Emerging markets poised to lead pack on renewable energy
Emerging markets are set to eclipse developed nations next year in their capacity to generate wind and solar power as equipment costs fall and the energy market approaches ‘peak coal’, according to Moody’s, the credit rating agency.
While developed countries have long been leaders in renewable power generation, emerging economies are close to overtaking them, bringing their total installed capacity of wind and solar to 307GW and 272GW — respectively 51 percent and 53 percent of global capacity, according to Moody’s calculations, FT reported.
China accounts for the lion’s share of the upsurge. But Middle East and North African countries are scheduled to have installed 14GW in solar plants by the end of 2018 — a seven-fold increase from 2015. Central and South America are also expected to reach 14GW — nearly five times more than in 2015 — while India is set to hit 28GW, a jump of nearly six times.
Swami Venkataraman, senior vice-president at Moody’s Investors Service, said, “Everyone knows the cost of installing solar and wind energy has been coming down, but recently we have seen prices hitting extreme lows in places such as Mexico, Chile, India and Abu Dhabi.
“This fall in costs is definitely changing the calculus of [emerging market] governments, allowing them to pursue renewables much more aggressively.”
Another factor is the onset of ‘peak coal’ in the energy market. In 2013, the US Energy Information Administration projected that world coal demand would rise 39 percent by 2040. Now it is expecting growth of just one percent.
The attractiveness of wind and solar power derives mainly from technological advances that are slashing costs and erasing the need for subsidies, with the trend seen as by no means over.
A recent report by Morgan Stanley, the investment bank, said, “Numerous key markets recently reached an inflection point where renewables have become the cheapest form of new power generation, a dynamic we see spreading to nearly every country we cover by 2020.
“The price of solar panels has fallen 50 percent in less than two years. All-in costs for wind power in countries with favorable wind conditions can be as low as one-half to one-third that of coal-fired or natural gas-fired power plants, and wind turbine output will increase exponentially as wind blade lengths continue to increase.”
The popularity of solar power in emerging markets is growing more quickly than that of wind. By the end of International Finance Corporation (IFC) has agreed to invest $150 million (SR562.5 million) in Egypt’s agriculture sector in partnership with the country’s private sector, UAE state news agency WAM reported late Saturday.
The investment aims at developing the country’s nutrition sector, introducing the newest technologies in manufacturing, as well as providing new job opportunities for the youth, WAM said, quoting investment and international cooperation minister Sahar Nasr’s interview with Ahram Online.
IFC, a member of the World Bank Group, focuses on developing the private sector in developing countries, Arab News wrote.
The agreement comes following a meeting between Egyptian President Abdel Fattah El-sisi and World Bank chief Jim Yong Kim in New York on the sidelines of the UN General Assembly meetings, where the two discussed cooperation between Egypt and the bank.
World Bank currently has a commitment of $5.92 billion in Egypt, spread in 26 projects. Foreign direct investments in Egypt are up 14.5 percent to $7.9 billion for the fiscal year 2016-2017.
Similarly, a UK trade delegation representing 14 companies is now in Cairo to explore investment opportunities in Egypt’s key sectors from infrastructure, agriculture, health care to defense.
The companies, including Rolls Royce and Bombardier, were attracted by the Egyptian government’s spate of economic reforms and improve the economic climate, said Jeffrey Donaldson, the UK’S trade envoy to Egypt.
“The recent reforms that have been implemented have brought about stronger economic growth in Egypt and this has heightened the interest of British companies in doing business with Egypt,” Donaldson said.
Ratings agency Moody’s in its latest annual report has credited Egypt’s strong reform momentum, despite weak government finances, which has resulted into a pick-up in economic growth and improved investor sentiment. 2019, Moody’s estimates, emerging markets will host 353GW of solar capacity — a 2.6-fold increase over 2015 levels — eclipsing an estimated 349GW of wind power, a level 1.5 times higher than in 2015. The cost of storing power in batteries, a shortcoming that has hampered adoption of renewable energy, is also declining rapidly, with benchmarks that had been projected for 2020 being reached over the past two years, Venkataraman said.
Cheaper storage should not only help resolve the intermittent generation problems of wind and solar plants but could also cut the price of electric cars, giving them mass-market appeal within a few years, he added.