Tag Archives: consolidation
Ernst & Young: Energy Bill Slow Progress Hinders UK’s Investment Potential
30 May 2013 The UK is missing out on a unique opportunity to become the market of choice for investment in renewables in Europe as political infighting delays the Energy Bill becoming a reality, according to the tenth anniversary edition of the Renewable Energy Country Attractiveness Indices (RECAI), released by Ernst & Young this week. At a time when investment in most other European markets is wavering, further delays in delivering a stable framework in the UK are weakening the country’s promising prospects and holding back investment . “We are at a stage where the UK is presented with a unique opportunity to become a safe harbour for renewable energy investment in Europe,” said Ben Warren, Environmental Finance Leader at Ernst & Young . “The foundations are there, reflected by the UK’s consistent performance in our index and its current 5th place ranking, as well as its huge offshore wind potential. “However, competing visions and strategies within the Government about the country’s future energy mix, pose serious questions amongst investors about whether we can compete for capital on a global level,” added Warren. “Although we are starting to see nods towards a more stable investment environment through initiatives like the Green Investment Bank (GIB) attracting significant foreign investment, more needs to be done to help the UK realise its full potential,” he said. The latest RECAI index includes a revised methodology to reflect the shift in investment and deployment drivers and the maturing of the sector since the report’s creation ten years ago, according to Ernst & Young. Key changes include an increased focus on the role renewable energy plays in each country’s energy mix, energy supply and demand, the cost competitiveness of renewable energy, the importance of decarbonisation and an increased emphasis on the economic and political stability of each particular market. The index sees the US regain the top spot, as high barriers to entry for external investors realign China into second place. However, growth prospects for the sector in China remain strong with continued GDP growth, increasing energy demand, and the ongoing strategic importance of the sector to the local economy providing solid foundations for the future. South America continues to grow in prominence, thanks in part to its growing energy demand. Chile’s project pipeline includes 300-400MW concentrated solar power plants, while Peru has entered the index for the first time due to good natural resources and a strong investment climate. However, new policy measures and tender cancellations in Brazil are likely to temper the rapid growth seen in the region over the last 18 months, said the authors. High levels of project activity and investment interest in Japan and Australia give the Asia Pacific region a stronger presence at the top of the index, said the company. Thailand also joins the index in this issue, boasting strong solar resource and a healthy project pipeline, as well as stable fiscal and regulatory support measures. In Europe, Romania became the latest to slash its subsidies, reinforcing the relatively sombre mood in Eastern Europe as policy makers try to find the balance between growth and sustainability, the report found. A number of the Middle East and North Africa countries, including Egypt, Tunisia and the UAE, have fallen out of the top 40 due to a slow recovery from the Arab Spring and an absence of clear policy frameworks delaying capacity deployment, according to Ernst & Young. Deal activity in the sector has been characterised by both incumbents and new entrants driving industry consolidation. There is also a strong appetite from Far East construction groups and original equipment manufacturers (OEMs) seeking development pipelines of solar and wind assets to provide a distribution channel for their products. Factors driving the levels of investment in renewables include divestment needs, market restructuring and the entry of new investors into the sector. Utilities and financial buyers are finding greater value in buying operational plants than investing in plant construction. “The mismatch between project sponsors’ capital expenditure plans and the corporate capacity to finance this investment will continue to drive more asset disposals,” said Warren. “Both financial investors and OEMs under pressure from overcapacity are likely to remain the most active buyers of operational assets and development assets respectively.” “Further consolidation can be expected in the supply chain. Depressed pricing, reduced fiscal support for renewables and continued overcapacity are all going to contribute to additional casualties in the year ahead,” Warren concluded. “However, with the shift in power democratising the energy sector and increasing the power of the consumer, the future role of renewables in the energy mix is bright.” Continue reading
Trends In The Renewable Energy Landscape
June 6, 2013 By Gil Forer Gil Forer Global Leader, Global Cleantech Center, Ernst & Young A new era is dawning in the renewable energy industry. Energy demand, natural resource, technology costs, access to finance and global competitiveness are identified as the key influences for investors. According to the tenth anniversary edition of the Renewable Energy Country Attractiveness Index (RECAI), which was recently released by Ernst & Young, global annual clean energy investment totaled US$269b in 2012, representing a five-fold increase on 2004. The sector now competes for investment with more traditional energy sources, and new technologies — such as solar panels, biomass boilers and mini wind turbines — are enabling energy users to run their own small power plants, changing the way businesses and consumers think about energy. The renewable energy landscape today is truly global. From Japan and Southeast Asia to Africa and South America, renewable energy is a viable energy source that is gaining a solid and growing share in the energy mix. But, the renewables industry is facing growing pains. Not only is the future a place with less government support, but industry players also have to fight for market share across all corners of the globe and with some worrying signs of trade barriers emerging. For an industry that is still relatively new, this is a seriously challenging time; leaders need to be conversant in international business, conscious of global politics, and clever in innovating new business models and business relationships to win in an increasingly global competitive world. South America and Asia Pac continue to rise as Europe and the Middle East stall Our index sees the US regain the top spot, as high barriers to entry for external investors realign China into second place. However, growth prospects for the sector in China remain strong with continued GDP growth, increasing energy demand, and the ongoing strategic importance of the sector to the local economy providing solid foundations for the future. South America continues to grow in prominence, thanks in part to its growing energy demand. Chile’s project pipeline includes 300MW-400MW concentrated solar power (CSP) plants, while Peru has entered the index for the first time due to good resources and a strong investment climate. However, new policy measures and tender cancelations in Brazil are likely to temper the rapid growth seen in the region over the last 18 months. High levels of project activity and investment interest in Japan and Australia give the Asia Pacific region a stronger presence at the top of the index. Thailand also joins the index in this issue, boasting strong solar resource and a healthy project pipeline, as well as stable fiscal and regulatory support measures. In Europe, Romania became the latest to slash its subsidies, reinforcing the relatively somber mood in Eastern Europe as policy makers try to find the balance between growth and sustainability. A number of the Middle East and North Africa countries, including Egypt, Tunisia and the UAE, have fallen out of the top 40 due to a slow recovery from the Arab Spring and an absence of clear policy frameworks delaying capacity deployment. Transaction market – the continuing squeeze Recent deal activity in the sector has been characterized by incumbents and new entrants driving industry consolidation. There is also a strong appetite from Far East construction groups and original equipment manufacturers (OEMs) seeking development pipelines of solar and wind assets to provide a distribution channel for their products. Factors driving the levels of investment in renewable energy include divestment needs, market restructuring and the entry of new investors into the sector. Utilities and financial buyers are finding greater value in buying operational plants than investing in plant construction. The mismatch between project sponsors’ capital expenditure plans and the corporate capacity to finance this investment will continue to drive more asset disposals. Both financial investors and OEMs under pressure from overcapacity are likely to remain the most active buyers of operational assets and development assets respectively. Further consolidation can be expected in the supply chain. New markets are gaining momentum. Countries and corporations are increasing their focus on changing their energy mix to ensure it provides financial, reputational, operational and social benefits. We’re also seeing the development and implementation of national renewable energy program best practices. In summary, with the shift in the democratization of the energy sector and the increasing power of the customer, the future of renewable energy in the energy mix is bright. For more information about the report, including a discussion of our evolved methodology, please visit www.ey.com/recai . Gil Forer is global leader of the Global Cleantech Center for Ernst & Young. Continue reading
World’s Largest Emerging Market Real Estate Expo in Dubai
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