LONDON, England, October 9, 2007.
The United States continues to be the most attractive country in the
world for renewable energy markets, followed by a three-way tie for second
place among India, Spain and the United Kingdom.
Ernst & Young produces a quarterly ‘Country Attractiveness Indices’ to
provide scores for national renewable energy markets, renewable energy
infrastructures and their suitability for individual technologies. The
scoring out of 100 provide long-term indices for ‘all renewables’ and
‘wind’, with a near-term wind index with a two-year horizon.
The U.S. scores 72 on the 'all renewables' index, with a 73 in wind (80 for
onshore and 58 for offshore wind). Solar scored 75, biomass & others scored
a 64, and the country received a rating of 76 for its infrastructure.
The three second-place countries shared a 64 rating for all renewables, with
India scoring 65 for wind (75 onshore and 43 offshore), 61 for solar, 55 in
biomass and a 65 in infrastructure; Spain had a 64 in wind (71 on, 48 off),
72 for solar, 58 for biomass and 76 infrastructure; while Britain had 65 for
wind (63 onshore, 69 offshore), 50 solar, 58 biomass and 69 infrastructure.
While India and Spain were tied for second-place in the last quarterly
rating, Britain moved up from fifth spot.
As a result, German dropped a notch to fifth spot, with ratings of 63 for
all, 63 for wind (62 on, 64 off), 73 solar, 61 biomass and 60 for
infrastructure. China remained in sixth spot with an overall rating of 61,
64 for wind (67, 56), solar 45, biomass 42 and 61 for infrastructure. Canada
remained in seventh place with 58 overall, 61 for wind (66, 48), 42 for
solar, 47 for biomass & other, and 64 for infrastructure.
Last quarter, there was a four-way tie for eighth place, which is repeated
this time with an overall score of 57 for Italy (57 wind (63, 43), 68 solar,
53 biomass, 64 infrastructure); France (57 (59, 53), 59, 54, 58); Portugal
(58 (63, 46), 62, 49, 64); and Greece (59 wind (63 onshore, 49 offshore), 59
solar, 44 biomass, 60 infrastructure).
The balance of the top 25 countries rated by E&Y were Ireland (55 overall),
Sweden (52), Australia (50), Denmark (50), Belgium (50), Norway (49),
Netherlands (49), Poland (48), Japan (45), New Zealand (44), Brazil (44),
Finland (37), Turkey (36) and Austria (31).
“Demand for renewable energy is growing at unprecedented rates, requiring
significant investment throughout the supply chain driven by competing
government incentive mechanisms,” the report explains. “The U.S. has a
‘twenty in ten’ target, China has a 10% target for renewables by 2020, India
has a 10% target by 2012, and EU countries have recently signed up to a 20%
mandatory target for energy consumption from
renewable sources.”
“This latter target is particularly significant given the relative
immaturity of renewable heat and transport markets, as the onus will be on
renewable power to make up any shortfall (some commentators argue that the
true target for renewable power is closer to 30%),” it continues.
In 1997, Ernst & Young predicted global investment in renewables would reach
US$70 billion by 2006, and the figure was considered ambitious at that time.
Investment exceeded $100 billion last year and could rise to $750 billion by
2016 at current rates of growth, it notes.
“Competition for assets is intense; trade players are battling for supply
chain presence” and, “given current rates of industry growth of 20% to 30%
and manufacturers’ focus on profitability, supply chain constraints are
likely to continue in the medium term notwithstanding new future entrants
from China, South Korea, India, and possibly Japan,” it adds. “As a
consequence, mergers and acquisition activity is likely to filter down the
supply chain, placing a premium for key players such as gearbox and bearing
manufacturers.”
Activity “is no less intense” in the solar sector, and certain pinch points
within the supply chain may not be so easily overcome. Solar companies
compete with the semiconductor industry for raw materials; turbine
manufacturers compete with other users of steel, aluminium, and metals.
“Tight supply encourages technological advances, pursued through investment
in R&D, such as bigger, more efficient wind turbines, advances in thin-film
solar PV, and hydrogen-based technologies” and new developments “could cut
through supply difficulties and ultimately alter the balance of power among
supply chain participants.”
“Critical mass is becoming an imperative,” it concludes. “Very significant
buyers are emerging in the renewable energy industry” and the “ability to
quickly acquire and commercialize new technologies, enter new markets, and
diversify across the industry requires a strong balance sheet, a track
record of raising finance for new acquisitions, and a dynamic approach to
the market.” The biomass industry lags in this respect and is ripe for
consolidation.
“For governments, one of the key issues is to continue supporting projects
through financial incentives such as tariffs and tax incentives but to focus
on this alone is short-sighted,” it cautions. “The most successful markets
for growth, such as India, China, and the US (for new technologies) are
placing equal emphasis on supporting the supply chain. Without this
investment, growth in generating capacity is continuously under threat from
a lack of supply, putting a market’s ability to reap the rewards from
renewable energy at risk. The next five to ten years will be just as much
about supply
chain as policy.
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