ASEAN will become the new hub for renewable energy deployment, innovation, and investments in the next decade, says KPMG. According to its New drivers of the renewable energy transition article series, this will be due to four key drivers:
1. ASEAN’s huge renewable energy potential
Technology will be key to unleash ASEAN’s renewable energy potential. Advancements in recent years have led to the steady decline in the overall costs of wind and solar, making renewable energy an increasingly attractive option for public and private sector decision-makers. This corroborates a recent brief by the International Renewable Energy Agency (IRENA) for the 24th Conference of the Parties to the United Nations Framework Convention on Climate Change (COP24). When compared to fossil-based and nuclear power, renewable energy now competes on cost alone.
Additionally, there is a growing emphasis around environmental, social, and governance (ESG) factors as a crucial component of risk and return. This is also driving more corporations to adopt renewables.
2. Governments looking to increase renewable energy uptake
ASEAN member states have turned their focus to raising renewable energy supply to address the challenges of sustainable energy growth and climate change. As part of their commitment, the region has developed several outcome-based strategies, a key target of which is to increase the component of renewable energy in the ASEAN energy mix to 23 per cent by 2025, up from 9 per cent in 2014.
Renewable energy is also being targeted to provide electricity access to the estimated 70 million people without access to reliable electricity in the region. For instance, the Philippines recently completed a 2MW solar-battery micro grid project in Mindoro to provide electricity supply in other off-grid areas across the country.
3. Consumers are looking for cleaner energy sources
Historically, costs have limited government actions with regards to pricing energy for the consumer market. However, growing public consciousness towards sustainability and an increased willingness to pay premium rates for renewable energy in ASEAN has opened new opportunities for policymakers to procure renewables.
4. New funds continue to flow into ASEAN renewable markets
Renewable deals volume continues to grow in ASEAN, with value being driven by a strong pipeline of projects. This has been enabled through the collaboration of international organisations with government agencies to develop and implement renewable energy projects. For instance, The Asia Development Bank worked with Melaka on its Green City Action Plan roadmap, which included structuring bankable projects for solar energy and street lighting, setting up a database to track indicators in environment and economic growth, and conducting training in urban development, environment planning, and knowledge sharing.
These insights were presented by Sharad Somani, Executive Director and ASPAC Head – Power & Utilities, KPMG, at the SIEW 2019 Global Launch last month, which highlighted the need for accelerating transformation toward a more sustainable energy future under this year’s theme – “Accelerating Energy Transformation”.
For more trends and opportunities of the renewable energy transition, please view the article series here.