Latest Ernst & Young Renewable Energy Country Attractive Index Loves Africa

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Ernst & Young has released its quarterly Renewable Energy Country Attractiveness Index report, and it’s good news for emerging regions like India and Sub-Saharan Africa, with both seeing massive increases in growth and investment.

Smiti Mittal has already covered India’s place on the Index, having moved up to 5 thanks to the government’s “aggressive policies and ambitious capacity addition targets.” However, on the first page of the 43rd quarterly report, Ernst & Young also notes that Sub-Saharan Africa is “experiencing unprecedented growth and [is] quickly establishing itself as a destination for foreign investment.”

According to Ernst & Young, “it’s little surprise an increasing number of developers and investors are looking to” Sub-Saharan Africa “with high expectations” given the focus the region is currently experiencing: IEA statistics estimate that almost one billion people in the region will have access to electricity by 2040, while still leaving approximately 530 million people without; US President Obama’s ‘Power Africa’ initiative; and the ever-decreasing cost of renewable energy and its ability to power rural populations.

“Ongoing oil price volatility and geopolitical challenges continue to emphasize the importance of energy diversification as a means of achieving greater energy security,” said Ben Warren, EY’s Global Power & Utilities Corporate Finance Leader and RECAI Chief Editor. “Renewables are becoming an increasingly important part of the broader generation mix for many countries, resulting in a number of markets climbing our attractiveness index. Global investment in renewables topped US$300b in 2014, exceeding investment in new nuclear and fossil fuel generation.”

(Keep reading to see Ernst & Young’s accompanying infographic highlighting the key index movements)

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A region like Sub-Saharan Africa has “unique obstacles” that challenge the view “of a single market” and call upon “both the public and private sectors to work in tandem to break down the agreed barriers.”

But far from simply throwing up gas plants, wind turbines and solar panels to increase total power capacity and generate quick returns, many are now recognizing the need for a more collaborative approach to use energy market reform and strategic investment to unlock Africa’s long-term growth potential.

Paul Hinks, the CEO of Symbion Power, an international developer of electrical infrastructure projects, is quoted within the report:

Africa needs baseload power, and so conventional thermal and hydro must continue to be the driver of Africa’s generation capacity in the short term. But for off-grid load centers, the real game changer will come when solar and wind power can be stored affordably and at scale. The industry is waiting for a proven, efficient and reliable utility-scale battery to come onto the market — then every village can have power.

There will be issues for future investment, as many European and Asian firms have already taken a stranglehold on the African market by getting in early. China, unsurprisingly, is one of these markets which is making “US business skeptical of whether they can compete effectively.”

The author’s of the report note, however, that “the accusation that China’s investments in Africa can undermine efforts to increase efficiency and transparency in public policy and business practices arguably also highlights a more collaborative and mutually beneficial business model as a differentiating factor for US-led investment and projects.”

For more on the report, head on over to the Ernst & Young RECAI page, or for the visually-minded, scroll on a bit for Ernst & Young’s key index movement infographic.

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Joshua S Hill

I'm a Christian, a nerd, a geek, and I believe that we're pretty quickly directing planet-Earth into hell in a handbasket! I also write for Fantasy Book Review (.co.uk), and can be found writing articles for a variety of other sites. Check me out at about.me for more.

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