Developing Nations Represent Significant Growth In Global Clean Energy

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Bloomberg New Energy Finance on Tuesday released the “landmark” Climatescope 2014, a country-by-country assessment focused on the developing world. It is an interactive report and index offering insight into the climate investment of 55 emerging markets throughout Africa, Asia, Latin America, and the Caribbean.

The study confirms that clean and renewable energy technologies are a cost-competitive alternative to traditional fossil-fuels in emerging countries, just as they are in the richer parts of the world.

Ranked according to investment opportunities and policies, the top 10 are China, Brazil, South Africa, India, Chile, Uruguay, Kenya, Mexico, Indonesia, and Uganda.

Developed back in 2012, Climatescope initially evaluated 26 countries in Latin America and the Caribbean. 2014’s Climatescope expands to include 19 countries in Africa, 10 in Asia, as well as 15 provinces in China and 10 states in India. The full list of organisations involved in the commissioning and data provision for the report are listed at the bottom of this article.

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The full report is available to view here (PDF), but there are some fascinating highlights to pull from it that should be highlighted.

No longer the realm of the wealthy

In opening, the authors note that “it has been widely accepted that only the world’s wealthiest nations have the means to enjoy the benefits of zero-carbon emitting sources of energy.” According to the authors, popular thought is that developing nations could only afford fossil fuel energy generation, a thought that “guided numerous investment decisions and policies.”

However, over the past two years, this sentiment has not been the prevalent one, at least not if we look back over some of the more recent investigations.

January of this year saw a report from Navigant Research predict that demand for renewable energy in Africa and the former Soviet Union would allow wind energy to experience faster growth in these emerging markets, and another report from IHS announce that South Africa stood out as the world’s most attractive emerging solar energy country.

In August, Bloomberg New Energy Finance reported that Sub-Saharan Africa would see more renewable energy come online in 2014 than had been brought online in the previous 14 years.

A month later the Ernst & Young Renewable Energy Country Attractiveness Index confirmed the importance of emerging markets such as China, India, Brazil, and South Africa, placing each of them in their top 10.

“The significant movement in our index reinforces the view that attractive renewable energy prospects are no longer the remit of only a few mature markets – they are truly global, providing opportunities in both developed and developing markets,” said Gil Forer, EY’s Global Cleantech Leader. “This shifting landscape will drive corporations and governments to review their energy strategy to ensure long term competitive advantage.”

NPD Solarbuzz added its own confidence in the Middle East and Africa region, predicting that the area was headed towards a 12 GW solar PV pipeline, while the International Energy Agency reported in October that renewable energy share in Sub-Saharan Africa could reach 45% by 2040.

The Top Markets

Markets covered in the Climatescope report have been steadily seeing growth year after year, somewhat in line with OECD growth. Out of these countries, there are several that have consistently held out in front.

For those who have been following along this past year, it will come as no surprise that China has again topped another chart for clean energy — as seen in several of the aforementioned reports, including Ernst & Young’s Index. According to the executive summary, “China is the largest manufacturer of wind and solar equipment in the world, has the largest demand market for wind and solar equipment, and has taken major strides to improve its domestic policy framework.”

In the end, it’s no real surprise that China has so dominated the clean energy industry these past few years — a population that continues to grow and demand increased energy efficiency, and a pollution problem unlike anything seen anywhere else in the world have both contributed to China’s policy dictating a move towards a cleaner future.

Brazil came in close behind China with a score of 2.17, having “moved aggressively to facilitate greater clean energy development through a series of state-organised tenders for power contracts.” Despite a poor clean energy investment ranking (27th), Brazil made up for it by ranking first in its enabling framework, and second in both low-carbon business and greenhouse gas management activities. A record volume of non-large hydro renewable capacity commissioned in 2013 (3.3 GW) helped Brazil see their renewable capacity account for 15% of the country’s total energy generation mix.

In third place was South Africa, a regular contender at the top of emerging market clean energy lists, thanks to its hefty investment in clean energy over 2012 and 2013. Ranked second overall in terms of clean energy investment, South Africa has been a dominant player worldwide, accounting for almost 90% of investment in Sub-Saharan Africa over the past two years.

Final Highlights

• Small-scale renewables offer the most efficient way to provide energy access to vast numbers of people living without power. Tanzania has the most advanced regulation to encourage these types of projects, with a host of small power projects in the pipeline.
• Demand for clean energy is growing faster on a percentage basis in these countries than in more developed nations. From 2008–2013, Climatescope nations added 142 GW (a bit more than the current total installed capacity of France) of new, non-large hydro renewables capacity. That represented a 143% growth rate. By comparison, wealthier OECD nations added 213 GW, posting a clean energy capacity growth rate of 84%.
• Climatescope shows that countries are rapidly strengthening their policy frameworks: Stronger policies attract more clean energy investment.

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“Private sector investment is vital if developing countries are to improve their renewable energy provision and underpin economic growth,” said the Rt Hon Justine Greening. “Climatescope boosts the investment potential of this market by giving investors the information they need to make reliable funding decisions, thereby helping millions of people to access modern forms of energy and improve their quality of life. The UK’s support has enabled Climatescope to expand benefitting countries in Africa and Asia.”

“Climatescope is a critical resource for the Power Africa initiative and our partners, providing an in-depth and objective evaluation of low-carbon energy opportunities in emerging markets, including Africa,” said U.S. Agency for International Development Administrator Dr. Rajiv Shah. “With over $20 billion in project financing commitments from our private sector partners, Power Africa aims to add 30,000 megawatts of cleaner, more efficient electricity generation capacity throughout sub-Saharan Africa.

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The Multilateral Investment Fund (MIF) of the Inter-American Development Bank Group (IDB), the UK Government Department for International Development (DFID), and the US Agency for International Development (USAID), under President Barack Obama’s “Power Africa” initiative, commissioned Bloomberg New Energy Finance (BNEF) to compile Climatescope 2014.