewables programme on the back of volatile conditions, says EY

Felicia Tan
Felicia Tan12/20/2022 03:34 PM GMT+08  • 4 min read
Governments accelerating renewables programme on the back of volatile conditions, says EY
The increase is due to countries seeking to reduce their reliance on imported energy, says EY. Photo: Bloomberg
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Governments around the world are accelerating their renewables programme. This is to help reduce their reliance on imported energy on the back of continuing geopolitical tensions and economic uncertainty, reveals the latest EY Renewable Energy Country Attractive Index (RECAI 60).

The index ranks the world’s top 40 markets in terms of their attractiveness on their renewable energy investment and deployment opportunities.

Within the index, the US has retained in top place due to the passing of its Inflation Reduction Act in August. The Act was viewed as a “game changer” for the US’s green hydrogen energy.

China came in second within the index for its commitment to accelerating its renewable energy transition. The country previously pledged to have its carbon dioxide emissions peak by the year 2030 and achieve net-zero emissions in 2060.

In third place, is Germany, which rose from fourth place the year before, as its renewables sector was boosted by its Easter package commitment. The country’s renewables sector is expected to triple its expansion within a decade.

The UK moved a spot down to fourth place after having lost its top ranking for installed offshore wind capacity this year to China. That said, the country has a large pipeline, with offshore wind featured prominently in the government’s energy strategy.

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Other Southeast Asian markets within the index include the Philippines in 27th place, Vietnam in 36th place, Indonesia at 39th, and Thailand at 40th. Indonesia is a new entrant to the top 40 countries within the index after the country introduced a new legislation to encourage the use of renewables.

Indonesia’s “good showing” was also due to its regulations and fiscal incentives to encourage renewable energy investment and plans to retire 15GW of coal-powered generation, notes the RECAI.

“The last couple of months have seen positive developments across Southeast Asian countries. For example, Thailand launched a 5GW tender; Malaysia is opening up to 600 MW of corporate power purchase agreements; the Philippines awarded close to 2GW through its Green Energy Auction Program tender; Vietnam is progressing toward the resolution of transition assets post-feed-in tariff (FiT); while the early coal retirement scheme in Indonesia is progressing and would be expected to enable a faster rollout of renewable energy. This sends a strong signal that Southeast Asia is committed to meeting its targets and creating a pipeline for developers and investors,” says Gilles Pascual, EY Asean power & utilities leader.

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“Energy transition remains at the top of the agenda for government and business, made all the more urgent in light of the significant challenges facing the global energy market. This is reflected in the remarkable commitments made across global markets to drive uptake of renewable energy sources and reduce reliance on gas imports,” adds Ben Warren, EY global power & utilities corporate finance leader and RECAI chief editor.

The latest normalised RECAI ranking in that the edition includes a new one-off index which normalises gross domestic product (GDP), thereby showcasing markets that are performing above expectations for their GDP. This is compared to the previous editions which use various criteria to compare the attractiveness of renewables markets, such as magnitude of development pipeline, which reflect the absolute size of the renewable investment opportunity.

“The RECAI ranking highlights the most attractive global renewables markets with larger capital flows and capacity. The normalised index shines a light on smaller markets with a strong commitment to renewable energy – demonstrated through supportive government policy and strong project economics – creating attractive alternatives for potential investors,” says Arnaud de Giovanni, EY global renewables leader.

“To reach net zero, the integration of renewables must improve significantly. Distributed energy resources have a vital role to play in allowing a range of green energy sources to be integrated into the grid. Additionally, investment in smart grids will be key to securing energy supplies and getting the world to net zero by 2050,” Pascual adds.

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