The Asia-Pacific region is ‘critical’ to the global power sector’s energy transition as it grows to over half of worldwide electricity demand this year, according to Alex Whitworth, Head of Asia-Pacific Power & Renewables Research at Wood Mackenzie, giving the keynote speech at last week’s Renewable Energy India Expo 2023. He also noted that the two largest markets in the region, India and China, are at the forefront of renewables growth, but are also leading the world in coal power deployments.

The Asia-Pacific region is forecast to add 1,840 GW of new capacity in the next five years, more than the rest of the world combined, according to Wood Mackenzie analysis.

Whitworth also talked about India’s power market and its role in the energy transition: ‘India is one of the most dynamic and important growing power markets in the Asia-Pacific region and the world. As the second largest regional market after China, since it overtook Japan a decade ago, India’s growth potential is still vast. Power demand doubled in the last 12 years, an achievement we could very well see again as strong economic growth continues over the next 12.’

India has some of the lowest cost renewables in the world, which has driven rapid deployment of large-scale wind and solar. This has pushed up the country’s renewables share of power generation to 22% in 2022, with wind and solar making up nearly half of the total.

However, despite an aspirational 2070 carbon neutral target, India is still investing heavily in new coal power to support growth, with a pipeline of over 50 GW of projects planned and under construction. India’s power demand is expected to rank third globally by 2050, after China and the US, and the future of its coal fleet will have a major impact on global carbon emissions.

Whitworth added: ‘Currently, fossil fuels (mainly coal) still provide 75% of India’s power supply but that share is declining steadily. Impressively, India’s per capita power sector emissions are expected to peak in the next decade at a level less than half of where most western markets were at a similar level of development. But is it enough? In the next decade alone, India will need $350bn in power generation investment to meet growing power demand.’

According to Whitworth, there are huge opportunities for renewables development for utility solar, onshore and offshore wind, as well as hybrid renewables and storage projects. ‘In addition, grid investments could require a similar amount of investment to support the capacity buildout and deliver power to consumers,’ he said.

India’s power sector carbon emissions have grown from 850mn tonnes in 2015 to hit an estimated 1,200mn tonnes in 2023, according to Wood Mackenzie, and this figure is expected to rise further to 1,400mn tonnes by 2030.

Whitworth concluded: ‘While cheap renewables and technology advances support continued expansion of renewables in India, the speed of growth of wind and solar is not a given. There are key uncertainties around grid investments and reform of pricing mechanisms to support such investment, growth of energy storage, as well as policy support for all of the above. Despite such uncertainties, India’s key role in the overall global energy transition is certain.’

Solar soon to be the most affordable electricity source for Bangladesh 
Meanwhile, renewables, and in particular solar, are set to be the cheapest option for Bangladesh to meet growing electricity demand, according to a new report published by BloombergNEF (BNEF).

Bangladesh’s heavy reliance on fossil-fuel thermal power plants has reduced the country’s energy security, while draining its foreign currency reserves and increasing local pollution, notes BNEF. In addition, further expansion of fossil-fuel thermal power plants would jeopardise the country’s energy security and affordability.

The cost of electricity generation from a new solar power plant is already competitive with those of new coal and gas power plants in Bangladesh, according to the new report. The levelised cost of electricity (LCOE) – the financial measure used by developers and investors – for a new utility-scale solar project in Bangladesh ranges from $97–135/MWh today, compared to $88–116/MWh for a combined cycle gas turbine (CCGT) and $110–150/MWh for a coal power plant.

By 2025, solar becomes the cheapest option, thanks to continued technology cost reduction, states the study. By 2030, solar paired with batteries will also achieve a cheaper LCOE than new thermal power plants. Electricity from onshore wind paired with batteries would also become cheaper than new thermal plants by mid-2030s, it says.

However, despite renewables’ cost competitiveness, Bangladesh is considering building more thermal power plants, on the assumption that such power plants can run on cleaner fuels such as hydrogen or ammonia post-2030. However, BNEF says its analysis shows that retrofitting thermal power plants for hydrogen or ammonia would not be more economic than building renewables, and suggests that the country would be better off accelerating deployment of renewables and limiting additions of thermal power plants.