Ireland has moved up 6 places from 18th to 12th out of 40 countries in the latest Renewable Energy Country Attractiveness index published by EY. This index examines the attractiveness of countries to those investing in renewable energy activity and projects.
Despite the global slowdown caused by COVID-19, the renewable energy sector is expected to bounce back quickly as the long-term drivers for investment remain strong, according to the 55th EY Renewable Energy Country Attractiveness Index (RECAI). The latest attractiveness index considers the potential impact of the pandemic and looks at the resilience of countries in the index.
Anthony Rourke, EY Ireland Government and Infrastructure Advisory Director, commented:
“Ireland’s ranking has been improved in the latest country attractiveness index as a result of the detail provided by the Government on the Renewable Energy Support Scheme (RESS) at the end of last year. Under this scheme, the Irish Government will hold auctions between 2020 – 2027 and as a result, we anticipate a growth in Ireland’s renewable energy capacity by 30% over the next three years.
This will contribute to Ireland’s efforts to reach its 70% renewable energy target by 2030 across the solar and onshore/offshore wind sectors. Ireland’s strong performance this year is also attributed to the significant 46% reduction in the use of coal and oil in generating power since 2015.
“Plans for the Climate Action (Amendment) Bill 2020 which will set a target to decarbonise the economy by 2050 at the latest, published in the new programme for Government, should further support Ireland’s position in future rankings.”
The EY report highlights how climate change and other environmental, social and governance (ESG) issues are being increasingly recognised as key determinants of a company’s future value creation potential.
Institutional investors are demanding that businesses not only deliver financial performance but also show how they make a positive contribution to society. As a result, companies are having to re-evaluate their corporate strategies to curb their emissions, enhance their governance, and improve their climate-related disclosures. This has resulted in institutional investors increasing the capital they are allocating to renewable energy infrastructure as a means to hedge their climate exposure, according to our analysis.
Anthony Rourke added, “This in many ways is a defining and transformative moment for the energy industry. Investors are increasingly seeking to collaborate and invest in companies where climate change and sustainable development is embedded in their strategy. Environmental, social and governance issues together with climate change remain the dominant long-term drivers for renewable investment here in Ireland. Investors are looking for reassurance that companies understand this link between the non-financial performance of the business and the successful delivery of the business strategy.”
For the first time since 2016, the US has secured the top position in the index. This is largely because of a short-term extension to the Production Tax Credit and long-term growth in offshore wind, with plans to invest US$57b to install up to 30GW by 2030. China’s growth in renewables has slowed, as the government looks to wean the market off subsidies towards a more competitive landscape.
This coupled with reduced demand as a result of COVID-19, has caused China to drop to second in the index, but forecasts remain optimistic for long-term growth. France has moved up from fourth position to third, securing strong power prices and awards of 1.4GW for wind and solar developers in its latest auction, as it gradually weans its grid off nuclear power.
The UK, ranked sixth, made a milestone proposal to re-include onshore wind and solar projects in the next contracts-for-difference auction, encouraging greater and more diverse renewable energy development.
Spain improved by four positions to rank eleventh, despite being hit hard by COVID-19, as climate and energy policy remains a high priority for the new coalition government. It has set out aggressive but achievable plans to increase wind and solar, and most investors remain positive about Spain’s medium-term prospects.
The report examines how large-scale energy storage is critical to decarbonise electricity systems, as well as the conditions needed to encourage investment in utility-scale battery storage. As electricity grids decarbonise, vast amounts of energy storage will be needed, and utilities and developers are slowly ramping up investments in large-scale batteries.
According to the report, 12.6GWh of battery storage is planned to be installed this year, making 2020 a record year for energy storage growth. And in the longer-term, a 13-fold increase in capacity growth, from around 17GWh currently to 230GWh by 2025, is anticipated.