The business intelligence firm today said new renewable energy generation capacity would be cheaper than new-build coal power stations in 2021, joining regional heavyweights India and Australia in the cheaper-than-coal club.
WoodMac said renewables plants currently cost around 16% more to build than the average cost of solar and wind farms across the Asia-Pacific region but predicted that situation will be flipped this decade, with clean energy facilities up to 23% cheaper in 2030.
In the nations which are leading the energy transition, the forecasts are even more impressive, with WoodMac predicting renewables will be 56% cheaper than new coal plants in India in 2030, 47% cheaper in Australia, 40% more affordable in China and will offer a 30% discount in South Korea, Thailand and Vietnam in ten years' time, with the latter three nations also undercutting new-build coal with renewables next year.
There is a familiar regional laggard in the shape of Japan, where land restrictions and high labor and environmental permit costs will see the nation's clean power plants only 1% cheaper than new coal in 2030.
WoodMac added, a higher carbon price across the region would accelerate the energy transition further. The value is expected to reach $30 in 2050, from less than $10 today, and the analyst said a $30 carbon price today would render utility scale PV across the region cheaper than new coal facilities as early as 2023. WoodMac has estimated Asia-Pacific's current carbon price is already pushing up coal and gas prices around 4%, even with numerous allowances and discounts, and that figure could double by 2030 under a business-as-usual scenario.
With renewables facilities having been cheaper than new-build gas plants across the region since last year, WoodMac estimates solar-plus-storage plants will start to compete with gas by 2026, providing they receive sufficient policy support.
After undershooting the cost of new-build fossil fuel facilities, the real inflection point for the energy transition will be reached when the price of installing renewables plants comes in below the marginal, operating costs of existing coal and gas power stations.
This copy was amended on 30/11/20 to indicate the carbon price across the Asia-Pacific region is expected to reach $30 in 2050, rather than that being the average value of the rate between 2020 and 2050, as previously reported.
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