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Asia’s top renewable energy markets

According to a new report by EY, seven Asian countries rank among the globe’s most attractive markets for renewable energy sources including wind power, hydropower and solar energy.

EY’s Renewable Energy Country Attractiveness Index (RECAI) ranks markets across the globe based on investment and implementation opportunities in the renewables space. Out of all countries assessed, the 40 best performing countries are listed in the index.

South and Southeast Asia have a strong representation in the list, with more than seven countries making the top 40. China has been among the top markets worldwide for years now, although the country has slipped one spot to second, providing the United States to regain pole position.

EY attributes China’s fall to a government shift from subsidising the renewables sector to allowing it to develop competitively. The Covid-19 crisis also appears to have played a part in its dip, although the Big Four accounting and advisory firm anticipates a promising future for the country’s renewables market.

India is the next country from the region to feature on the index, holding 7th place. The country has fallen significantly on the rankings, having previously occupied third position. According to EY, India is expected to fall short of its renewable energy generation target of 175GW by 2022, which has been branded ‘disappointing’ among the global community. The Covid-19 crisis has worsened this scenario.

Asia's top renewable energy markets: China, India and Japan

Japan follows in tenth place, having also fallen from its previous ranking of eighth. The country’s relatively low score in the solar power energy segment is partially responsible for this dip. Next on the list from South and Southeast Asia is South Korea in 17th place, however, the country has risen on the rankings from 20th.

The Philippines comes in at number 28, having jumped up from its previous ranking of 32nd, which EY attributes to a recent government initiative aimed at attracting $2 billion of investments towards renewable energy. Under the green energy tariff programme, the government plans to hold a 2GW auction that will make up some ground towards the country’s 2030 target of 15GW.

Vietnam rounds up the region’s presence on EY’s RECAI, ranking 39th. The position represents a devastating drop for Vietnam, given its previous rank of 23rd. The country had a boom-and-bust cycle in solar energy over the course of last year, while overall uncertainty has dampened Vietnam’s future forecasts as well.

Asia’s renewables sector

Going forth, EY expects that the renewables sector in South and Southeast Asia will continue its growth. A PwC report from 2018 explained how the Asia-Pacific region as a whole is expected to see up to $250 billion in new renewable investments in the lead up to 2025. Accroding to EY Asean Resources Market Segment Leader Sanjeev Gupta, the region will weather the Covid-19 storm.

“The balance sheet and cashflow of energy players are essentially supported by long-term contracts for the sale of renewable electricity; they are therefore not likely to be affected by any short-term fluctuations such as the Covid-19 pandemic. Renewables are also seen as a less risky investment by the loan and capital markets and furthermore, prices of renewables are at parity with grid or even lower than thermal electricity, and not affected by changes in oil and gas prices. Hence, the economic case for renewables remains intact,” he said.

Outside of Asia

Outside of Asia, the US leads the way this year, making the top of the list for the first time since 2016. According to EY, the country has investments of nearly $60 billion earmarked for offshore wind energy alone in the coming period, looking to develop capacity of 30GW by 2030.

France made third place behind the US and China. The country has accelerated its transition away from nuclear power recently, bolstering its wind and solar capacity with competitive pricing levels. Australia follows France in fourth, having jumped up from its previous rank of fifth.

Western Europe dominated the rest of the top ten, with Germany, the UK, Denmark and the Netherlands all making an appearance. EY points to the UK’s new proposal to promote a wider array of wind and solar energy development, which has secured a jump in the rankings for the country.

Spain and Ireland both narrowly missed the top ten, although both made significant progress since the last ranking. They were followed by Chile, which remained in the same place as last time, while Israel broke into the top 20 with a jump from 22nd to 14th. Other countries in the top 20 are Canada, Brazil, Argentina, Italy and Belgium. Argentina’s fall from 11th to 18th is based on high political uncertainty which is slowing the investment landscape.

Non-Asia-Pacific countries between the ranks of 20 and 30 are Switzerland, Sweden, Morocco, Finland, Mexico, Norway, Portugal, Egypt and Jordan. The case of Egypt is notable, where poor price forecasts and revised renewables targets have taken the country all the way down from 12th to 29th.

Rounding off the top 40 countries are Poland, Saudi Arabia, Greece, Turkey, South Africa, Kazakhstan, United Arab Emirates (UAE) and Kenya. This is Saudi Arabia’s first presence in the top 40, which can be attributed to country’s plans to reach 60GW in capacity over the next decade. South Africa and the UAE have also made the top 40 for the first time.

According to EY Global Energy Leader Benoit Laclau, the outlook is promising for all these markets going forth. “This is a defining and transformative moment for the energy industry, despite the current crisis. Stakeholders are looking to collaborate and invest in companies where climate change and sustainable development is embedded in their strategy. Energy leaders should take action to invest in renewables and related sustainable long-term projects, including energy efficiency, smart power networks and low-carbon transport infrastructure.”

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