This is an extract from a recent report “63rd edition of Renewable Energy Country Attractiveness Index” by EY.
Since 2003, the biannual RECAI has ranked the world’s top 40 markets on the attractiveness of their renewable energy investment and deployment opportunities. The rankings reflect the assessments of market attractiveness and global market trends. The RECAI uses various criteria to compare the attractiveness of renewables markets, such as the magnitude of the development pipeline, that reflect the absolute size of the renewable investment opportunity. Hence, the index naturally benefits large economies. However, by normalising with the GDP — that is, dividing the “raw” RECAI scores by the log of GDP. it can see which markets are performing above the expectations for their economic size. In this way, the normalised index helps reveal ambitious plans for energy transition in smaller economies, creating some attractive alternatives for potential investors.
Renewables highlights from some countries
Germany: Solar auctions set records; bids open for more wind
Germany’s highly effective approach to state tenders continues, with record participation in the country’s latest round of solar PV auctions. Bids received totaled 5.5 GW capacity, far surpassing the 1.6 GW up for auction and resulting in projects receiving support of just 4.44 and 5.47 cents per kilowatt hour, significantly less than previous tenders. Solar PV is central to Germany’s renewables ambitions, with recent changes to project planning, licensing and registration aiming to help expansion of solar projects. Wind-generated power is also a priority of Germany’s Federal Network Agency (BNetzA), which is opening bids for both offshore and onshore wind projects this year. BNetzA’s decision to put almost 15 GW of onshore wind out to tender brings welcome certainty for the sector, according to Bärbel Heidebroek, President of the German Wind Energy Association. The government has also outlined a $17 billion plan to subsidise gas power plants to transition to hydrogen. Tenders are expected to open soon for four gas plants with a total capacity of up to 10 GW, although details remain unclear, and some say the capacity goal is too low to effectively speed up the end of coal-fired power. The government has also announced it will subsidise power plants that run exclusively on hydrogen with a capacity of up to 500 MW, for energy research.
India: Record renewables added but funding shortfall looms
In the financial year 2023–24, India added approximately 26GW of new power capacity, more than 70% coming from renewables. Overall, renewables now make up 33% (about 144GW) of total installed energy capacity, with the share of coal and lignite dropping below 50% for the first time. A record level of renewable energy auctions (for about 41GW of capacity) highlighted innovative approaches to new energy projects, including wind-solar hybrids, and firm and dispatchable renewable energy. Combined renewable energy and storage solutions made up about 37% of the total capacity auctioned. Tariffs for battery energy storage systems (BESS) have dropped about 59% from August 2022. But India could still miss its renewables ambitions unless it can close a forecast $100 billion+ funding shortfall. More investment is needed in renewable energy generation, storage and transmission capacity if the country is to meet the International Energy Agency’s Net-Zero Emission Pathway by 2030. India also aims to be a global green hydrogen hub, committing more than $2 billion in incentives. These target both domestic electrolyzer manufacturing and hydrogen production, though the short tenure of the scheme and relatively low subsidies offered may limit its potential. So far, winners have focused on the export market due to domestic uncertainty around policy and pricing.
Denmark: Largest ever wind auction and historic carbon capture deal
The launch of Denmark’s largest ever offshore wind auction, with a minimum of 6GW capacity awarded across six wind farms, includes sustainability mandates such as the requirement to use recyclable turbine blades. The tenders will give winning bidders the freedom to establish as much offshore wind as possible in their awarded areas, with the hope that enough power will be generated to use at home, export to neighbouring countries and support green hydrogen production. Projects will be built without state subsidies, with operators paying an annual concession payment to the Danish government, which will retain 20% ownership of each wind farm. Cementing its role as a leader in carbon capture and storage, Denmark has completed the largest ever government procurement of carbon dioxide removal credits, worth approximately $24 million. The agreement saw three companies, BioCirc, Bioman ApS and Carbon Capture, win in a bidding process that demonstrated high market interest in capturing and storing biogenic carbon dioxide from biomass. Already achieving one of the OECD’s lowest emission intensities, Denmark aims to achieve net zero by 2045. A newly announced alliance with India will focus on green fuels, including hydrogen. The alliance aims to foster innovation, collaboration and partnerships between Danish and Indian organisations, with shipping giant Maersk playing a key role.
Canada: New tax credit scheme and more certainty for offshore wind
Both Newfoundland and Nova Scotia have made moves to encourage offshore wind projects off their respective coasts. The provinces have signed MoU with the federal government to allow the development of jointly managed land, which should deliver more certainty to investors. Nova Scotia is building a regulatory framework for these projects and opens bidding next year for 5GW of capacity to be built by 2030. Newfoundland is also pushing ahead with several green hydrogen projects worth about $66 million. In Alberta, a moratorium on renewable energy projects has been lifted, but an “agriculture-first” approach to approving new projects will see prime farming land and areas with pristine views off limits. The changes are not expected to affect projects already under construction, but the Canadian Renewable Energy Association warns it may have a negative impact on investor confidence. Canada is also hoping to replicate the success of the US Inflation Reduction Act, with plans to introduce investment tax credits for clean energy. As with the Inflation Reduction Act, the Canadian scheme will offer 10-year certainty for these credits as part of a $45 billion government pledge but, in a key difference from the American version, production tax credits are not included. The announcement has already seen a rise in interest from investors, according to some sources.
Japan: Expansion of offshore wind zone to create opportunities
Japan’s expansion of its offshore wind power zone will create installation opportunities in economic zones and help the country reach its goal of 10 GW of offshore wind capacity by 2030. With floating offshore wind critical to help Japan phase out coal and liquefied natural gas, if passed, this new legislation will allow wind farms to be installed further out to sea. January saw the government issue two tenders for offshore wind off the coasts of the Aomori and Yamagata prefectures, with developers to be selected by December. Japan is also set to unify subsidy rules around electric vehicles and solar panels, with the EU to build a supply chain based on common principles and reduce reliance on China. The two regions are working to align rules to their respective decarbonization programs, ensuring procurement decisions go beyond price to consider sustainability accountability. The draft agreement opens the doors to collaboration with the US and other like-minded countries. The country’s latest round of solar PV capacity auctions yielded a low average price of JPY5.11/kWh (about $0.034) due to a JPY0.00/kWh bid submitted for a 19 MW PV project that had already signed a private power purchase agreement but needed to secure a grid connection. The auction selected 134 MW of PV projects ranging in size from 550 kW to 29.9 MW.
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