Despite last year’s $1.8 trillion increase in investment in green energy, including $660 billion in renewables, investment remains below the level needed to meet the COP28 target of tripling renewable energy capacity by 2030. Gridlock and high capital costs could delay progress, even when the need for acceleration is greatest, according to the latest study – EY Renewable Energy Country Attractiveness Index (RECAI 63).
Energy storage, including battery energy storage systems (BESS), can play a key role in overcoming the grid congestion challenge, which has now reached acute proportions in many mature markets. This edition of RECAI takes a closer look at BESS, exploring how it can provide profitable opportunities for discerning investors.
“Romania moved up three positions in the global ranking made by EY, reaching 36th place, thanks to the announced funding programs and legislation on offshore wind energy. There is a significant potential for further growth, by obtaining European certification of guarantees of origin and facilitating the storage of energy in batteries, aspects that could contribute to an even better ranking in future editions of the report,” said Mihai Drăghici, Partner, Consultancy, EY Romania.
As renewable energies proliferate and electrification increases, BESS will play a key role in a dynamic energy system, smoothing demand and supply peaks and helping to defer the costs of expanding and upgrading networks. The United States, supported by a 30% tax credit under the Inflation Reduction Act, tops 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. The UK follows in third place, with a sophisticated energy market design and a new energy law that classifies BESS as a production asset. Worldwide BESS deployment is expected to quadruple between 2023 and 2030, reaching 572 GW/1,848 GWh.
The top positions in the RECAI index are held by mature markets
In this edition of the RECAI index, the first places are kept by the USA (position 1), China (position 2) and Germany (position 3), where investors are attracted both by the clear demand for renewable energy and the value established for the projects. Grid constraints in Spain (12th) pushed the market out of the top 10, and Canada (9th) and Japan (10th) entered the top 10 due to a clear intention to maximize offshore wind potential. Among the biggest developments in the index are Belgium, which has climbed four places to 17th as it plans to triple its offshore wind capacity by 2040. Argentina, now in 26th place, up three places thanks to the commitment of the new government to revitalize the economy. Changes to solar feed-in tariffs saw Vietnam (39th) drop six places.
Countries with smaller economies become attractive alternatives for investors
In the normalized index, Denmark remains in first place. Greece (+1), Chile (+2) and Finland (+3) move up the ranking of smaller economies to 2nd, 3rd and 7th respectively, thanks to ambitious energy transition plans and attractive government incentives. Greece has doubled its renewable energy capacity in the last four years, Chile’s renewable energy sector is set to double over the next decade, and Finland has set ambitious targets to become Europe’s first carbon-negative economy. creating new opportunities for potential investors.