India Moves to 3rd in Latest Renewable Energy Attractiveness Index

India Moves to 3rd in Latest Renewable Energy Attractiveness Index

A piece of positive news has come from Ernst & Young Global Limited (EY), which released its 57th Renewable Energy Country Attractiveness Index (RECAI) yesterday, granting the third position to India due to its continued progress in solar energy.

The biannual RECAI ranks the world’s top 40 markets on the attractiveness of their renewable energy investment and deployment opportunities. The rankings reflect assessments of market attractiveness and global market trends. The US retains top position on the 57th index and is expected to hold its position under President Biden.

While India’s performance is commendable, it may not tell the whole story about the country’s advancement in renewable energy in recent time. In the last five years, India’s position in the RECAI has fluctuated many times, including the slip from the 2nd position in 2017 to the 4th position in 2018. Last year, the country moved up from the 7th to the 4th position in the 56th EY RECAI as a result of installed solar PV capacity skyrocketing, reaching more than 35GW. This year, the country has climbed up one more position, with the market’s solar sector expected to grow significantly and with generation from solar PV forecast to exceed coal before 2040. Let us hope that the upward trend continues.

East Asian markets Japan and South Korea (ranking the 8th and the 17th positions respectively) also made commitments toward net zero in the past year. The report highlights that East Asia has a robust pipeline of clean-energy projects, with more than 800 shovel-ready schemes and with a total investment potential of US$316b.

RECAI 57 also examines green hydrogen case studies in Europe and China that illustrate the great potential of this new technology, but also show the barriers that need to be overcome to reach commerciality and widespread use. The U.S., which has retained the first spot, has performed well in this regard. The re-acceptance of the Paris Accord, coupled with the recent announcement to cut GHG levels by 50-52% as early as 2030 and achieve 100% carbon free power by 2035, will likely see increased investment interest in the US. Similarly, China has remained a buoyant market and maintains second position, adding 72.4GW of new wind power in 2020, as developers rushed to beat an onshore wind subsidy cut.

According to the 57th EY RECAI, future development to achieve net zero will require a further investment of USD 5.2 trillion, with institutional investors being expected to play a key role in financing the energy transition.

The forthcoming 2021 United Nations Climate Change Conference of the Parties (COP26) presents an opportunity to close the gap between what governments have promised to do and the level of action they have undertaken to date. RECAI 57 finds that current policy and pledge trajectories from leading nations indicate an increased commitment to greater accountability and transparency, with representatives expected to outline clear roadmaps and detail on policy measures to spur investment in renewables.

Carmine Di Sibio, EY Global Chairman and CEO, says, “The Index highlights the extent to which the COVID-19 pandemic has increased global awareness on the urgent environmental challenges we’re facing today. Convening moments like COP26 and MWC Barcelona present a collaborative platform to drive critical conversations around national and business net zero commitments.” He adds that no single country or organization can do it alone and that collaboration across industry ecosystems, geographies and governments is required.

RECAI 57 finds that environment, sustainability and governance (ESG) goals are increasingly being prioritized on the investor agenda while institutional investors’ interest in renewables continues to grow.

In 2020, global renewable energy capacity investments grew 2% to US$303.5b, the second-highest annual figure recorded to date despite the impact of the global COVID-19 pandemic. But the RECAI 57 shows that an even greater investment is required for the world to achieve its net zero goals as per schedule.

[First Published – May 19, 2021/ Updated – May 20, 2021]

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Soumya Duggal

Soumya is a master's degree holder in English, with a passion for writing. It's an interest she has directed towards environmental writing recently, with a special emphasis on the progress being made in renewable energy.