Coal Well Ahead of RE in Southeast Asia’s Power Market, for now

Coal will continue to be the dominant fuel source in Southeast Asia and is predicted to peak before slowing down before renewable energy sources.

Coal Southeast Asia

According to a new report by Wood Mackenzie, coal will continue to be the dominant fuel source in power generation of Southeast Asia, peaking at 2027 before slowing down and accounting for 36 percent of the region’s generation mix in 2040.

By then, total power demand in Southeast Asia is expected to double from 1.05 petawatts per hour (PWh) in 2018 to 2.46 PWh.

To meet the rapidly increasing power demand, Southeast Asia will have to invest an average of USD 17 billion annually in power capacity. Coal should account for most of this investment in the medium term, before being overtaken by spending on gas-fired generation. By 2034, investments in solar and wind power plants should surpass that of gas power plants.

“The narrative surrounding coal has been pessimistic across the world. This will result in the gradual slowdown of new coal-fired capacity in Southeast Asia. However, the reality of rising power demand and affordability issues in the region mean that we will only start to see coal’s capacity plateau post-2030,” said Jacqueline Tao, research associate, Wood Mackenzie.

Incremental coal will decline over time as the cost of renewables decreases and pressure on environmental grounds increases. By 2040, solar and wind power plants will lead in the region’s power capacity mix at 35 percent or 205 gigawatts (GW). 

“Collectively, investments in wind and solar power supply makes up 23 percent of total power investment, amounting for more than USD 89 billion from 2019 to 2040. This is despite renewables being less cost-competitive in the region compared to the rest of the world, and challenges such as land acquisition and intermittency issues,” Tao added.

The author further added that, driven by strong economic growth, burgeoning population and developing middle-class, power demand in Indonesia and Vietnam, could rise three-fold to 1.44 PWh in 2040. And that together, these two markets will account for almost 60 percent of Southeast Asia’s power demand.

Ayush Verma

Ayush Verma

Ayush is a staff writer at saurenergy.com and writes on renewable energy with a special focus on solar and wind. Prior to this, as an engineering graduate trying to find his niche in the energy journalism segment, he worked as a correspondent for iamrenew.com.

      SUBSCRIBE NEWS LETTER
Scroll