Asia Pacific is set to see a record 7GW of renewable capacity contracted to corporations in 2022, an 80% increase on 2021, according to analysis from Wood Mackenzie.
In the second half of 2022, corporate power purchase agreements (PPAs) for renewables are on pace to increase by about 4 GW.
The increase is partly due to markets in the region emerging from pandemic-related disruptions and corporate as well as governmental decarbonisation targets.
Wood Mackenzie found that PPAs are becoming increasingly attractive as fuel prices rose and the cost of renewables has come down.
The levelised cost of electricity (LcoE) for utility-scale solar has fallen by 4.9% since 2019, while commercial solar has dropped 14.2%.
In the same period, liquified natural gas has become 2.4 times more expensive, while the price of crude oil has more than doubled and coal has become more than four times as expensive.
As a result, renewable power costs are 46% below average industrial end-user tariffs in 2022.
Solar energy dominates corporate renewable procurement in Asia Pacific, accounting for 57% of the region’s contracted corporate PPAs to date. Wind has been catching up since 2020, representing 44% of new contracts in the first half of 2022, Wood Mackenzie found.
As of the first half of 2022, India, Australia, and Taiwan were the top three markets in the Asia-Pacific region’s cumulative corporate PPA procurement capacity, accounting for 89% of the total, or 18.6 GW. India leads the charge, with 8.1 GW. Australia has 5.2 GW, while Taiwan has 3.2 GW.
Other countries account for the remaining 2 GW of contracted capacity, with Singapore, China, and Thailand completing the top six. South Korea, Cambodia, and Pakistan contracted the least capacity in the first half of 2022.
Within countries, the market share of different technologies “varies considerably.”
Solar and wind are almost equally popular in Australia, accounting for 45% and 43% of PPA contracts respectively.
India favors solar energy, which accounts for 82% of contracts.
The situation in Taiwan is reversed, Wood Mackenzie found. Offshore wind in the region has rapidly become the dominant technology behind PPAs, making up 89% of total capacity.
For the rest of south-east Asia and East Asia, solar accounts for nearly all contracted capacity.
The Asia-Pacific region's renewable corporate PPA capacity accounts for 15% of the global PPA market. Lack of regulation permitting large-scale procurement of renewables is the main barrier for further growth in corporate PPAs in the region, according to Wood Mackenzie.
“Countries including South Korea, Japan, and China are all gradually easing regulations surrounding offsite corporate PPAs, which should open up opportunities in the coming years,” it says. “However, we expect Australia, India, and Taiwan to continue to lead future growth.”