The next frontier of infrastructure investments
Renewable energy in Asia-Pacific
What’s the story?
Governments and leading companies are increasingly treating renewable energy (RE) as a strategic asset to drive growth and drive down cost. Globally, 2016 saw significant demand for RE with a total of USD 241.6 billion invested in the market. Our latest study explores the economic case of RE in Asia Pacific and key considerations industry players need to keep in mind.
The economic case for RE is certain
Here are 6 factors that tell you “why?”
- Market potential: Many governments are ramping up their efforts in RE, setting higher RE targets.
- Procurement model: Countries are increasingly moving towards the auction system, a competitive selective process, compared to the traditional Feed-in-Tariff mechanism.
- Financing: Besides decreasing financing costs, there is expected to be continued innovation in financing options.
- Policy & regulatory support: Government initiatives and fiscal incentives have proven to be an accelerator of the RE ecosystem.
- Costs: The global photovoltaics (PV) module pricing trend has shown a downward trend in recent years, making RE more competitive over conventional sources of energy.
- Revenue: Robust Power Purchase Agreements (PPAs) remain a key consideration for developers.
Key considerations for developing RE in Asia-Pacific
What are the potential issues and solutions developers need to consider?
- Currently, land procurement is a key concern in most Asia-Pacific countries, however, regional governments are slowly assuming land allocation risk for RE projects.
- Grid connectivity & stability has a high impact on RE projects in remote areas separated from the main grid. Stable grid networks are essentials for future large-scale developments.
- Many Asia-Pacific governments have favorable regulatory & legal frameworks for RE, with significant RE capacity targets.
- It is important for RE developers to ensure off-take security for PPAs to reduce risk of payment default since most off-takers in the region are in poor financial health.
- The availability of local debt, long-term loans and falling interest rates in most Asia-Pacific countries provides a solid financing platform for RE projects.
What’s up and coming in RE?
New trends in store
- Mini-grids or hybrids consist of a set of electricity generators interconnected to a distribution network that supplies electricity to a localized group of customers.
- Stand-alone systems such as rooftop solar systems are being used to power homes increasingly.
- Utility scale battery storage helps enhance grid stability and remove intermittency of RE generation.
- Building integration through adoption of energy efficient equipment as well as inclusion of RE technologies has been a key focus in global environmental sustainability.
- Artificial intelligence will propel increased usage of clean power in the future.
Contact us
Mark Rathbone
Asia Pacific Capital Projects & Infrastructure Leader, PwC Singapore
Tel: +65 9625 5206
Email
Lee Seng Chee
Partner, Capital Projects & Infrastructure
Tel: +65 6236 4178
Email
