Page 10 - AsiaElec Week 33 2021

AsiaElec RENEWABLES AsiaElec
Asian green corporate PPAs double in 2020
ASIA
CORPORATE renewable Power Purchase Agreement (PPA) volumes in Asia-Pacific more than doubled to 3.8 GW in 2020, Wood Macken- zie said, as such deals start to lay a bigger role in the region’s decarbonisation efforts and as gov- ernments and corporations set ambitious decar- bonisation targets.
The increase came despite project delays caused by labour shortages and logistic disrup- tions from the COVID-19 pandemic.
Wood Mackenzie senior analyst Rishab Shrestha said: “Corporate renewable procure- ment is on the rise and Asia Pacific is starting to play a bigger role with 10.9 GW of cumulative capacity procured until H1 2021.
“Demand for renewable procurement is largely driven by ambitious decarbonisation tar- gets set by governments and companies in the region. But more importantly, falling renewa- bles premiums and rising power tariffs in Asia Pacific are making corporate renewable PPAs more attractive.”
Renewables premiums have fallen across all markets in Asia Pacific and are expected to be 45% below power tariffs on average by 2025. Wheeling and transmission charges will offset some of these gains, but the discount is expected to remain above 30% by 2025.
A corporate renewable PPA refers to a con- tract between a corporate buyer and a renewable power producer to purchase electricity at a pre- agreed price and duration.
India, Australia and Taiwan lead in Asia Pacific’s corporate renewable procurement mar- ket, with a cumulative procurement capacity of 5.2 GW, 3.2 GW and 1.3 GW respectively.
Attractive project economics and enabling policy frameworks in Australia and India account for the greater corporate PPA activity in these markets.
Shrestha said: “We expect Singapore and Japan to join the ranks in becoming leaders in corporate renewable procurement. Singapore is the most developed procurement market in Southeast Asia but has limited land availability for renewable projects. Japan’s procurement is largely limited to onsite projects, but we expect
policy updates by year end.”
Industrial offtakers were the largest buyers of
renewables, accounting for 57% share of PPAs contracted in 2020.
This is due to the high energy demand of the electronics manufacturing and mining industries.
Retail and service offtakers were the next larg- est group, accounting for a 25.4% share. Technol- ogy sector offtakers make up 16.9% share, with energy procured primarily directed towards powering data centres.
“Interestingly, although RE100 memberships in Asia Pacific have increased year on year, only 10% of the 99 member companies signed corpo- rate PPAs in the region,” Shrestha said.
RE100 is a global initiative of major compa- nies that have committed to driving the transi- tion to 100% renewable electricity.
“Most Asia Pacific headquartered RE100 companies rely on onsite installation and net-metering solar projects to power their oper- ations using renewables.”
Asia Pacific RE100 companies account for only 22% of total cumulative contracted PPA capacity share.
Most companies that signed corporate PPAs in the region have not committed to RE100, as limited regulations permitting large-scale pro- curement of renewables in the region form a major barrier, Wood Mackenzie said.
Large energy users, particularly companies in the manufacturing industry, would demand more policy certainty regarding procurement from offsite projects to satisfy their large energy requirement for RE100 targets to be feasible.
With ambitious carbon neutrality targets and corporate emission reduction obligations, Asia Pacific businesses are increasingly pressuring regulatory bodies to ease corporate procurement regulations towards offsite generation projects offering larger capacities.
Shrestha said: “While challenges remain, pol- icy, corporate ambition and economics are start- ing to tilt the balance towards a more conducive corporate PPA landscape for growth.”™
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w w w . N E W S B A S E . c o m Week 33 18•August•2021