Corporate Renewable Procurement of 7 GW Sets New Record in Asia Pacific

• The corporate PPA market in Asia is finally supplying on guarantee, mirroring the impact this market can make on new renewable capacity as seen in the North American and also European markets.
• In India, this is also demonstrated by the active rate of interest of large programmers, who have actually announced plans for this over utility scale projects in some cases.

A research authored by Kyeongho (Ken) Lee, Principal Analyst, Asia Pacific Power & Renewables at Wood Mackenzie discloses that Corporations in Asia Pacific are readied to contract a record 7 GW of renewable capacity in 2022. This is an 80% increase on 2021 as markets arise from pandemic-related disturbances. Need is mostly driven by ambitious decarbonisation targets in the area-- and market forces are straightening to make corporate renewable power acquisition contracts (PPAs) significantly attractive.

Contrasts between renewable power costs

Historically, the demand for renewable purchase has actually generally been driven by ambitious decarbonisation targets, both from governments and also firms themselves. However, the favourable change in the rate equation has actually assisted to shift the rate of adjustment.

The levelised cost of electricity (LCOE) for utility-scale solar, industrial solar as well as onshore wind has actually fallen by 4.9%, 14.2% and 8.6% specifically given that 2019. In the very same duration, LNG has actually become 2.4 times a lot more expensive. The price of crude oil has more than doubled. And coal has actually come to be more than 4 times as pricey. Because of this, renewable power costs are 46% below average commercial end-user tariffs in 2022.

Solar Dominates Corporate PPAs, Wind Follows

Solar dominates corporate renewable procurement in Asia Pacific, accounting for 57% of the region's contracted corporate PPAs to date. However, wind has actually been catching up because 2020 as well as accounted for 44% of new agreements in the area in the initial fifty percent of 2022.

Within countries, the market share of different technologies varies significantly. Solar as well as wind are almost just as preferred in Australia, accounting for 45% and 43% of PPA contracts respectively. In India, solar dominates, representing 82% of contracts. The situation is reversed in Taiwan, where wind, particularly offshore wind, has swiftly end up being the leading modern technology behind PPAs, making up 89% of complete capacity. For the remainder of Southeast Asia and also East Asia, solar make up almost all got capacity.

Where are corporate renewable PPAs most preferred?

Countries with beneficial policies in the direction of offsite corporate energy procurement have actually had the ability to ramp up PPA projects quicker.

India leads the charge, with 44% (8.1 GW) of advancing contracted capacity. Australia and Taiwan are likewise seeing solid growth. These 3 countries with each other make up 89% of overall capacity.

In the majority of Southeast Asian countries, consisting of Cambodia, Thailand, Vietnam, Pakistan as well as the Philippines, PPAs are rooftop solar projects. These are of minimal size, reducing their payment to capacity.

Who are the big players?

The leading designers in Asia's corporate PPA market are mostly residential as well as local players. The top 3 solar programmers in India-- Amp Energy, Amplus Solar as well as Cleantech Solar-- are likewise the greatest players in general, yet the huge bulk of their capacity remains in India. They are also set to get tight competitors from bigger, hitherto utility scale players like Renew Power as well as Greenko, as they change focus to the much more lucrative corporate PPA market currently. In a similar way, the top 3 wind programmers in Taiwan are likewise the leading three players regionally, yet they have actually no mounted capacity elsewhere.

Large energy customers in the commercial, retail and technology fields are the key consumers for PPAs. At 2.4 GW, Taiwanese chipmaker TSMC's PPAs represent over 10% of the total amount for the entire area. In Australia, firms including BHP and also Newcrest make use of PPAs to power their mining procedures. Other huge users include supermarket chains as well as telecommunications companies that make use of renewables to power their information centres.

What's the possibility for further growth?

Although Asia Pacific's contracted renewable corporate PPA capacity was 7 times higher in 2021 than in 2017, the area still represents only 15% of the worldwide PPA market. Up until now, only 29% of the 122 Asia Pacific companies that are participants of the RE100 worldwide renewable resource initiative have actually authorized corporate PPAs. That leaves lots of space for additional development.

With the rates of LNG, coal as well as crude oil anticipated to continue to be high in the coming years, renewables are currently considerably less expensive in addition to greener than standard energy resources. Where they are feasible, PPAs are an easy and also relatively cost-effective way for companies to gain access to renewable power. The major obstacle is a lack of policy permitting large-scale procurement of renewables in some jurisdictions to drive development.

Countries including South Korea, Japan, and also China are all gradually easing laws surrounding offsite corporate PPAs, which must open opportunities in the coming years. However, the research study expects Australia, India, and Taiwan to remain to lead future growth.