WoodMac: APAC renewables to outcompete coal within eight years

Facebook
Twitter
LinkedIn
Reddit
Email
Indian PV is already cheaper than coal thanks to a mix of high irradiation, market scale and competition, Wood Mackenzie said (Credit: Bridge to India)

Indian and Australian solar will spearhead a grid parity shift set to take hold of Asia-Pacific renewables within less than a decade, according to Wood Mackenzie.

Renewables’ levelised cost of energy (LCOEs) across the region’s top 12 markets remains 29% higher than coal-fired power but the gap will vanish by 2027, the firm predicted on Monday.

This article requires Premium SubscriptionBasic (FREE) Subscription

Unlock unlimited access for 12 whole months of distinctive global analysis

Photovoltaics International is now included.

  • Regular insight and analysis of the industry’s biggest developments
  • In-depth interviews with the industry’s leading figures
  • Unlimited digital access to the PV Tech Power journal catalogue
  • Unlimited digital access to the Photovoltaics International journal catalogue
  • Access to more than 1,000 technical papers
  • Discounts on Solar Media’s portfolio of events, in-person and virtual

Or continue reading this article for free

By 2030, the new analysis estimated, solar and wind will actually be 17% cheaper on average than any fossil fuels across the 12-strong group, spanning India, Australia, China and Japan.

Wood Mackenzie research director Alex Whitworth said the shift will drive a major jump in these markets’ current renewable share of 6%, creating “opportunities” but also “disruption”.

The figures show Indian solar LCOEs (US$38.2/MWh) already outcompete those of the country’s cheapest fossil fuels (US$44.5/MWh), thanks to high irradiation, market size and competition.

Australia, Wood Mackenzie noted, will be second. The country’s past dependency on coal and gas is crumbling, as fossil fuel price hikes and green regulations bolster the case of renewables.

After LCOE drops of 42% over the past three years, Australian PV already outcompetes gas and will reach US$48/MWh next year to catch up with coal, according to the firm.

As Whitworth noted, Australia’s transition won’t be devoid of challenges, including grid impacts and curtailment issues. Energy storage, he argued, is “one of the key options” to shore up supply.

Japan, Indonesia and Malaysia lag behind

Wood Mackenzie’s update examined the grid parity journey of Asia-Pacific’s solar, finding utility-scale PV cost declines of 80% between 2010 and 2019 across the region.

From solar LCOEs (US$344/MWh) above wind’s (US$120/MWh) in 2010, the industry has finally jumped ahead in 2019, achieving US$69/MWh to wind’s US$72/MWh.

For some, however, the going is far slower. Where PV hit LCOEs of US$38.2/MWh in India in 2019, it remained behind in Japan (US$153/MWh), Indonesia (US$106/MWh) and Malaysia (US$88.6/MWh)

All three solar markets – the priciest in Wood Mackenzie’s sample of 12 – will be the only in Asia-Pacific where renewables will not catch up with coal prices by 2030, the firm noted.

The market tailwinds taking Asia-Pacific’s solar to grid parity are pushing the industry towards the same goalpost across the rest of the world. 

In May, IRENA reviewed renewable projects and PPAs and found 83% of the utility-scale PV pipeline commissioned for 2020 will boast prices lower than the cheapest fossil-fuel alternatives.

According to the agency, India and Italy were the world’s most cost-efficient PV markets as of 2018, followed by China, France and Germany.

Others, including McKinsey, have predicted different outcomes for the global grid parity race. In February, the firm said Germany and Spain would hit the goal next year, outrunning India and Australia.

Read Next

May 24, 2024
Waaree Energies has signed an agreement to supply 445MW of modules to Statkraft India for a project in Bikaner, Rajasthan.
May 24, 2024
Indian solar installations increased by over 400% in the first quarter of 2024 to the highest quarterly deployment levels in its history.
Premium
May 24, 2024
Quarterly reports from China’s big-five PV module producers highlight the challenges PV manufacturers face in maintaining profitability.
May 22, 2024
The European Solar Manufacturing Council (ESMC) has called on increasing work around inverters’ cyber- and data security.
May 21, 2024
The ISO has granted DMEGC Solar its ISO 14067 certification, to hold it to high standards of carbon footprint reporting.
May 21, 2024
Chinese solar manufacturer Huasun Energy has secured a 1GW heterojunction (HJT) module procurement for state-owned utility China Datang Corporation.

Subscribe to Newsletter

Upcoming Events

Upcoming Webinars
May 29, 2024
11am (EDT) / 5pm (CEST)
Solar Media Events
June 4, 2024
London, UK
Upcoming Webinars
June 11, 2024
3:00 PM (BST) / 4:00 PM (CEST)
Solar Media Events
July 2, 2024
Athens, Greece