Renewable energy costs plummet in Asia Pacific, outpacing fossil fuels
![Renewable energy costs plummet in Asia Pacific, outpacing fossil fuels](https://sustainabilityeconomicsnews.com/wp-content/uploads/2024/03/2269.jpg)
A recent analysis by Wood Mackenzie reveals a historic low in the cost of renewable energy generation across the Asia Pacific region, marking a significant milestone in the clean energy transition.
The study indicates that the levelized cost of electricity (LCOE) for renewables reached an all-time low in 2023, making them increasingly competitive with conventional coal power.
The report highlights the following key findings:
- Declining Costs: Renewable energy costs in 2023 were 13% cheaper than conventional coal, with utility PV solar emerging as the cheapest power source in the region. By 2030, renewables are projected to be 32% cheaper than coal, further solidifying their economic viability.
- Solar Dominance: Solar photovoltaic (PV) power saw a remarkable decline of 23% in costs in 2023, becoming the most cost-effective power source in 11 out of 15 countries in the Asia Pacific. New-build solar project costs are expected to drop another 20% by 2030, driven by falling module prices and oversupply from China.
- Wind Power: While onshore wind costs were higher than solar in 2023, a 30% drop is forecasted by 2030, fueled by cheaper Chinese turbines. Offshore wind is also gaining competitiveness, with costs falling by 11% in 2023 and expected to become cheaper than gas power in Japan and Taiwan by 2027 and 2028, respectively.
- Fossil Fuel Challenges: In contrast, coal and gas generation costs have been rising, primarily due to carbon pricing mechanisms. Gas power costs remain above US$100/MWh on average out to 2050, gradually losing the cost battle with offshore wind over the next decade.
- Green Hydrogen and Ammonia: Deployment of green hydrogen and ammonia faces challenges due to doubling cost expectations since last year, making them significantly more expensive than conventional coal and gas power even out to 2050.
- Policy Implications: Government policies will play a crucial role in supporting grid reliability, transmission capacity, and promoting battery storage to manage the intermittent nature of renewables.
The Asia Pacific region, including 15 markets such as China, Japan, India, and Australia, is witnessing a paradigm shift in its energy landscape, with renewables emerging as the frontrunner in the quest for sustainable and affordable power generation.
As costs continue to plummet and technology advances, renewables are poised to play an even more significant role in the region’s energy mix, driving a cleaner and greener future.
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