The analyst currently said India and Australia are the only countries in the Asia-Pacific region where renewable energy is already lower cost than newly built coal. The trend was predicted to spread across the region by the end of the decade, as India and Australia continue to make renewable energy cheaper than coal.
A new report by Wood Mackenzie shows that electricity costs (LCOE) for renewable energy could be cheaper than coal in most Asia-Pacific markets by 2030.
Currently, India and Australia are the only countries in the Asia-Pacific region where the cost of generating renewable energy is already lower than that of building new coal.
According to WoodMac, the cost of generating renewable energy in the Asia-Pacific region is currently 16% higher on average than coal-fired power. However, the situation will be reversed by the end of the decade and generating electricity from renewable sources will require 23% less investment than coal by 2030.
Rishab Shrestha, Senior Analyst at Wood Mackenzie, said, “Today, India and Australia are the only markets in the Asia-Pacific region where LCOE for renewable energy is cheaper than newly built coal. However, by the end of the decade, we can assume that almost all markets in the region will have renewable energy at a discount compared to the cheapest fossil fuels. The prerequisites for rapid growth in subsidy-free renewable energies in the Asia-Pacific region have been created. ”
The report predicts the cost of renewable energy generation in India will continue to decrease by 2030 and be 56% cheaper than newly built coal. In Australia, the second cheapest renewable energy market in the Asia-Pacific region, it will be 47% cheaper than newly built coal.
The report attributes India’s rise as a cost leader to low construction and labor costs and good renewable resources. The massive market potential for renewable energies has attracted many investors, which has led to intense competition and cost reductions.
The report states that Australia and China have similar solar costs, while the former market has better solar exposure, while the capital cost is cheaper in the latter market. However, due to the lower LCOE for coal in China, the renewable energy premium remains relatively high.
Shrestha said, « The winds are going to change in China as we expect the LCOE for renewable energy to be cheaper than coal in the next year. This decade, the renewable energy discount over fossil fuels across China will rise to an average of 40% as the LCOE of new wind and solar systems falls below that of fossil fuels and also takes into account a carbon price. ”
Three more markets – South Korea, Thailand and Vietnam – will join China in 2021 with lower electricity costs for renewable energy than coal.
Japan, the most expensive renewable energy market in 2020, can also expect renewables to become 1% cheaper than fossil fuels by 2030. The cost of producing renewable energy in the country is high, mainly due to higher labor costs, environmental permit costs, land restrictions and lower availability of renewable resources.
In Taiwan, renewable energy costs will be around 30% cheaper than fossil fuel costs by the end of the decade.
Shrestha said, “Despite low renewable energy costs, government policies will continue to be of vital importance to attract investors, manage grid reliability and transmission upgrades, and promote battery storage to cope with renewable disruption. Our LCOE estimates for Solar-Plus storage and Wind-Plus storage projects show that from 2026 and. Compete with gas in 2032. However, it will take much longer for these technologies to compete with coal. ”
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Renewable Energy, Coal, Photovoltaic, Wood Mackenzie, 2030
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