Asia Pacific renewables ‘cheaper than coal by 2030’
The levelised cost of electricity (LCoE) for renewables is expected to be cheaper than coal across the Asia Pacific by 2030, according to analysis by Wood Mackenzie.
Across the region, new investments in renewables power are expected to be 23% lower cost than coal power on average by the end of the decade, the research found.
Solar-plus-storage projects expected to be competitive with natural gas by 2026.
Today renewable power costs about 16% more on average compared to coal power but has been at a discount to gas-fired power since 2019.
Wood Mackenzie senior analyst Rishab Shrestha said: “Today, India and Australia are the only markets in Asia Pacific with LCoE for renewables cheaper than new-build coal.
“However, by the end of the decade, we can expect almost all markets in the region to have renewable power at a discount compared to the lowest cost fossil fuel. The stage is set for rapid growth of subsidy-free renewables in Asia Pacific.”
By 2030, renewables power in India and Australia are expected to be 56% and 47% cheaper than new-build coal, respectively, Wood Mackenzie said.
India is a “cost leader” for renewables due to low construction and labour costs and good renewable resources.
Australia and China have similar solar costs, though the former market has better solar insolation whereas capital costs are lower in China.
Due to lower coal LCoE in China, the renewables premium remains relatively high, Wood Mackenzie found.
Shrestha said: “The winds will change in China as we expect renewables’ LCoE to be cheaper than coal next year.
Over this decade, the renewables discount over fossil fuels will grow to 40% on average across China, as the LCoE of new wind and solar plants fall below those of fossil fuels, and also taking into consideration a carbon price.”
South Korea, Thailand and Vietnam will join China with lower renewables power cost compared to coal in 2021.
Shrestha added: “Despite low renewables costs, government policy is still critical in the future to attract investors, manage grid reliability and transmission upgrades, and encourage battery storage to manage intermittency of renewables.
“Our LCoE estimates for solar-plus-storage and wind-plus-storage projects show that they can start to compete with gas in 2026 and 2032, respectively.
“However, it will take much longer for these technologies to compete with coal.”
Source : renews
