Page 5 - GLNG Week 15 2022

GLNG COMMENTARY GLNG

to development could face constrained running farm costs will also have fallen below the long
hours from day one amid strong competition run marginal cost (LRMC) of new gas units in
from lower cost renewables. Japan.
In South Korea, a new onshore wind farm
Cheaper renewables will become a cheaper overall investment than
New large-scale gas units in Japan, South Korea a new gas-fired power station when comparing
and Vietnam appear totally incompatible with a the LCOEs of both.
net zero emissions by 2050 pathway and any that Finally, there is offshore wind, whose poten-
are built may be forced to close well in advance tial in Asia is huge.
of the end of planned lifetimes. Rystad Energy said that anticipated growth
In terms of cost, the report found that new in offshore wind investments means that spend-
solar and onshore wind power developments ing on offshore wind will overtake fossil fuels in
in Japan, South Korea and Vietnam were either Europe, the US and Asia (outside China) before
already cheaper, or will become cheaper overall the end of the decade. Offshore wind spending in
investments than new gas units by 2025. China overtook oil and gas investment in 2017,
Indeed, Wood McKenzie said in January that Rystad said.
although the levelised cost of electricity (LCOE) In Asia, offshore wind capacity is predicted
for renewable power in Asia broke historical to see rapid growth until 2030. In the short to
trends and rose in 2021, it still gained ground medium term, ‘inter-tidal’ – or near-shore, shal-
against fossil fuel power. low-water – wind farms in Vietnam and conven-
The average LCOE across Asia-Pacific for tional offshore wind in Taiwan are anticipated to
new solar projects increased by 9% to $86 per drive capital investment until 2025.
MWh and for onshore wind projects by 2% to Rystad said it expects Japan and South Korea
$103 per MWh in 2021, compared with rises of to add most to sectoral growth in the second half
19% for coal and 46% for gas. of the decade. With declining offshore O&G
In India, China and Australia, renewable investments, the crossing point, which offshore
power was 12% and 29% cheaper than the low- spending in higher than oil and gas, is forecast to
est-cost fossil fuel, coal, Wood McKenzie said. occur in 2028.
By 2030, electricity from renewables (mostly This matches Carbon Tracker’s forecast that
utility PV) will be at a 28% discount to coal offshore wind capacity in South Korea and Viet-
across the region, with India, Australia and nam will become cost-competitive with new gas
China boasting renewable LCOE discounts this decade.
ranging between 50% and 55%. Put simply, accelerating the transition to
Carbon Tracker found in its report that new renewables will bring Japan, South Korea and
solar units with battery storage capacity will Vietnam into line with the requirements of
become cost-competitive with existing gas plant reaching carbon neutrality and could begin their
capacity in Japan and South Korea during the shift away from their risky exposure to global
early 2030s. And by 2025, new onshore wind LNG markets.™

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