The next decade will see 355 gigawatts (355 billion watts) of new photovoltaic solar installations across the Asia-Pacific region by 2023 and a 20-fold increase in offshore wind capacity by 2027, according to a new report by analysts at Wood Mackenzie.
That’s in spite of an expected decline in the region’s solar installations this year, CleanTechnica reports.
“Traditionally the leader of the pack in the Asia-Pacific, China’s solar installations are expected to fall 30% this year, as it is adopting various policy instruments which will reduce subsidies,” said WoodMac solar analyst Rishab Shrestha. But even so, “the larger of the two sectors will be the solar PV market which, despite falling somewhat this year, is nevertheless set to remain relatively steady over the next five years through to 2023,” CleanTechnica notes.
After meeting its 2020 solar capacity target of 105 GW in 2017, China announced it was capping new projects, phasing out renewable energy subsidies, and replacing them with technology and policy supports that would enable solar and wind to compete against non-renewables at “grid price parity”. Japan is going through a similar transition, replacing its feed-in tariff program with competitive auctions for two-megawatt projects and larger.
“The key trend we are seeing is the phaseout of subsidies and transition towards auctions, which is leading to lumpy demand in the region,” Shrestha said. But the torrid pace of solar installations will continue, “partly attributable to the reduction in PV capital cost globally.”
WoodMac sees the Asia-Pacific’s offshore wind capacity growing to 43 GW by 2027, with China accounting for 31 GW and Taiwan installing another 8.7. “Taiwan presents the biggest offshore market in APEC due to a relatively stable regulatory regime, a supportive government, and openness to foreign investment,” said WoodMac senior analyst Robert Liew.
More broadly, the analysis points to stable supply chains and strong government support as necessary conditions for the region to expand its renewable energy footprint. Liew said South Korea, Japan, and East Asia will need combined investment of about US$37 billion over the next five years to meet their offshore wind targets.
“The good news is that prices are coming down. Future offshore wind prices are projected to be competitive with traditional thermal prices by 2025,” he said. “This should attract investments in offshore wind, though Asia-Pacific is still playing catch-up with Europe” in setting up a “dedicated infrastructure to support large-scale offshore growth”.