- Press Releases
April 22 (Renewables Now) - Up to 150 GW of wind and solar projects across the Asia-Pacific region could be delayed or even scrapped in the period 2020-2024 if the recession resulting from the COVID-19 lockdown extends beyond 2020.
This is according to Wood Mackenzie’s latest research, which shows that a two- to three-month disruption in power demand with strong recovery would result in 380 TWh of lost electricity consumption in the region this year. The figure could reach 1,000 TWh by 2023 if the coronavirus situation is not resolved and markets go into major recession.
“The coming months will be crucial to determine if the region is moving towards a rapid recovery or extended recession future. Key indicators to monitor include power demand growth, credit terms for renewables projects, cost competition between renewables and fossil fuels and government support including stimulus for renewables markets,” stated Wood Mackenzie research director Alex Whitworth.
He quoted a base case outlook in which stronger growth and support policies in 2021 would compensate for the impact on wind and solar installations this year. Whitworth, though, noted that in a worsening situation financing costs would rise and affect renewable energy projects in markets such as India, Vietnam, the Philippines, Thailand, Indonesia and Malaysia.
“A 10% increase in weighted average cost of capital could lead to an 8% increase in levelised cost of electricity (LCOE) in renewables,” he said and warned that regardless of how much solar and wind generation costs have fallen in the last five years, renewables would not be able to compete with coal in most of the Asia Pacific before 2025 in a recession scenario with lower fossil fuel prices.
Whitworth added that in this case government support would be required. He gave an example with Vietnam where the Ministry of Industry and Trade has proposed a two-year extension of wind power feed-in tariffs (FiTs) to 2023. In the meantime, China mulls extending subsidies beyond the planned cut-off in 2020. Such move are more likely to benefit existing projects rather than new ones.