The FINANCIAL — Tapping into the transformative power of storage to meet energy security demands requires a change of mindset to accelerate investment, according to EY’s latest Renewable energy country attractiveness index (RECAI).
Market to focus on making storage “just another” energy asset
Energy security in the Mediterranean is about more than keeping the lights on
Government proactivity prompts positive index movements
Storage: Just another energy asset?
The report concludes that, so far, it’s been difficult for investors to get a clear view of the opportunities, business models and most suitable markets when it comes to energy storage. To change this, and increase funding for accelerated activity across the storage asset life cycle, the market must highlight the various entry points for investors and focus on creating an investable asset class for storage products that delivers the necessary returns.
Ben Warren, EY’s Global Power & Utilities Corporate Finance Leader and RECAI Chief Editor, says:
“With a number of storage technologies already proven and costs falling fast, we must stop thinking about storage as something that will arrive tomorrow. It arrived yesterday and the game is already changing. It’s time to start viewing storage as just another energy asset that generates long-term predictable revenues and needs competitive and appropriate construction capital solutions.”
Empowering the Mediterranean
Energy storage technology will inevitably become a cornerstone of the energy transformation currently underway in the Mediterranean region. With unsustainably high unemployment and a lack of secure affordable energy a common theme across the entire region, the report highlights how a more strategic focus on energy security can be a catalyst for broader economic and societal benefits.
This view emerged from a group of high-profile energy experts speaking at the recent EY Strategic Growth® Forum in Rome, which convened more than 600 CEOs, policymakers, investors and entrepreneurs to explore how to unlock the potential of the Mediterranean region.
Warren says: “The Mediterranean region can use energy as a way of securing its own future. But to achieve this, policymakers must level the playing field, the industry must drive down cost and investors must be willing to innovate. Clear objectives to accelerate renewable energy capacity build-out — which is quickly becoming the most cost-effective way to tackle energy security issues — combined with the effective deployment of storage technologies, will undoubtedly shape the investment attractiveness of different markets in the months and years ahead.”
Feeling positive
While China, the US and Germany once again hold the top three index positions, increased government proactivity in setting renewables targets and auctioning generation capacity through competitive tenders is already impacting the rankings for several Mediterranean countries. Egypt jumped two places to 37th, after reentering the Index in March, following the auction of more than 4GW under the Government’s new renewables program. Turkey and Morocco saw similar positive movements to 17th and 25th place respectively following the announcement of a national renewable energy action plan in Turkey and the financial close of phase two of Morocco’s mega-scale concentrated solar power project.
Other notable Index movements include India replacing Japan in 4th place as a result of a growing project pipeline and proposed reforms to address currency risk and increase the renewables obligation on major energy users. Meanwhile, South Africa’s commitment to procure an additional 6.3GW of renewable energy capacity prompted a jump to 13th place.
In Europe, Poland and Romania experienced upward movement to 27th and 34th place respectively. Previously paralyzed by policy U-turns, Poland finally passed legislation to hold competitive auctions from 2016, while Romania’s Government is now talking to the market about how to catalyze renewables investment once again.
Warren says: “Survival in the energy market of tomorrow requires a more strategic approach that puts the economics and returns — both financial and societal — at the heart of policy and transaction decisions.”
Discussion about this post