In a new report, BloombergNEF recognizes a significant uptake in renewable energy in developing countries, clearly outperforming OECD countries. The trend is due to reductions in equipment cost, and new business models that enable access to capital. Still, many emerging markets are also the biggest installers of new coal capacity. India and China alone, account for 81% of newly added coal-fired power stations.
For this year’s Climatescope report, BlommbergNEF collected data of more than 100 non-OECD countries, to determine each market’s conduciveness for renewable energy investment and development. Since its inception in 2012, BNEF has revamped its methodology to more accurately reflect market realities. This year’s market report sees Chile as the overall winner as the most attractive renewable energy market for investors.
Reportedly, the country has presented a strong track record of government policy, clean energy investment and a commitment to de-carbonize irrespective of grid constraints. India, Jordan, Brazil, and Rwanda followed the ranking in that order. While China scored first place last year in the ranking this year, the market was this year only ranked the seventh most conducive for renewable energy.
BloombergNEF, highlights that non-OECD countries are the biggest installers of renewable energy resources. Reportedly, in 2017 developing nations added 114 GW of zero-carbon generating capacity of all type, of which 94 GW accounted for solar PV and wind. At the same time, coal capacity additions had dropped by 38% to 48 GW, representing half of the additions in 2015, when growth peaked at 97 GW of additional capacity.
“It’s been quite a turnaround. Just a few years ago, some argued that less developed nations could not, or even should not, expand power generation with zero-carbon sources because these were too expensive,” said Dario Traum, BNEF senior associate, and Climatescope project manager. “Today, these countries are leading the charge when it comes to deployment, investment, policy innovation, and cost reductions.”
The analyst outfit connects the change to the new economics of renewable energy. The costs of generation of wind and solar have significantly dropped over the last years. New business models, suitable climate conditions, and dramatically lower equipment costs have led to renewables outcompeting new fossil fuel generators on price over the last years, without subsidies. According to the report in 2017, about 28 GW of wind and solar capacity had been added in developing countries, with prices often as low as $17.7/MWh for wind and $18.9/MWh for solar.
Pivotal to this development are development banks, export credit agencies and other financial stakeholders of the industries, which enable access to capital flows. After the first movers have paved some ways, also private players, like multinational utilities are moving into developing countries.
“European players, in particular, have moved aggressively to finance projects, particularly in Latin America,” said BNEF head of Americas Ethan Zindler, who helped found Climatescope. “While concessional capital is still clearly required in least developed countries or in others just beginning to adopt clean energy, elsewhere private funders appear quite comfortable deploying capital at volume.”
However, the report also highlights some less celebratory facts. While it has been said that coal capacity additions fell to record lows, the report also highlights that actual generation capacity has grown 4% year-on-year to 6.4 TWh. Currently, there are 193 GW of coal capacity additions under construction, 86% of which are in China, India, Indonesia, and South Africa.
Despite India and China have also installed 432 GW of coal capacity between 2010 and 2017. The entire U.S. has a coal capacity of 260 GW, for comparison. Faced with pressure to enable energy access and keep energy costs low, a timely decommissioning of this capacity seems unlikely, BlooombergNEF says in its report. Currently, the two markets account for 81% of the emerging market’s coal generation capacity.
Source PV Magazine