Asia Pacific renewables could attract US$1tn of investments this decade – WoodMac

Share on facebook
Share on twitter
Share on linkedin
Share on reddit
Share on email
Asia Pacific is expected to add more than 170GW of new power capacity annually in the next decade. Image: Meralco.

Solar and wind power represent a US$1 trillion investment opportunity in Asia Pacific this decade, equivalent to two-thirds of the region’s total power generation sector, as countries move away from fossil fuel generation in favour of greener alternatives.

That is according to a new Wood Mackenzie report, which reveals the share of wind and solar in the Asia Pacific power generation mix will more than double to 17% by 2030, with more than 51 markets out of 81 modelled exceeding 10% renewable energy.

Gas and dispatchable power will still continue to play a “key role” in providing flexibility to power systems in the region, with fossil fuels making up a US$500 billion investment opportunity in the next ten years.

Wood Mackenzie senior analyst Rishab Shrestha said coal investment will fall from its peak of US$57 billion in 2013 to US$18 billion by the end of the decade.

“Traditionally, energy security and availability of low-cost coal are key drivers of coal investment in Asia,” he said. “However, investment sentiment towards coal is waning as economies strive for a more sustainable and greener future.”

While sluggish demand as a result of coronavirus may result in a slight slowdown in capacity additions in the next five years, Asia Pacific is expected to add more than 170GW of new power capacity annually in the next decade, with the pace of additions predicted to accelerate beyond 2030.

Meanwhile, energy storage capacity is forecast to more than double during the transition decade to 9% of peak load, with pumped hydro storage dominating, as battery storage rapidly develops.

Renewable headwinds

Despite green energy gains, the report flagged increasing headwinds and risks for renewables investments as grid constraints rise and subsidies are cut.  

“The Asia Pacific region has entered a transition decade where wind and solar investment is expected to decline by 20% by 2025 from its peak in 2017. Generous government subsidies during the high-cost renewable era were key drivers of the previous growth period,” Alex Whitworth, Wood Mackenzie research director, said.

The report points to Australia, which has seen its share of variable renewable energy in generation reach 21% this year – the highest in Asia Pacific. However, the country is facing a drop of 67% in renewables investments over the next five years as it is hit by curtailment, transmission constraints and sustained low capture prices. These challenges are already being felt, as large-scale solar and wind projects committed in the country in Q2 2020 plunged to their lowest level since 2017.

In the long-term, Wood Mackenzie predicts technology improvements combined with lower costs and new policies will drive a major acceleration in renewables investments post-2030.

“In particular, we expect renewables to be competitive with new coal plants by 2030, setting the stage for a new era of subsidy-free growth,” Whitworth said.

Read Next

December 2, 2021
New York authorities have finalised contracts for an US$11 billion infrastructure project comprising 1.8GW of solar and 2GW of wind capacity that would deliver energy from upstate to New York City.
December 2, 2021
Acciona Energia has struck deals for multiple green hydrogen facilities, one with state-owned Australian energy company Stanwell Corporation and a joint venture with US company Plug Power Inc. to establish multiple production sites across Spain and Portugal
November 24, 2021
Italian utility Enel will invest around €70 billion (US$78 billion) by 2030 to scale up its renewables and energy storage portfolio as it brings forward plans to reach net zero to 2040.
November 24, 2021
PV Tech sits down with the CEO of Arcadia following the launch of its flagship software, Arc, to discuss data, digitisation and the US transition
November 23, 2021
Renewables developers and O&M provider RES has appointed two new chief executives to lead on its growth plans.
November 23, 2021
Italian oil major Eni is planning an initial public offering (IPO) of its renewables, retail and mobility units that will scale up solar capacity as part of a clean energy push.

Subscribe to Newsletter

Upcoming Events

Solar Media Events
February 1, 2022
London, UK
Solar Media Events
February 23, 2022
London, UK
Solar Media Events
March 23, 2022
Austin, Texas, USA
Solar Media Events
March 29, 2022
Lisbon, Portugal