Page 7 - AsianOil Week 15 2022

AsianOil COMMENTARY AsianOil

be made viable, the provision of which makes become cost-competitive with existing gas plant
no sense when cheaper renewable alternatives capacity in Japan and South Korea during the
are available. early 2030s. And by 2025, new onshore wind
In practical terms of new gas projects running farm costs will also have fallen below the long
on imported LNG, typical planning and con- run marginal cost (LRMC) of new gas units in
struction timeframes of at least four years for Japan.
new gas mean that any units that move ahead In South Korea, a new onshore wind farm
to development could face constrained running will become a cheaper overall investment than
hours from day one amid strong competition a new gas-fired power station when comparing
from lower-cost renewables. the LCOEs of both.
Finally, there is offshore wind, whose poten-
Cheaper renewables tial in Asia is huge.
New large-scale gas units in Japan, South Korea Rystad Energy said that anticipated growth in
and Vietnam appear to be incompatible with a offshore wind investments means that spending
net zero emissions by 2050 pathway and any that on offshore wind will overtake fossil fuels in
are built may be forced to close well in advance Europe, the US and Asia (outside China) before
of the end of planned lifetimes. the end of the decade. Offshore wind spending
In terms of cost, the report found that new in China overtook oil and gas investment in
solar and onshore wind power developments 2017, Rystad said.
in Japan, South Korea and Vietnam were either In Asia, offshore wind capacity is predicted
already cheaper, or will become cheaper overall to see rapid growth until 2030. In the short to Asia has been the
than new gas units by 2025. medium term, ‘inter-tidal’ – or near-shore,
Indeed, Wood McKenzie said in January that shallow-water – wind farms in Vietnam and primary driver
although the levelised cost of electricity (LCOE) conventional offshore wind in Taiwan are of LNG demand
for renewable power in Asia broke historical anticipated to drive capital investment until
trends and rose in 2021, it still gained ground 2025. in recent years,
against fossil fuel power. Rystad said it expects Japan and South Korea
The average LCOE across Asia-Pacific for to add most to sectoral growth in the second half accounting for
new solar projects increased by 9% to $86 per of the decade. With declining offshore O&G
MWh and for onshore wind projects by 2% to investments, the crossing point, which offshore 95% of projected
$103 per MWh in 2021, compared with rises of spending in higher than oil and gas, is forecast growth in
19% for coal and 46% for gas. to occur in 2028.
In India, China and Australia, renewable This matches Carbon Tracker’s forecast that 2020-22.
power was 12% and 29% cheaper than the low- offshore wind capacity in South Korea and Viet-
est-cost fossil fuel, coal, Wood McKenzie said. nam will become cost-competitive with new gas
By 2030, electricity from renewables (mostly this decade.
utility PV) will be at a 28% discount to coal The group concludes that accelerating the
across the region, with India, Australia and transition to renewables will bring Japan, South
China boasting renewable LCOE discounts Korea and Vietnam into line with the require-
ranging between 50% and 55%. ments for reaching carbon neutrality and could
Carbon Tracker found in its report that new begin their shift away from their exposure to
solar units with battery storage capacity will global LNG markets.™

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