Despite the current global crisis of COVID-19, the Asia Pacific Renewable Energy market is only continuing to grow. According to Global Wind Turbine Materials Market, Forecast to 2026, global focus on renewable energy has created tremendous growth prospects for wind. The Clean Energy Council also recently described 2019 as “a remarkable year” for the Australian clean energy sector and says the industry is ideally placed to support the Australian economy through a tough period. With record levels of investment across Asia Pacific over the last couple of years in Wind (onshore and offshore) and Solar power, the region is set to continue booming in the near-term and long-term future.
Great Geographic and Atmosphere in the Asia Pacific
A potential reason for this is simply the great geographic and atmospheric conditions in most parts of Asia Pacific. These allow companies to really capitalise on the natural resources available to them. More and more developing nations in the region are starting to turn to renewable energy as a key focal point of the future of their Energy mix. Global agreements like the Paris Accord will also play a heavy role in helping to push this agenda of clean energy forwards in the region. With global renewable powerhouses like China and Japan leading the way, the region is rapidly following suit.
A good, recent example of this was in early April this year when Toyota established Toyota Green Energy with Chubu Electric for the purposes of obtaining and managing renewable energy sources in Japan in spite of the rapid development of Covid-19 in the region and Japan's announcement of a "state of emergency". Shortly after this, in mid April, RENOVA selected Vestas Turbines for their offshore wind farm in Japan. The project is expected to have a power generating capacity of approximately 700 MW, making it one of the largest offshore wind farms in Japan.
In the last 24 months, the appetite for Wind Energy in countries around Asia has grown exponentially, with almost all seeing the benefit of having a single wind Turbine to give the same output as thousands of solar panels. Despite the higher level of capital expenditure required to get wind projects off the ground, countries and companies are continuing to champion the Energy source.
Another potential reason for the increase in demand for Wind Power is the apparent maturity of the solar market in many key areas around the region. Solar projects are becoming so much more cost-effective to develop, that Utilities and governments are pushing to pass the savings on to the consumers. This has two outcomes; firstly, cheaper green energy. Secondly, this means the rate of return on solar projects is becoming less and less - which is not as attractive to investors and developers alike. This is in no small way of helping to shift the focus towards Wind energy.
Having said this, there is still a big opportunity in a lot of locations to continue to develop solar projects. The traditional setups of pure developers who subcontract a lot of services out will become harder to sustain with falling prices in solar. There is an argument to be made that sub-contractors will also have to drop prices to remain competitive in such a market. So good contract negotiation is key in keeping these kinds of models viable. On the flip side of this, the traditional IPP (Independent Power Producer) business model is one that could actually flourish with falling prices in such a market. As most of the phases and services tend to be kept in-house, it means companies aren’t losing precious percentage points in their margins to get the jobs done. This creates a big opportunity for these types of company to eat up market share.
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A Greener Future
As the world keeps moving towards a “greener future”, companies will continue to innovate, and prices will inevitably continue to fall. Within the next 30-40 years, we will hopefully see the majority of the world moving towards a majority Renewable Energy Mix. A big indicator that this will be a reality is the recent moves by traditional Oil & Gas super-majors to become more active within the renewable energy space. It is an exciting and promising time to be working in the Energy industry.
So, whilst the current global pandemic may indeed slow down the global supply chain, it is clear that the renewable energy market within the Asia Pacific and the wider world will continue to march on.
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