A guide to the fast-developing off-grid world

Source: Daniel Cusick, E&E reporter • Posted: Thursday, October 30, 2014

A sweeping new report on clean energy development in 55 emerging economies suggests the United States and Europe may soon be eclipsed by countries from Asia, Latin America and Africa on several measures of clean energy adoption.

The analysis, from Bloomberg New Energy Finance, identified China, Brazil, South Africa, India and Chile as the top five developing markets for clean energy, followed by Uruguay, Kenya, Mexico, Indonesia and Uganda.

The metrics for comparison include a country’s “enabling framework” for clean energy development, its investment and financing climate, its commitment to low-carbon business activity, and policies around greenhouse gas management.

Overall, the findings show that a growing number of countries — including traditionally underdeveloped parts of sub-Saharan Africa, Asia and Latin America — are adopting clean energy technologies to solve long-standing issues of energy access and reliability.

But greater investment in such technologies is needed to meet the broad challenges of global energy demand and climate change, according to the BNEF analysis called “Climatescope 2014.”

The report was commissioned by three government-backed institutions that fund energy development worldwide: the Inter-American Development Bank Group, Britain’s Department for International Development and the U.S. Agency for International Development via the Power Africa initiative.

Two previous versions of the Climatescope analysis specifically focused on 26 Latin American and Caribbean countries. But given the dramatic rise in energy demand, particularly in Asia and Africa, this year’s report attempts to provide a more comprehensive picture of clean energy development in countries that traditionally have been overlooked.

According to the report’s authors, Climatescope countries account for more than half the world’s population and about 25 percent of global gross domestic product.

China: biggest fish in the pond

Luis Alberto Moreno, president of the Inter-American Development Bank, which funds clean energy projects in Latin America and the Caribbean, said the analysis “aims not only to be a snapshot of where clean energy policy and finance stand today, but more importantly, serves as a guide to where clean energy opportunities can lie tomorrow.”

Among the key findings are that between 2008 and 2013, the 55 countries included in the Climatescope analysis added 142 gigawatts of new clean energy, a doubling of emissions-free power in five years. In terms of percentage growth, the Climatescope countries as a group substantially outperformed their wealthier counterparts, notably the 34 members of the Organization for Economic Cooperation and Development.

Only two countries included in the Climatescope analysis — Mexico and Chile — are OECD members.

“Much of this has to do with China, which was the largest demand market for renewables in 2013,” states the report. “With China on track to set another annual record for solar installs, it’s entirely possible that total clean energy capacity installed in Climatescope nations will surpass that installed in OECD countries in 2014.”

Meanwhile, “Asia beyond China is increasingly becoming a clean energy equipment manufacturing hub,” the analysis said, as “Pakistan, India, Indonesia, and Vietnam, among others, are all rapidly scaling their clean energy economies.”

While Asia’s energy sector growth has been closely observed in the United States, where competition for natural resources from China as well as Asia’s emergence as a global leader in wind and solar power manufacturing are well-known, there has been considerably less attention paid to other fast-growing energy economies.

Routes away from energy poverty

South Africa, for example, has experienced nearly $10 billion of clean energy investment in the last two years alone, while Kenya and Uganda have been at the forefront of an emerging economy around off-grid energy resources.

“Energy poverty issues are paramount in many of these countries, and those that have found ways to pair the goals of expanding energy access with growing clean energy tended to score highest,” the report said.

The analysis also determined that “small-scale renewables offer the most efficient way to provide energy access to vast numbers of people living without power.” The authors cited Tanzania as a leader in this area, saying it has “the most advanced regulation to encourage these types of projects, with a host of small power projects in the pipeline.”

In Latin America and the Caribbean, Brazil stood apart from its regional peers in ways similar to China’s leadership position in Asia, largely due to its supportive framework for clean energy development, its growth in installed wind and solar capacity, and its commitment to biofuels.

Increasingly, the report said, Brazil’s status as Latin America’s clean energy leader is being challenged by newcomers like Peru, Costa Rica, Nicaragua and Colombia. Chile and Mexico, meanwhile, have emerged as global leaders in reducing greenhouse gas emissions.

For nations that scored in the bottom tier of Climatescope countries, the authors attribute their performance to two factors.

“First, there were countries with plentiful local conventional energy resources, either in the form of fossil fuels or large hydro generation. This was the case for Paraguay, Trinidad & Tobago, Suriname and Venezuela,” the authors said.

“Second, there were countries that clearly have the potential for clean energy but simply have made relatively little effort to build support frameworks to welcome its development.” Among those falling into the latter category are Tajikistan, Guyana and the Bahamas.