Significant growth in Asia Pacific

The Asia-Pacific region offers significant growth opportunities. Strong economic growth has returned to many parts of the region, which has boosted demand for electricity. Most households in the region have access to electricity, but average household consumption rates are much lower than in developed economies. This picture will change over the next 15 years as rising wealth increases demand. At the same time, the region has largely lagged behind in renewable energy investment (with the notable exception of China). Policymakers across the region are working to address this situation, but the reality is that fossil fuels will remain key to the region’s energy supply.

So how will investments develop in the most important national markets over the next decade?

Australia

With coal-fired power plant retirements expected to cost around $12-20 billion over the next 10 years and increased electricity demand, renewable energy will become key to power supply in several states from 2024. Australia plans to add 7.3 GW of onshore wind and over 50 GW of solar to the grid by 2030. Improving the regulatory landscape for planning approvals will be key to achieving this. Residential solar photovoltaics (PV), already installed in more than 3 million Australian homes, will continue to see significant growth. A total of $132 billion will be invested in wind and solar PV between 2023 and 2035, accounting for 98% of total investment in power generation. By 2035, renewable energy will account for 74.7% of electricity generation, up from 49% in 2023.

Japan

Japan is currently heavily dependent on fossil fuels for power generation. The country previously had attractive incentives for decentralized photovoltaics, but has invested only a limited amount in utility-scale projects. Wind power accounted for just 0.9% of electricity generated in 2023, which is extremely low by global standards. Land availability is a problem in Japan, population density is high, and there is opposition to renewables in rural parts of the country. Utilities are hostile to renewables, and the required grid investments have not been made.

Russia’s invasion of Ukraine has increased Japan’s focus on energy security. Solar photovoltaics’ share of total electricity generation is forecast to double to 16% by 2035, with $163.7 billion in investment by 2035. Given Japan’s limited land availability, offshore wind will be a key technology. Project costs for this technology are currently high but will gradually decline over the decade. Policy improvements and technological advances will support growth, with $72.9 billion in investment by 2035.

To ensure energy security, Japan’s GX Strategy Implementation Council has unveiled a new policy to resume operations of 17 nuclear reactors in 2023 (11 of which have actually been put into operation) and extend the operating life of current nuclear facilities from 40 to 60 years to ensure long-term energy security. Twenty-two reactors scheduled for decommissioning will be replaced by next-generation reactors or restarted.

Despite all these efforts, by 2035 coal, natural gas and other fossil sources will still account for 54.3% of electricity generated.

South Korea

Energy security is also a top priority in South Korea, which (like Japan) is almost entirely dependent on imported energy. 2023 10^t The basic plan for long-term electricity demand and supply highlights nuclear and renewable energy as sources of potentially high growth. However, the government has cut 9^t The baseline plan calls for the share of electricity generated from renewable sources to increase from 30.2% to 21.6% in 2030, indicating weaker support for renewable energy. Given the lack of clear support, Frost & Sullivan predicts the target will not be met, with only 17.3% achieved by 2030 and 23.1% by 2035. Offshore wind is a bright spot, with $117 billion invested, meaning wind electricity will increase from 0.7% in 2023 to 8.6% by 2035.

Nuclear capacity will increase and plants will likely be extended. Nuclear will remain a key source of baseload power, consistently providing 30%/yr for the next decade. There will also be an expansion of natural gas. South Korea has a number of long-term LNG supply contracts with Australia and Qatar. Natural gas will also account for about 30% of electricity generation for the decade.

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Energy Global Summer 2024 Issue

The Summer 2024 issue of Energy Global begins with a guest commentary from Terrawatt on streamlining Italy’s permitting process, then moves on to Frost & Sullivan’s regional report on the Asia-Pacific energy landscape. This issue covers key topics such as wind vessels, offshore wind turbine foundations, weather analysis, solar panel maintenance, and more!

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