Surging energy prices are helping corporate renewable power purchase agreements (PPAs) in the Asia Pacific region reach a record of 7 GW this year, writes Wood Mackenzie analyst Kyeongho (Ken) Lee.
This represents a rise of 80% compared to 2021, which also reflects a recovery from pandemic-related disruptions.
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Corporate renewable procurement is driven by decarbonisation targets and increasingly by market forces as soaring prices of liquefied natural gas (LNG), crude oil and coal mean renewable power costs are 46% below average industrial end-user tariffs in 2022, according to the article.
The market is led by India, which accounts for 44%, or 8.1 GW, of cumulative contracted capacity. Together with Australia and Taiwan, the three countries have a share of 89% in overall capacity. In many Southeast Asian countries like Cambodia, Thailand, Vietnam, Pakistan and the Philippines, the contracts are for rooftop solar projects of limited size.
In terms of resources, solar accounts for 57% of the region’s corporate PPAs so far and wind for 25%, although its role has been growing since 2020 and the technology represented 44% of new contracts in the first half of 2022. Solar is the leading technology in India, offshore wind in Taiwan, while in Australia solar and wind have similar shares in PPAs.
The biggest customers include Taiwanese chipmaker TSMC, which has 2.4 GW of PPAs, Australian miners BHP and Newcrest, supermarket chains and telecoms providers.
The research firm sees potential for more growth in Asia Pacific as the region still accounts for only 15% of the global PPA market and energy prices are expected to remain high in the coming years.
According to it, the main obstacle to growth is the lack of regulation allowing large-scale procurement of renewables in some markets. While countries such as South Korea, Japan and China are gradually relaxing regulations, Australia, India and Taiwan are seen to keep driving future growth, says Wood Mackenzie.