Author: Daniel Gaefke, APAC Director, BayWa r.e.
Making new year predictions comes with a certain nervousness nowadays. Nothing short of a crystal ball could have foreseen the events of the past few years. In good conscience, the best any of us can do is give an informed perspective on 2023. What can we say with reasonable certainty? And what do we hope to see in the next 12 months?
Well, Southeast Asia has a great deal on its immediate horizon. Q1 will see results from Thailand’s recent round of bidding bring multiple gigawatts online. There’s also good news and market upticks expected from Malaysia and the Philippines before March is over.
Malaysia’s bidding round is a particularly welcome indicator that PPAs are set to drive markets forward. Korea and Japan are also likely to see continuing expansion of similar PPA-based offtake projects.
In Australia, two trends are more than likely to continue into the first half of this year. First, a number of projects are changing hands. IPPs and big players like EDF are expanding their portfolios. Second, the focus should remain on scaling. Rising energy prices make bigger projects increasingly attractive Down Under.
Across the entire region, we can expect to hear more and more about energy storage solutions this year. Existing grids can only do so much, creating high demand for storage from more or less every corner of the sector.
If there’s one theme that seems set to underpin the whole of 2023, it’s onshore and offshore wind. A huge chunk of BayWa r.e.’s development effort is focusing on wind right now. Markets like Thailand, Vietnam, Korea, Australia, and Japan are showing a healthy appetite to diversify their renewables mix.
A few different factors are driving this. Korea and Japan get a lot of wind, but also has to contend with restrictively small landmass. This makes offshore turbines very attractive and even onshore, wind’s smaller footprint compared to solar enables a lot of land use synergies.
APAC appears to be following in Europe’s footsteps. Solar might be easier to install, but a full renewables transition can’t happen without a balanced mix of energy sources. Australia, with its impressive landmass, is a shining example of what the region can do with wind.
Of course, this trend isn’t proceeding unopposed. Fisheries raise similar objections to offshore projects that we see from landowners in Korea, Taiwan and Japan regarding onshore. Wind construction is more expensive and takes longer than solar. However, we see increasing numbers of stakeholders coming around to the importance of these turbines.
2023’s major challenges don’t feel too different from previous years. The skills shortage doesn’t seem likely to ease for another five years or so. Grid capacity issues are still an ever-present concern, making storage technology a timely investment for many.
The threats of a looming recession and regulatory intervention aren’t new either, but the Ukraine war continues to add price volatility to the global mix. Ongoing tensions between China and the US via Taiwan also can’t be ignored.
But really, these obstacles only serve to feed into my hopes for this year. In an ideal vision, policymakers would take stronger and more rapid steps to open up their countries’ grids to the market. Wider PPA access could ease considerable strain on businesses.
A truly interconnected ASEAN grid infrastructure would enable far easier energy trading across borders, like we see in Europe. EU grid integration was a huge benefit to Germany when tensions flared in Ukraine. APAC can benefit from that same energy security and peace of mind… if governments find the political will to enable it.
We’re already seeing plans for undersea cables between Singapore, Australia and Malaysia; theoretical foundations for an APAC grid network. A big international firm has lobbied Thailand’s government for corporate PPAs in exchange for a huge new data center. Bit by bit, government institutions are giving ground to dynamic market forces.
If 2023 becomes the year that policymakers realize the era of FITs and support schemes is over, it’ll be a good year. We need deregulation and market liberalization across the entire region if individual nations are to meet their sustainability goals.
All the ingredients are certainly right here… As is the threat of utilities providers lapsing back into reliance on fossil fuels. But examples shown elsewhere around the world invite optimism. Domestic manufacturing incentives in the US and EU can be replicated in Asian markets if we choose to.
These are my hopes for 2023, but hope isn’t a strategy. Capitalizing on these opportunities will take bold action this year. We’re looking forward to continuing to champion renewables in Asia.
With a little help, we know that change can happen.