LAC Regarded as One of the Great Frontiers for Clean Energy Investment

Lots of poorer countries may be gearing up to largely skip fossil fuel reliance in favor of renewables, if a report released last week is any indication.

It’s long been assumed that developing nations — particularly those in Africa and Asia — would need to follow the same course as the United States and other western powers, relying on traditional fossil fuels to build their economies before transitioning onto renewable energy. It’s one of the reasons many critics think efforts to keep global warming under 2°C are either doomed or would be hopelessly destructive.

But according to Climatescope 2014 — a worldwide analysis by Bloomberg New Energy Finance (BNEF) of 55 countries in Latin America, the Caribbean, Asia, and Africa — developing countries’ renewable energy capacity grew 143 percent between 2008 and 2013. By contrast, the wealthy western nations in the Organization for Economic Cooperation and Development (OECD) — in North America, Europe, Australia, and so forth — saw only 84 percent growth. This was while total grid capacity for the nations covered by the Climatescope analysis rose over 30 percent, but grew only 9.6 percent for the OECD countries.

The report focused on forms of renewable power other than large hydroelectric plants, because those can take years, if not decades, to install, while wind only requires two to three years and solar needs only a few months. But when large hydroelectric is thrown in, Climatescope nations now have 666 gigawatts of clean energy installed, and OECD nations have 806 gigawatts.

Previous iterations of the Climatescope report focused just on the Caribbean and Latin America. The expansion of its research this year adds to the signs that communities and regions in many of these developing countries are going right from lacking energy access to plugging the hole with renewables, while skipping grid-reliance on fossil fuels almost entirely. Being poorer, these countries have difficulty bringing their electrical grids to their populations, are providing a reliable grid infrastructure even when they do. Globally, something between 1.2 and 1.6 billion people lack access to electricity. Around 300 million of them are in India, for example, and the country’s remaining residents have faced repeated, massive blackouts from India’s aging grid.

As a result, many of the world’s poor rely on kerosene for heating or diesel for local electricity generation, or simply pay high prices on the grid when they do have access. That makes the cost of their fossil fuel energy some of the most expensive in the world: manufacturers paid $147.90 per megawatt-hour in the Climatescope nations. Meanwhile, the global “leveled cost of energy” — the average price a form of power needs to reach to earn a decent financial return for a provider — is $82 per megawatt-hour for wind, and $142 for solar. In Jamaica, for instance, solar can be sold for half the cost of wholesale power. And in Nicaragua, wind is also about half the price of traditional energy.

Throw in the speed with which solar and wind can be deployed, and that makes them smart alternatives to the traditional fossil-fuel-powered grid for many poor nations. Distributed solar in particular may have a higher upfront cost, but it only has to be paid once in contrast to the continual purchase of kerosene or diesel, making it much cheaper over the long haul.

“Clean energy is the low-cost option in a lot of these countries,” Ethan Zindler, a Washington-based Bloomberg New Energy Finance analyst, told Bloomberg news. “The technologies are cost-competitive right now. Not in the future, but right now.”

Along with the substantial supplies of natural resources developing countries often have, these numbers make renewable energy in the Climatescope nations an opportunity for investors and industry, according to the report. The Climatescope nations increased green energy investment to $122 billion last year, up from $59.3 billion in 2007. At the same time, the fact that these countries are still developing means doing business in them can be more costly and logistically difficult.

The Climatescope analysis actually scored the countries on four metrics: the scale of their clean energy investment, what green energy value chains they boast, how well they do at managing carbon emissions, and the overall quality of their green energy and market policy. Not surprisingly, China scored the highest — “China is the largest manufacturer of wind and solar equipment in the world, has the largest demand market for wind and solar equipment, and has taken major strides to improve its domestic policy framework,” the report explained — but even China only scored a 2.23 out of a total possible score of 5. And the average score among the measured countries was just 1.1. (An accompanying website lays out the scoring methodology, and allows users to redesign their own score as well.) Brazil came in second, thanks to its policies and value chains, and Kenya and Uganda made it into the top ten for the same reason. South Africa also made the top ten thanks to the scale of its investment.

As of now, the 55 countries Climatescope looked at have implemented over 450 measures somehow related to renewables, along with 359 total policies aimed directly at supporting clean energy — and of the latter, almost half were passed between 2012 and 2013 alone.

Credit: Jess Spross, Think Progress

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