APAC to Invest US$3.3 Trillion in Power Generation Over Next Ten Years: Wood Mackenzie

APAC to Invest US$3.3 Trillion in Power Generation Over Next Ten Years: Wood Mackenzie

Wood Mackenzie, a global research and consultancy group forecasts an investment of US$3.3 trillion in power generation over the next ten years in Asia Pacific, with 49% earmarked for wind and solar, and 12% for energy storage. 

“The Asia Pacific region is critical to the power sector’s energy transition as it grows to over half of global electricity demand this year. 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,” says Alex Whitworth, Head of Asia Pacific Power & Renewables Research at Wood Mackenzie, during his keynote speech at Renewable Energy India Expo 2023.

Whitworth adds, “The region is forecast to add 1,840 gigawatts (GW) of new capacity in the next five years, more than the rest of the world combined. As leaders India and China face rapidly growing power demand, each country continues to invest in a mixture of technologies, with emphasis on the cheaper options of coal and renewables.”
                                                                   


Spotlight on India

Speaking at the sidelines of the Expo, Whitworth talks 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. This is 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 (as reflected in the graph below).

But 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 adds, “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 US$350 billion in power generation investment to meet growing power demand.”

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Whitworth concludes, “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.”