Investment in wind and solar generation in the Asia Pacific region could reach $1.3 trillion in the decade to 2030, twice what it was in the ten years to 2020, according to research consultancy Wood Mackenzie.
Speaking at the inaugural Wood Mackenzie Asia Pacific Power and Renewables Conference, research director Alex Whitworth said: “Asia Pacific power generation investments are leading the world and are expected to hit $2.4 trillion in the current decade, with renewables accounting for over half or $1.3 trillion of power investments.”
Fossil fuel power investments are forecast to decline by around 25% from the previous decade, to $54 billion a year. “We expect coal to make up 55% of fossil fuel investments until 2030, but shrink to 30% in the 2030s as gas dominates,” Whitworth added.
The current decade will see subsidies across Asia being rolled back, but stronger policy targets and cost declines will continue to drive renewables development. WoodMackenzie expects subsidy-free renewable power to start competing with coal power from 2025 in most Asian markets.
Top contributors to wind and solar investments in Asia Pacific include China, Japan, India, South Korea and Taiwan. Between 2021 and 2030, around 140GW of new wind and solar capacity will be added annually, accounting for two thirds of average total power capacity additions in the region by 2030.
“China’s 1,200GW of wind and solar capacity target by 2030 will require more than 534GW of renewables to be added over the next decade,” said principal consultant Xiaoyang Li. Wood Mackenzie expects average annual wind capacity additions to be over 40GW per year to 2030.
WoodMackenzie said that offshore wind power will play a key role in supporting Japan’s 2050 net-zero target, and that South Korea, with nearly 4.4GW in its immediate development pipeline, will become a leader in offshore wind in Asia.
Collectively, Southeast Asia will require around $14 billion a year of wind and solar investments to 2040, making up just under half of total power investments.
Australia’s wind and solar investments, on the other hand, are forecast to drop by 60% in the next five years, but pick up again to average $7 billion a year in the 2030s.
Along with strong renewables investments this decade, Wood Mackenzie expects carbon emissions from the Asia-Pacific power sector to peak at 7.3 billion tonnes in 2025, which equates to 1.8 tonnes per person, less than half the level of most developed countries. Inertia in the coal power fleet, however, is expected to prevent Asia-Pacific from reaching carbon-free power by 2050.