Wind and solar PV could attract more investment than any other power generation source in the Asia Pacific region in the next decade as the two technologies become cost-competitive with coal by 2030, according to new analysis.
Consultancy Wood Mackenzie believes the region's power generation sector could attract investments worth $1.5 trillion through to 2030.
It forecasts wind and solar will account for 66% of this ($1 trillion), with fossil fuels – mainly coal and gas – taking the remaining €500 billion.
This comes despite an expected decline in wind and solar investment – 20% by 2025 from its peak in 2017, when the sector was driven by generous government subsidies.
Investments in renewables have overtaken fossil-fuel power since 2013, the analysts stated.
Wood Mackenzie added that wind and solar PV will become competitive with new coal plants in Asia Pacific by the end of the decade.
The consultancy noted several increasing risks for renewables in the forecast period, including subsidies being cut, increasing grid constraints, and greater exposure to market forces.
This – along with sluggish demand due to the coronavirus pandemic – means there will be a slowdown in capacity installations in the next five years, but new additions should pick up again in the second half of the decade.
The analysts forecast more than 170GW of new power capacity will be added every year until 2030.
Senior analyst Rishab Shrestha said: “Traditionally, energy security and availability of low-cost coal are key drivers of coal investment in Asia.
“However, investment sentiment towards coal is waning as economies strive for a more sustainable and greener future.”
While Wood Mackenzie believe wind and solar PV will be cost-competitive with coal by 2030, this is already the case in many other markets.
Renewables investments are growing rapidly in regions where variable renewable energy has a low share of generation, Wood Mackenzie stated.
These regions include southeast Asia, northeast Asia and coastal China.
The analysts forecast that wind and solar’s combined share of generation in Asia Pacific will more than double to 17% by 2030, with more than 50 regional markets out of the 81 modelled exceeding a 10% share.
Meanwhile, gas and dispatchable power will continue to play a key role in providing flexibility to power systems. However, energy storage technology – mostly pumped hydro storage, but also battery storage – will also grow during the forecast period, more than doubling during the transition decade to 9% of peak load.