Despite the current economic shutdown due to the COVID-19 pandemic, the global renewable energy transition is well underway and it is coming to Asia
Despite the current global economic shutdown due to the COVID-19 pandemic, the global renewable energy transition is well underway and it is coming to Asia according to the latest study by the Institute of Energy Economics and Financial Analysis (IEEFA). This transition is being driven by renewable energy technology that disrupts incumbent industry business models, much like the rise of the mobile phone and the internet.
The technology disruption is fundamentally reshaping the global energy landscape. A key impetus is the dramatic, ongoing deflation in the cost of solar energy and battery storage. Both have seen costs drop 80 to 90 percent over the last decade and the Institute for Energy Economics and Financial Analysis (IEEFA) expects both to halve again in the coming decade. Renewables are now a cheap source of energy generation, beating the costs of new imported coal. Such a global market transformation has significant implications for energy security.
It added that while South and Southeast Asia have been renewables laggards, Asia is nevertheless on the cusp of a dramatic pivot. Recent developments across India, China, Japan, South Korea, Vietnam and Taiwan highlight the potential for change.
“India imported some USD 250 billion worth of fossil fuels in 2019, both a massive economic drain and a major energy security risk. Leveraging renewable energy resources — wind, solar and hydro — allows for domestic diversification away from imports and helps reduce energy security risks,” IEEFA said.
According to the study, in 2016-17, India’s then energy minister Piyush Goyal had accelerated the use of online reverse auction tenders for the supply of renewable energy for a term of 25 years with zero indexation, backed by bankable central government contracts.
“In one year, the price of tariffs dropped by 50 percent to below Rs 3 per kilowatt-hour. This price was 30 percent below the cost of existing domestic thermal generation and 50 percent below the new imported thermal power. Since then, India has taken advantage of global investor interest to invest $10 billion annually in renewable infrastructure,” it added.
IEEFA said that in the last decade, India has scrapped plans to build 600 gigawatts (GW) of new coal-fired power plants, including 46 GW in 2019 alone. While the country’s stranded asset losses for the thermal power sector have reached USD 60 billion. India is targeting 450 GW of renewable energy capacity by 2030.
The global energy transformation is belatedly coming to Asia. The speed of that change is likely to be dramatic and consistent with disruptions seen in Europe, the United States, Australia, and India over the last five years, it concluded.