- Battery energy storage systems are critical to unlocking
network challenges
- A new EY battery storage ranking highlights the US,
China, and the UK as the most
attractive investment markets
- The US, China, and
Germany retain the top three spots
in the Renewable Energy Country Attractiveness Index due to strong
policy support
LONDON, June 20,
2024 /PRNewswire/ -- Despite last year's surge of
US$1.8 trillion in clean energy
investment, including US$660 billion
earmarked for renewables, investment remains below what is needed
to meet the COP28 target of tripling
renewable capacity by 2030. Network gridlock and high capital costs
could also delay progress just when acceleration is needed,
according to the latest EY Renewable Energy Country
Attractiveness Index (RECAI 63).
Energy storage, including battery energy storage systems (BESS),
can play a vital role in overcoming the network gridlock challenge,
which has now reached acute proportions in many mature markets.
This edition of RECAI takes a close look at BESS, exploring how it
can offer lucrative opportunities for sophisticated investors.
Arnaud de Giovanni, EY Global
Renewables Leader, says:
"Scaling up battery energy storage systems can help solve
multiple problems holding up clean energy progress, including
stabilizing and strengthening network infrastructure and enabling
more distributed energy resources to connect to the grid. Focusing
on four factors can help investors navigate this complex, highly
regionalized and fast-changing market. These include building a
resilient investment case; taking steps to maintain technology
competitiveness; establishing the optimal business model or
financing structure; and mitigating supply chain risks."
New EY battery storage ranking reveals top markets for
investment
As renewables proliferate and electrification grows, BESS will
play a key role in a dynamic energy system by smoothing supply and
demand peaks and helping defer the cost of grid expansion and
upgrades. The US, bolstered by a 30% tax credit under the Inflation
Reduction Act, takes the top spot in the new EY ranking of the
world's most attractive markets for BESS investment. China with strong government support,
subsidies and plans to reduce BESS costs by 30% by 2025, is a close
second. And the UK, with its sophisticated energy market design and
a new energy bill that classifies BESS as a generation asset,
rounds out the top three. A fourfold increase in global BESS
deployment is forecast from 2023 to 2030, reaching 572 GW/1,848
GWh.
Ben Warren, EY RECAI Chief
Editor, says:
"Investor interest in BESS is on the rise. To help cut through
the complexity, EY has identified and ranked the attractiveness of
the world's top global battery investment markets. But this isn't
an easy market to master. BESS investments are a long-term
commitment; they are also highly localized and carry more risk than
some other clean energy investments. Success requires understanding
the dynamic interaction of regional variations, electricity market
design, technology and financing — as well as an acceptance of
volatility."
Top positions in the RECAI index are retained by mature
markets
In this edition of RECAI, the top spots are retained by the US
(1st position), China
(2nd position) and Germany (3rd position) where
investors are attracted to both clear demand for renewables and
established value for projects. Grid constraints in Spain (12th position) have seen the
market drop out of the top 10 with Canada (9th position) and
Japan (10th position)
moving in, off the back of clear intent to maximize the potential
of offshore wind. Big movers in the Index include Belgium, which has moved up four spots to
17th, as it plans to triple its offshore wind capacity
by 2040. Argentina, which is
now in 26th, up three spots due to the new government's
commitment to re-energize the economy. Changes to solar feed-in
tariffs have seen Vietnam
(39th position) fall six places.
Smaller economies create attractive alternatives for
potential investors
In the normalized index, Denmark holds on to the top spot. Greece (+1), Chile (+2), and Finland (+3) climb up the ranking of smaller
economies to 2nd, 3rd, and 7th
positions respectively, driven by ambitious energy transition plans
and attractive government incentives. Greece has doubled its renewable energy
capacity in the last four years, Chile's renewables sector is set to double in
the next decade, and Finland has
set ambitious targets of becoming Europe's first carbon negative economy,
creating new opportunities for potential investors.
To view the RECAI Top 40 in full, the normalized RECAI ranking
and the corporate power purchase agreement index, as well as
analysis of the latest renewable energy developments across the
world, visit ey.com/recai.
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SOURCE EYGS LLP