Description

Low-Carbon Business and Clean Energy Value Chains Parameter III employed three indicators to measure the availability of local manufacturing and other similar types of capacity to spur clean energy deployment. These seek to take into account the availability of local manufacturers to provide the equipment needed to construct projects, local financial firms to provide capital, and local service firms to provide assistance such as legal or other services. For lesser developed nations, this parameter used the augmented off-grid focus methodology to take into account the availability of technical assistance and service providers in value chains specifically related to distributed clean energy. In all, Climatescope sought to account for no less than 63 segments of these value chains. In the case of nations deemed sufficiently “off-grid”, a total of 78 value chain segments were assessed. Parameter III contributed 15% toward each nation’s overall score.

It is important to note that Parameter III measures where certain value chain segments are present. It does not take into account the volume of actual output occurring locally.

Expanding manufacturing chains can be a slow and laborious process. Thus it could come as relatively little surprise that Climatescope tracked only an incremental change in the value chain segments present in the 55 countries from 2013-2014. Overall, the average score among all nations on Parameter III moved to 1.96 in the latest survey from 1.95 the year prior.

Among the four Climatescope parameters, Parameter III saw the widest gap between the highest and lowest scorer. This is because to a large degree, scoring is impacted by a country’s size. Larger nations tend to have larger volumes installed and this, in turn, makes the market more demanding of locally-made goods. This demand can be driven by economics as, for instance, it can be far less costly to procure multi-ton wind turbine in-country than from overseas. Or it can be driven by policy through so-called domestic-content rules that simply mandate or incentivize local projects to use locally-made equipment.

The same countries that achieved the highest Parameter III scores in the 2014 edition of Climatescope have returned.
China has once again achieved a “perfect” score of 5.0 due to the fact that the country is home to manufacturers in every one of the 63 segments surveyed across each of the sectors (wind, solar, biomass & waste, biofuels, geothermal, and small hydro). Not reflected in these scores is the growth seen in certain countries in terms of number of plants operating in certain manufacturing sub-segments and overall growth. For instance, India had a PV cell manufacturing plant on line as early as 1999 but commissioned at least four more in 2014. India has had a domestic-content rule that has compelled project developers to use locally-made equipment. This has accelerated local growth in manufacturing while raising complaints from overseas suppliers.