In its February 2013 Renewable Energy Country Attractiveness Indices, Ernst & Young lays out a number of emerging trends it expects to gain traction throughout the renewable energy industry in 2013.
One "dramatic" change it notes is the increasing attractiveness of capacity, or technology auctions, in place of FITs or other forms of financial subsidy. Indeed, in addition to South Africa, which has invited bids for solar and wind power projects under its Renewable Energy Independent Power Producer Programme (REIPPP), countries including France, India and Russia are also engaged in auctions.
Despite this shift, Ernst & Young is quick to point out the role FITs and subsidy support play in getting renewable energy projects off the ground. Their importance in supporting emerging markets like Japan (which currently offers the most generous solar FIT worldwide due to be cut in April), or Romania (which currently issues 6 green certificates for every MW produced due to be reduced in 2014) "should not be overstated," it says.
Overall, clean energy investment fell 11% to US$268.7billion (203.9 billion), in 2012, compared to 2011, according to figures from Bloomberg New Energy Finance (BNEF). And, while investment in solar came out on top, at $142.5 billion (108.2 billion), the sector still saw a 9% decrease.
In light of this, the trend of increasing corporate investment in clean energy will be a welcome one. According to Ernst & Young, an increasing number of large corporations are strengthening their renewable energy credentials, in a bid to both boost corporate social responsibility (which is seen as a brand strength), and to reduce exposure to energy and carbon price fluctuations.
While a number of measures can be taken to achieve this, says Ernst & Young, including establishing waste minimization programs and installing smart meters, large corporations "need" to switch their power sources to renewables.
"Historically, this has taken the form of purchasing green tariffs, renewable energy certificates (RECs) or carbon offsets. However, more recently, these instruments have become increasingly controversial in justifying carbon reduction and they do not provide any price security," states Ernst & Young.
Large corporations taking the renewable, and solar, energy lead, include Google, Ikea and Walmart. Meanwhile, according to a report released in the U.S. last September by the Solar Energy Industries Association (SEIA) and Vote Solar Initiative, "big box" discount retailers, including Walmart and Costco they have installed 144 systems and 134 solar systems, respectively are leading the way.
Overall, the report found that the top 20 commercial solar users in the U.S. have installed more than 1.2 million photovoltaic panels, covering more than 544 acres of rooftops.
Divestment is another key trend Ernst & Young expects to see continue throughout 2013. Helping to transform the financial deal landscape, it says, are divestment and privatization programs by utility and large energy corporates. The aim is to both reduce balance sheet debt and free up capital for emerging markets and technologies.
"As debt pressures still hang over many European utilities and US utilities seek to rebalance their holding in favor of regulated businesses, further divestments across the energy market are expected to create transaction opportunities for the whole sector," explains Ernst & Young.
Overall, Ernst & Young has placed China at the top of its all renewables index, followed by Germany, the U.S., India and France. Looking specifically at solar, however, it is the U.S. which takes pole position, followed by India, China, Germany and Japan.
Of particular note in the solar industry, says Ernst & Young, is China, which increased its ranking from the last quarterly report, due to the availability of subsidies for 2.9 GW of projects under the countrys Golden Sun Program, FITs for rooftop installations, and its 10 GW solar installation goal for 2013.
Chinas growing international presence is also noteworthy, it adds, with companies like China Sunergy setting up manufacturing bases outside of China. "Expansion of manufacturing capacity into countries such as Turkey evidences Chinas proactivity in maintaining supply chain momentum during this period of domestic consolidation," states the firm.
On a not so positive note, Australias place in the indices fell one place to seventh, on the back of cancelled and scaled back solar plans. It cited the abandonment of the 250 MW Solar Dawn CSP project and scaling back of Infigen and Suntechs 150 MW photovoltaic project to 35 MW, both due to funding failures, as examples for the drop.
Predictions for Romanias solar market currently ranked number 24 in the indices are said to be positive, with new capacity forecasts from the national energy regulator of between 500 MW and one GW for 2013. A rush may well be seen on the back of the news announced last week that the country is contemplating reducing the amount of green certificates paid out to solar operators in 2014.