Germany, Turkey and UK Outperform In Renewables Prospects

Europe remains a global powerhouse for installed renewables capacity even though the long-term outlook for renewables is highly divergent with some countries presenting greater investment opportunities than others. Across both Western Europe and Central and Eastern Europe (CEE), we see Germany, the UK and Turkey emerging as the key markets; with strong project pipelines, robust growth potential and relatively attractive investment climates for developers.

Europe, and specifically the European Union (EU) has long been viewed as a global powerhouse for renewable energy, primarily due to its strong green credentials and ambitious renewables goals, in the form of its 20'20'20 energy and climate package. That said, we have commented recently that we believe we are witnessing a slight policy slippage in terms of renewable energy in Europe, as rising concerns over the region's competiveness compete with green energy policies. We believe this viewpoint was encapsulated by the announcement of the proposed EU 2030 climate and energy targets in late-January 2014, which proposed an EU-wide binding renewable energy target, but is not mandated at the individual member state level ( see 'EU 2030 Energy And Climate Package: Playing It Safe', January 24 2014). Despite this long-term policy uncertainty, investment is continuing to pour into the region's renewables market and there is still ample growth opportunities present in the region.

By employing various analytical techniques, using BMI's proprietary databases, we are able to pinpoint where these opportunities lie. These tools include: 10-year renewables capacity forecasts, our Renewables Risk/Reward Ratings and the Renewables Projects Database.

  • Wind On The Rise
    Wind Capacity By Country (MW), 2013-2023

Europe remains a global powerhouse for installed renewables capacity even though the long-term outlook for renewables is highly divergent with some countries presenting greater investment opportunities than others. Across both Western Europe and Central and Eastern Europe (CEE), we see Germany, the UK and Turkey emerging as the key markets; with strong project pipelines, robust growth potential and relatively attractive investment climates for developers.

Europe, and specifically the European Union (EU) has long been viewed as a global powerhouse for renewable energy, primarily due to its strong green credentials and ambitious renewables goals, in the form of its 20'20'20 energy and climate package. That said, we have commented recently that we believe we are witnessing a slight policy slippage in terms of renewable energy in Europe, as rising concerns over the region's competiveness compete with green energy policies. We believe this viewpoint was encapsulated by the announcement of the proposed EU 2030 climate and energy targets in late-January 2014, which proposed an EU-wide binding renewable energy target, but is not mandated at the individual member state level ( see 'EU 2030 Energy And Climate Package: Playing It Safe', January 24 2014). Despite this long-term policy uncertainty, investment is continuing to pour into the region's renewables market and there is still ample growth opportunities present in the region.

By employing various analytical techniques, using BMI's proprietary databases, we are able to pinpoint where these opportunities lie. These tools include: 10-year renewables capacity forecasts, our Renewables Risk/Reward Ratings and the Renewables Projects Database.

  • Forecasts

By using our 10-year capacity forecasts for solar and wind power, the two most popular renewable energy technologies deployed across Europe, it is possible to gauge where the most pronounced growth will be over the coming decade, and which markets we believe will be the largest by 2023. The chart below shows the top five wind markets (in terms of total installed wind capacity) in both the CEE and Western Europe regions, and their relative growth rates.

Wind On The Rise
Wind Capacity By Country (MW), 2013-2023

It is clear that Germany will lead the way for Western Europe for wind power; by far the largest market by the end of our forecast period in 2023. Considering the ambitious energy policy that Germany has adopted and the continued government support for the renewables industry, this trend is not surprising ( see 'Renewable Energy Act Reform: A Difficult Balance To Strike', March 17 2014).

In terms of highest growth rates, we expect the UK to post the greatest growth between the two time periods for wind capacity, spurred on by its promising offshore market ( see 'Offshore Wind Investment Supports 'Bright Spot' Outlook', March 26 2014).

Turkey is the clear outperformer for the CEE region, in terms of total market size, and the country's renewable energy industry is yet to be negatively affected by the volatile economic and political environment prevailing in the country and therefore we expect growth to remain robust ( see 'Outlook Remains Positive For Turkish Wind', December 10 2013).

Solar Shining Bright
Solar Capacity By Country (Left) and Western Europe Solar Capacity And Generation (Right), MW, 2013-2023
  • Renewables Risks/Rewards Ratings (RRRs)

Our RRRs consider and evaluate a wide range of factors that affect the investment climate in the sector in different ways and therefore give a strong indication of the emerging opportunities across markets in the European region. The ratings take into consideration factors such as GDP projections, renewables subsidy schemes, policy frameworks, installed capacity and generation forecasts, among other indicators.

The chart below compiles the renewables rating scores for the markets included in our Western Europe and CEE coverage. Denmark, Germany and the UK emerge as the most attractive markets in Western Europe, while Poland and Turkey lead the way for the CEE region. That said, we believe there is scope for Poland to slip from top spot in the coming quarters, owing to the regulatory uncertainty shrouding its renewables industry and the Polish government's questionable commitment to the sector ( see, 'Renewables Regulations Still In Flux', February 24 2014).

Bright Spots Emerging
Renewables Risk/Reward Ratings By Country (Scores Out Of 100)
  • Key Renewables Project Database

Our key projects database help to give an indication of strengthening project pipelines across the region, for specific renewable energy technologies. The database collates renewables projects in various stages of development across the globe, for example at the planning stage, under construction, delayed, cancelled, recently commissioned).

Robust Project Pipeline
Europe Renewables Project Pipeline, Total = 32.5GW

By collating all the renewables projects recorded in our European projects database (across all technologies) and arranging them by country, and by share of total capacity, it becomes clear which countries are dominating the European renewables project pipeline. The countries with the strongest project pipeline are UK, Germany, France, Denmark and Turkey, which underpins our underlying views of the region, as highlighted by the RRRs and capacity forecasts.

As such, we see Germany, the UK and Turkey emerging as the outperformers in renewables markets across Europe; with strong project pipelines, robust growth potential and relatively attractive investment climates for developers.

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This article is tagged to:
Related sectors of this article: Renewables, Solar - Renewable, Solar - PV - Renewable, Solar - CSP - Renewable, Wind - Renewable, Wind - Onshore - Renewable, Wind - Offshore - Renewable, Regulatory/Policy
Geography: Europe, Germany, Denmark, United Kingdom, Poland, Turkey
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