A surge in the use of renewables triggered by lockdown measures this spring to contain the Covid-19 pandemic gave a glimpse of what the energy industry might look like in the future, EY said in its latest analysis of global markets that continued to rank the US and China on top.
The business services group pointed to periods in which renewables surpassed half of Europe’s total generation during lockdown, while in the US renewables consumption passed coal for the first time in 130 years.
“The pandemic and its impact on economics across the globe seem to have accelerated the drive to net zero and refocused investors’ minds on the environmental, social and corporate governance (ESG) agenda and resilience in their investment portfolio, as evidenced by ESG fund assets surging to an all-time high of more than US$1t in June,” said Ben Warren, EY global power & utilities corporate finance leader.
“For the low-carbon transition to be accelerated, renewables must stay at the top of the global agenda once the world comes out the other side of the pandemic.”
That the commitment to reach carbon neutrality is currently growing is shown by the EU’s launch of its Green Deal last December, followed by China’s pledge in September to go for net-zero in 2060, EY pointed out, adding that a total of 120 countries have now committed to net zero by 2050 as part of the Climate Ambition Alliance.
Despite being hard hit by the coronavirus pandemic, EY sees India as more promising than before in its Renewable Energy Country Attractiveness Index (RECAI), moving it up to fourth place (behind the US, China and Australia) from seventh, as the sub-continent’s solar capacity has skyrocketed in the past few years to more than 35GW.
India’s economic attractiveness has led to record-low tariff bids, with the country striving to reach its 510GW target of installed renewables by 2030, the business services group said.
EY has lowered the ranking for German (to 6 th from 5 th) and France (to 7 th from 3 rd).
Following a period of uncertainty caused by Covid-19, several renewable energy auctions in France were pushed back and have yet to be held, EY explained, but stressed that a government economic recovery package with a focus on renewables and green hydrogen is positive.
Hydrogen and artificial intelligence (AI) are two enablers set to play critical roles in stabilising grids as renewables are scaled up, Warren stressed.
“The ability to convert renewable energy into hydrogen and create a chemical battery with greater long-term storage than utility battery storage could be a game-changer.”
EY singles out Germany’s national hydrogen strategy published in June that eyes connecting German electrolyser capacity to other EU member states to use North or Baltic Sea offshore wind capacity to produce green hydrogen for its domestic consumption.
1. (1) US
2. (2) China
3. (4) Australia
4. (7) India
5. (6) UK
6. (5) Germany
7. (3) France
8. (10) Japan
9. (9) Netherlands
10. (11) Spain