With capital remains a top challenge, the most energy hungry country China alone constitutes almost 50 per cent of the $20.5 billion investments in renewable energy world-wide, according to a report.
“2011 is set to be a promising year for the industry, as economic recovery drives demand for resource-efficient and low-carbon solutions. Yet challenges remain, with the most critical success factor for the cleantech sector being capital,” Ernest & Young in a report released on Sunday said.
The interest in the region is led by Egypt’s emergence as one of the most prominent players in the sector. It has debuted on the latest renewable energy country attractiveness indices of 30 countries compiled by Ernst & Young. The indices provide scores for national renewable energy markets, renewable energy infrastructures and their suitability for individual technologies. It ranks the renewables markets by country and technology, and are updated on a quarterly basis.
“MENA countries need to balance environmental goals with providing a sustainable future for their buoyant economies and rapidly growing populations,’ said Michael Hasbani, MENA Strategic Growth Markets Leader, Ernst & Young.
“As costs decrease, supply chains globalize and ever more energy is derived from renewables, new business opportunities arise and existing business are transformed. The Masdar initiative of Abu Dhabi is one of the notable renewable energy projects in the region that represents the collaboration between governments, academia and enterprise. The abundant renewable resources need to be made better use of and we are glad to see new developments in this regard,” he added.
“The abundant renewable resources of wind, solar and hydro that Egypt has will best be utilized if a mix of private investment and international investment is allowed to benefit from developing the sector. Government encouragement and development of the sector thus far has driven Egypt into our indices and we hope to see more countries from the region generate power through renewable in future,” said Nimer AbuAli, MENA Head of Cleantech, Ernst & Young.
Egypt had an installed wind generation capacity of 430MW at the end of 2009 and the World Bank estimates the wind power could itself generate 7.2 GW of power in Egypt by 2022 if it utilises the 7600 sq km of land allocated.
“With China the clear global renewables leader and new countries emerging as key contenders in the market, a new world order is apparent in the clean energy sector. China’s record spending on its wind industry in the 4th quarter of 2010 represented nearly half of all funds invested in new wind projects around the world. It invested around $10 billion in wind out of a global total of $20.5 billion. Such heavy investment has ensured that approximately one in every two wind turbines to go live in 2010 will have been in China.”
“There is still a gap between the capital required to enable the full transformation to a more resource efficient and low carbon economy and the capital available from traditional sources. The capital challenge will be resolved through new players, new business models, new roles, continuous government commitment, as well as re-allocation of capital,” added Gil Forer, Ernst & Young Global Cleantech Leader.
“The outlook for 2011 is extremely positive, with corporate transactions set to accelerate and more capital invested than in 2010. We will see a range of cleantech companies move from technology demonstration stage to proven concepts ready for commercialization.”