- Wood Mackenzie expects Asia Pacific region to contract 7 GW CPPA capacity in 2022, with an 80% annual increase
- It counts decarbonization targets coupled with falling LCOE for solar and onshore wind as the leading factors for this shift, amidst rising prices of fossil fuels
- India leads the offsite CPPA market, and along with Australia and Taiwan the trio account for 89% of overall capacity
- Amp Energy, Amplus Solar and Cleantech Solar are the largest developers of solar in Asia Pacific with most of their capacity installed in India
- Lack of regulation permitting large-scale procurement of renewables in some jurisdictions is one of the obstacles in its proliferation
Driven by their decarbonization targets and the falling levelized cost of electricity (LCOE) for utility scale, commercial solar and onshore wind vis-à-vis other fuels, corporates in the Asia Pacific region are expected to contract a record 7 GW renewable capacity in 2022, according to Wood Mackenzie.
US based global market intelligence and research firm Wood Mackenzie sees this 80% annual increase in renewable energy corporate power purchase agreements (CPPA) in the region as a result of renewable power costs at 46% below average industrial end-user tariffs in 2022.
Among renewable energy technologies, solar dominates corporate procurement activities accounting for 57% of cumulative contracted capacity to date, followed by wind with 44% market share. On cumulative basis, till the end of 2021 Asia Pacific renewable energy contracts added up to 15 GW, increased to 17.5 GW as of H1/2022 and expected to reach nearly 22 GW in 2022.
Nonetheless, globally CPPA accounts for only 15% of the market share. According to Wood Mackenzie’s Principal Analyst, Asia Pacific Power & Renewables, Kyeongho (Ken) Lee, out of 122 Asia Pacific companies that are members of the RE100 global renewable energy initiative, only 29% have signed CPPAs.
In terms of models, offsite corporate PPAs account for 81% of the total contracted capacity with countries like India, Australia and the Taiwan region leading the CPPA market with 89% of overall capacity, thanks to enabling policy framework. Other markets are slowly opening up to its potential to drive their clean energy generation like China, South Korea and Japan.
India leads this segment with 44% or 8.1 GW cumulative contracted capacity, followed by Australia with 5.2 GW, Taiwan with 3.2 GW, among others at the end of H1/2022.
The largest solar developers in India and overall as well, catering the CPPA market are Amp Energy, Amplus Solar and Cleantech Solar and majority of their capacity exists in India. Top 3 largest wind developers are in Taiwan. All the players mainly cater to industrial, retail and technology sectors as these are the large energy users.
Taiwanese chip maker TSMC accounts for over 10% of the total for the entire region with 2.4 GW contracted.
The key to further popularize CPPAs as an easy and relatively inexpensive way for companies to access clean energy, especially in times when prices of LNG, coal and crude oil are likely to remain elevated, is friendly policy framework.
“The main barrier is a lack of regulation permitting large-scale procurement of renewables in some jurisdictions to drive growth,” added Lee. “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. However, we expect Australia, India, and Taiwan to continue to lead future growth.”
The Wood Mackenzie report titled Route to green energy: Asia Pacific’s corporate renewable procurement sets record in 2022 amid ongoing energy crisis can be purchased from its website.