Investments in renewable energy generation in Asia excluding China will overtake spending on upstream oil and gas projects in the region as soon as next year.
Total capex in renewable energy generation will overtake exploration and production spending in 2020, with contributions from Australia and other Asian countries such as Vietnam, Taiwan and South Korea, the latest bottom-up analysis of investments shows.
“These countries each have strong pipelines for renewable energy developments of all types, including offshore wind,” says Gero Farruggio, head of renewables at Rystad Energy. “And, importantly, most have large targets outlining the inclusion of renewable power sources within their respective energy mixes, with corresponding support policies.”
In Australia, the renewable energy generation project pipeline is now over double the national electricity market. Only 1% of the country’s solar, wind and utility storage projects is currently owned by oil majors.
“By 2020 it is feasible that the majors will be the dominant renewable developers in Australia as they pursue ‘oil and gas’ scale opportunities. Commercial drivers are increasing the desire to ride the ‘solarcoaster’,” Farruggio remarked.
“Upstream companies will lead the charge, building sizable utility storage, solar and – ultimately – offshore wind portfolios. Solar panels, lithium-ion batteries and turbines will soon be conventional segments of Australia’s oilﬁeld services,” he added.
It is expected that renewables in Australia will continue the strong growth seen in 2018 through to 2020, although the country still faces the local challenge of transmission losses, which impacts revenues and creates policy uncertainty.
However, investor confidence is high in Australia, and the country currently has a development pipeline of over 105GW of solar, wind and storage projects, as well as a fleet of aging coal-fired power stations which will require replacement.
The growth in India’s renewables presents significant scale and is one to watch.
Renewable energy investment in Asia excluding China will overtake spending on upstream oil and gas projects in the region as soon as next year.
This research would seem to be supported across other parts of APAC. Malaysia will continue to embrace and develop thermal power capacity for the next decade and beyond, adding 5GW of coal and gas capacity. Renewables, particularly wind and solar, will also rise by 2.8GW, according to a new report which explores the make-up of the country’s energy mix to 2030.
However, the study by analytics company GlobalData points out that the rise of renewables will come at the expense of nuclear, which has seen new build plans stall because of strong public opposition.
As a net importer of electricity, Malaysia is primarily dependent on thermal resources for electricity generation and although it possesses substantial fuel reserves, it faces the risk of declining energy security.
In 2018, gas-fired power dominated Malaysia’s power portfolio, with a share of 43% of total installed capacity. This was followed by coal and oil at 30.4% and 5.9% respectively, while hydropower held a 17.2%. However, other renewables together accounted for less than 4.0% of the total capacity.
Power analyst Harshavardhan Reddy Nagatham said: “Progressive economic reforms and a continuous increase in industrial activity are expected to boost economic progress in Malaysia, driving the country’s GDP at a compound annual growth rate of 4.8% during the forecast period. In addition, increasing population will result in a significant increase in electricity consumption.”
Storage changes the dynamics
The Asia-Pacific region will be the largest market for battery energy storage in the next few years, with a share of the sector worth $6 billion by 2013.
That’s one of the key conclusions of a new report on global battery storage, which found that Asia-Pacific accounted for 45% of the worldwide market’s installed capacity last year.
According to research, lithium-ion will continue to be the preferred technology for market deployment and adds that “with the number of grid-connected renewable electricity generation plants increasing tremendously, countries such as China, India, Japan, South Korea and the Philippines will focus on frequency regulation in the electric grid to normalize the variation in power generation from renewables”.
Globally, it is forecast that the battery energy storage market will grow to $13.13 billion by 2023.
GlobalData power analyst Bhavana Sri said: “With countries aggressively promoting the modernization of grids, and developing their capability to handle the demands of the present and future, batteries are being deployed to support smart grids, integrate renewables, create responsive electricity markets, provide ancillary services, and enhance both system resilience and energy self-sufficiency.”
The research found that the EMEA battery energy storage market registered a market value of about $1.73 billion in 2018 and accounted for 26% of the global market; while the Americas had a value of around $1.97 billion and accounted for 28%.
Sri said: “Market conditions are improving and more companies are moving into a decentralized generation, leading to an increase in the onsite deployment of renewables and batteries, as in micro or mini girds. Supportive policies and high electricity charges are also nudging the market towards renewables and/or storage plus renewables at the end-consumer level. As the power sector evolves to accommodate new technologies and adapt to varying market trends, energy storage will play a central role in the transition and transformation of the power sector.” SEI