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Renewables 2021 - Take on Asia...

International Energy Agency (IEA) recently published a report titled "Renewables 2021". The report presents an update on the renewable energy sector, based on current policies and market developments, while also exploring key challenges to the industry and identifying barriers to faster growth.

This insight article by YOG INRFA provides key developments and updates on Asia (summarized from the IEA report)

 

Megatrends

  • Improved policies and COP26 climate goals are set to propel renewable electricity growth to new heights

  • Additions of renewable power capacity are on track to set yet another annual record in 2021, driven by solar PV

  • The growth of renewable capacity is forecast to accelerate in the next five years, accounting for almost 95% of the increase in global power capacity through 2026

  • Asia is set to overtake Europe as India and Indonesia lead renewed growth in global demand for biofuels


Asia - key updates

  • Solar PV leads the deployment of renewables in the region, driven by auctions in India and new policies expected in ASEAN countries

  • Renewable capacity in ASEAN is expected to increase by 52 GW during 2021-2026, representing growth over current capacity of more than 65%.

  • Viet Nam continues to lead capacity growth in ASEAN, although new deployment is spreading throughout the region. Further, an acceleration in hydro and geothermal deployment is expected towards 2026, with a few large-scale projects coming online in Malaysia and Indonesia

  • Commercial PV installations are expected to drive capacity growth during 2021-2026. Steady growth in utility-scale and commercial PV supported through auctions and net metering quotas is expected in Malaysia, while the private PPA market will continue to drive rooftop and floating PV installations in Singapore.


Country Updates

 

Pertinent Questions to Ask


1 - What is the impact of increasing commodity and energy prices on solar PV, wind, and biofuels?

  • Rising commodity prices have increased the cost of producing solar PV modules, turbines, and biofuels worldwide. This situation has short-term implications for equipment manufacturers, project developers and policy makers.

  • Higher prices for solar PV and wind equipment have reversed the cost reduction trend that the industry has seen for more than a decade and may delay the financing of some projects already in the pipeline.

  • While rising input prices have already resulted in policy change on biofuels in several countries, demand for wind and solar PV remains strong, as reflected in recent auction participation and corporate purchasing, even with rising prices.

  • While uncertainty remains as to how long commodity prices will continue their upswing, the impact of rising material costs on the profitability of the renewable energy industry could have long-term implications for the cost of clean energy transitions.


2 - How much will renewable energy benefit from global stimulus packages?

  • As of October 2021, governments around the world have mobilized almost USD 17 trillion in the form of rebates, grants, loans, and tax incentives/exemptions to mitigate the effects of the Covid-19 crisis.

  • The majority of these measures are aimed primarily at providing relief to businesses, the public sector and consumers affected by the economic downturn arising from the Covid‑19 pandemic and to channel public money towards rebuilding economies around the world.

  • Approved government spending on clean energy reached USD 480 Bn. The USD 45 Bn allocated to renewables – including electricity, heat and fuels (biofuels, advanced biofuels and biogas) – accounted for about 9% of announced public spending on clean energy. The majority of global clean energy stimulus is expected to be spent over 2021-2023.


3 - Could the green hydrogen boom lead to additional renewable capacity by 2026?

  • In 2020, global electrolyser capacity stood at 0.3 GW, mostly using grid electricity to produce hydrogen. Planned project pipelines in almost 30 countries indicate that global electrolyser capacity could reach almost 17 GW by 2026. Based on project announcements, we estimate that almost half of the planned expansion to use existing renewable capacity.

  • Most announced projects range from 1 MW to 10 MW in size and are close to industrial sites and ports. The additional renewable capacity installed for these small projects is expected to be limited, as they will mostly use renewable electricity from the grid through bilateral agreements with developers and utilities.

  • Larger projects (10-100 MW) are expected to bring almost 18 GW of additional renewable capacity during 2021-2026 dedicated to the production of hydrogen or ammonia from renewables, accounting for only 1% of our main case forecast growth in renewables.


4 - How rapidly will the global electricity storage market grow by 2026?

  • Global installed storage capacity is forecast to expand by 56% in the next five years to reach over 270 GW by 2026. The main driver is the increasing need for system flexibility and storage around the world to fully utilize and integrate larger shares of variable renewable energy (VRE) into power systems.

  • Utility-scale batteries are expected to account for the majority of storage growth worldwide. Their installed capacity increase six fold over the forecast period, driven by incentives and an increasing need for system flexibility, especially where the share of VRE covers almost all demand in certain hours of the day.


5 - Are renewable heating options cost competitive with fossil fuels in the residential sector?

  • While fossil fuels met more than 60% of heat demand in the buildings sector globally in 2020, the recent rebound in oil and gas prices revives the question of the cost-competitiveness of renewable space and water heating technologies.

  • The cost-competitiveness of heating technologies depends on a combination of parameters, including initial investment costs, variable operating costs, fixed operating and maintenance costs, and the presence of financial and economic incentives or disincentives.

 

References

IEA Renewable 2021: https://www.iea.org/reports/renewables-2021

 

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With our offices in Singapore and India, we work on projects globally, and the team brings strong experience in supporting development of infrastructure projects.


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