Report: The UK is the sixth most attractive market for clean energy investment

Global investment in clean energy rose to $1.8 trillion last year but remains below the level required to meet the internationally agreed goal of tripling renewable energy capacity by the end of the decade.

That’s the main conclusion of the latest edition of consultancy EY’s influential assessment of country attractiveness for renewable energy investors, which warns that grid constraint challenges are hampering efforts to meet the clean energy goals agreed at last year’s COP28 climate summit in Dubai.

The report confirms that growing investment in clean energy systems around the world delivered the largest increase in new capacity on record last year, with 507 GW of new capacity added to the grid, two-thirds of which came from solar projects.

According to EY, if investment trends continue for the rest of the decade, the world will be on track to increase global renewable energy capacity by about 2.5 times by 2030.

Such a rapid expansion of the world’s renewable energy fleet would represent a historic achievement, but would still fall short of the goal agreed by governments at the COP28 UN climate summit in Dubai last year to triple global renewable energy capacity by the end of the decade.

The report also warned that the recent surge in investment could stall unless urgent action is taken to address delays in planning and connecting new projects to the grid.

In particular, she highlighted “years of underinvestment” in network infrastructure, which she said had led to “serious levels” of congestion in energy networks in many markets.

In Europe alone, the report estimated that annual investment in distribution networks would need to double by 2050, to around €67 billion per year.

The Renewable Energy Attractiveness Index study indicates that the booming battery sector provides part of the solution to grid congestion, highlighting that the United States, China and the United Kingdom are the most attractive investment markets for the current rapidly growing sector.

However, when it comes to the attractiveness of renewable energy investment more broadly, the UK fares slightly worse in EY’s rankings. Since the last edition, the country has moved up one place to sixth place, but still lags behind the United States, China, Germany, France and Australia in the rankings. India ranks seventh, just ahead of Denmark, Canada and Japan, which round out the top ten.

The report highlights how quickly the global energy system is changing.

“Rapid electrification, especially in transport and heating, means that by 2050 electricity will make up the majority of total energy demand, replacing gas and other fossil fuels – in Europe, for example, this will rise to 60% from around 20% currently,” he added. it stated. “But this depends on a reliable, resilient power grid. Deploying grid-scale battery energy storage systems (BESSs) can help achieve this goal, solving many energy system challenges. In particular, BESS can decouple consumption from generation, reduce unnecessary energy exchange with grid transmission and ensure grid operation.”

The latest edition of the report comes on the same day as new analysis from the Institute for Public Policy Research (IPPR) think tank that shows the UK continues to lag behind its G7 competitors when it comes to private sector investment.

Using OECD investment data from the most recent year available, 2022, IPPR found the UK ranked lower than any other G7 country for the third year in a row.

Overall, it said the UK ranked just 28 out of 31 OECD countries for business investment this year, with only Greece, Luxembourg and Poland attracting less investment.

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