Renewable energy around the world – the risks and opportunities
Podcast 22 June 2023 22 June 2023
Projects & Construction
In this episode of our Global Projects and Construction Group podcast, host Alon Meyerov, Partner with Clyde & Co in Johannesburg, focuses on the development of renewable energy projects across different global regions and the risks and opportunities facing the sector.
Joining Alon are Alexa Hall, Partner within the MEA Projects & Construction team in the Dubai office, Qiao Kang, Legal Director in the Projects & Construction team in Beijing, Nathaniel Horrocks-Burns, Legal Director in Clyde & Co’s Global Projects & Construction Group, based in London, and Morgan Riley, Legal Director in Cape Town with extensive experience in construction and insurance litigation in the region.
In what is a critical decade for climate action, this episode begins with each guest providing an overview of renewable energy developments in their region, spanning the Middle East, China, South Africa, and Latin America. The discussion then moves on to a review of the risks that each of these regions faces in meeting their renewable energy goals, how they can go about mitigating those risks, before concluding with a look to what the future holds in each region.
To kick off, each guest outlines the state of play regarding renewable energy in their region, including key targets, plus government and industry initiatives. Some countries and regions are more advanced than others. For example, Hall notes that the UAE and Saudi Arabia are “leading the race” in the Middle East, while for Horrocks-Burns, Latin America “is poised to become one of the world's largest generators of renewable energy,” due to its abundant wind and solar resources.
Kang admits that China was lagging other regions, however it is now seeing a concerted effort from government to close the gap, through investments and policy initiatives: “Nowadays, energy security is of greater importance to China,” he explains. In South Africa, the “daily struggle of scheduled power outages or load shedding…” has focused minds, alongside the drive to transition to a low carbon economy, which is a common goal amongst all four regions.
Next, guests look at some of the key risks facing the renewable energy agenda, again with similarities and differences between different parts of the world. In Latin America, we hear that the primary challenges relate to an uncertain regulatory environment, the greater potential of political instability, as well as lack of domestic demand for the energy produced. In South Africa, Riley outlines the serious infrastructure challenges which mean the National Grid doesn’t have the transmission capacity to handle the energy produced. Meanwhile, in the Middle East and China, there are recurring issues around risk allocation within construction contracts, while China also faces concerns regarding grid interconnections, power abandonment, and subsidies.
These risks can be mitigated to a greater or lesser extent, depending on the region and nature of the risk. Issues such as power abandonment in China will require government action to overcome, while other risks such as regulatory and political uncertainty can be mitigated through close engagement with governments and exploring public-private partnerships. In the case of managing contract concerns, Halls says that disputes can be avoided by undergoing thorough contract reviews combined with “effective and robust contract administration.”
To conclude the episode, each guest sums up the outlook for renewable energy in their region, and the future is bright. Ambitious targets for energy transition and decarbonisation are in place across the board and while significant challenges remain, governments around the world are taking action to ensure they can deliver.