Significant growth in Asia Pacific
Published by Jessica Casey,
Editor
Energy Global,
The Asia Pacific region offers significant growth opportunities. Strong economic growth has returned to many parts of the region, driving electricity demand growth higher. Most households in the region have access to electricity, but average household consumption rates are much lower than those of highly developed economies. The next 15 years will see this picture change as increased wealth drives up demand. At the same time, the region has largely been a laggard when it comes to renewable energy investment (with the notable exception of China). Policy makers across the region are aiming to try and address this situation, but the reality is that fossil fuels will remain key to the regions power supply.
So how will investment in key country markets unfold over the course of the next decade?
Australia
Due to the retirement of coal-fired power facilities – approximately US$12 – US$20 billion will go to phasing out coal-fired generation over the next 10 years – and increased electricity demand, renewable energy will become pivotal to electricity supply in several states from 2024. Australia plans to add 7.3 GW of onshore wind and over 50 GW of solar energy to the grid by 2030. Improving the regulatory situation related to planning approvals will be pivotal as to whether this can be achieved. Residential solar photovoltaics (PV), already installed on more than 3 million Australian homes, will continue to see significant growth. A total of US$132 billion will be invested in wind and solar PV between 2023 and 2035, 98% of total power generation investment. By 2035, renewables will account for 74.7% of electricity generated, up from 49% in 2023.
Japan
Japan is currently heavily dependent on fossil fuels for power generation. The country has previously had attractive incentives schemes for decentralised solar PV, but has invested limited amounts in utility scale projects. Wind power accounted for just 0.9% of electricity generated in 2023, exceptionally low by global standards. Availability of land is an issue in Japan, the population density is high and there has been opposition to renewables in rural parts of the country. Utilities have been hostile to renewables and the required grid investment has not been made.
Russia’s invasion of Ukraine has heightened Japan’s focus on energy security. Solar PV is forecast to double as a share of total electricity generated to 16% by 2035 with US$163.7 billion invested by 2035. Given Japan’s limited land availability, offshore wind will be a key technology. Project costs for the technology are currently high, but these will slowly decline over the course of the decade. Policy improvements and technological advancements will both support growth, with US$72.9 billion invested by 2035.
To address energy security, Japan’s GX Implementation Council unveiled a new policy to resume the operation of 17 nuclear power reactors in 2023 (of which 11 actually came online) and raise the operational life of current nuclear facilities from 40 to 60 years for long-term energy security. 22 reactors slated for decommissioning will either be replaced by next-generation reactors or restarted.
Despite all of these efforts, coal, natural gas and other fossil sources will still account for 54.3% of electricity generated by 2035.
South Korea
Energy security is also a top priority in South Korea, which (like Japan) is almost totally dependent on imported energy. The 2023 10th Basic Plan for Long-term Electricity Demand and Supply emphasises nuclear power and renewables as sources of potential high growth. However, the government has slashed the 9th Basic Plan’s electricity generated from renewable target from 30.2% to 21.6% in 2030, indicating weaker support for renewables. Given the lack of clear support, Frost & Sullivan forecasts the target will be missed, with only 17.3% achieved by 2030 and 23.1% by 2035. Offshore wind is the bright spot, with US$117 billion invested, meaning electricity from wind power will increase from 0.7% in 2023 to 8.6% by 2035.
Nuclear capacity will increase, and plants are likely to get life extensions. Nuclear will remain a key source of baseload power, consistently supplying 30%/y across the next decade. There will also be an expansion of natural gas. South Korea has a number of long-term supply contracts with Australia and Qatar for LNG. Natural gas will also account for approximately 30% of electricity generated across the decade.
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Energy Global's Summer 2024 issue
The Summer 2024 issue of Energy Global starts with a guest comment from Terrawatt on the streamlining of the permitting process in Italy, before moving on to a regional report from Frost & Sullivan on the energy landscape in Asia Pacific. This issue looks at key topics such as wind installation vessels, offshore wind turbine foundations, weather analysis, solar maintenance, and more!
Read the article online at: https://www.energyglobal.com/special-reports/08072024/significant-growth-in-asia-pacific/
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