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Report: Emerging Markets More Attractive than EU, US for Renewable Energy Investment

Almost without exception, European markets slipped while less mature markets across Latin America, Africa and Asia continued their ascent, revealed the latest edition of the EY Renewable Energy Country Attractiveness Index (RECAI) report. Emerging markets now represent half of the countries in the 40-strong index, including four African markets featuring in the top 30. Ten years ago only China and India were attractive enough to compete with more developed markets for renewable energy investment.  

The report finds that Chile is one of the first markets to enable economically viable renewables projects to compete directly with all other energy sources. At the same time, Brazil’s renewables sector is showing resilience amid an economic downturn and its underdeveloped solar market remains a potentially lucrative lure. Mexico’s recent power auctions have opened the door to multi-billion dollar opportunities under a new liberalized energy market.

Meanwhile, European countries appear to be scaling back their ambitions as they address the challenges of marrying up increasingly mainstream renewables with a legacy of centralized conventional power generation.  

Ben Warren, EY’s Global Power & Utilities Corporate Finance Leader and RECAI Chief Editor, said in a press release: 

“Emerging markets are transforming their energy industries at an unprecedented pace. Last year, renewable energy investments in the developing world overtook those in the developed world for the first time. Latin America, in particular, has become something of a litmus test for how quickly markets can grow.”

Argentina was the highest-scoring new entrant, the report shows. The transformation of the country’s economy and rollout of an ambitious renewables program under its new pro-market government brings it into the index in 19th position, and reinforces how quickly new markets can redirect the focus of developers and investors.

Warren added: “Markets earlier in their renewables journey are benefiting from cheaper and more efficient technologies, lower cost of capital and more reliable resource forecasting. The increasingly global flow of capital proves that investors are becoming more comfortable with new markets. We can expect to see massive deployment of low carbon investment in developing markets.”

Lead image credit: Warren Rohner | Flickr

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