Renewable Energy Sector in Asia-Pacific Special Focus on India Q4 2020 Table of Contents
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RENEWABLE ENERGY SECTOR IN ASIA-PACIFIC SPECIAL FOCUS ON INDIA Q4 2020 TABLE OF CONTENTS 1 Background 2 Overview of the Asia-Pacific Renewable Energy Sector 3 The India Opportunity 4 Our Offering 1 1 Background THE SUSTAINABLE DEVELOPMENT GOALS (SDGs) AND ELECTRICITY GENERATION Dependence on fossil fuels for electricity generation is adversely affecting the SDGs. A global shift towards renewable energy(1) is being witnessed as a sustainable model for electricity generation ◼ The Sustainable Development Goals (SDGs) adopted by the United Nations has led to articulation of clear actions for a sustainable world underpinned by responsible consumption and production ◼ Governments are required to meet targets assigned by the United Nations and to frame adequate regulations and policies to drive behavior at a corporate and societal level ◼ Current dependence on fossil fuels for electricity generation is adversely affecting the realization of at least six SDGs SDGs Impacted by Electricity Generation Other SDGs ◼ International organizations and local governments around the world have shifted their focus to decarbonization of the grid and promotion of electricity generation from renewable energy sources ◼ The Asia-Pacific region(2), home to some of the fastest growing and most populous countries globally, has seen the highest growth in electricity generation, with coal being the predominant source ◼ The region is the largest contributor to global carbon dioxide emissions and has witnessed significant activity to promote renewable energy Note: (1) Renewable energy includes hydro, solar, wind and biopower (2) For the purposes of this report, the Asia-Pacific region has been assumed to include India, China, countries in South-East Asia, Australia and the countries in Oceania 3 Source: News Reports and GCA Analysis OVERVIEW OF ELECTRICITY GENERATION The Asia-Pacific region has witnessed the fastest growth in electricity generation; most of the growth has been fueled by coal-based electricity generation Regional Growth in Electricity Generation (2016–19) Africa 30,000 ◼ The Asia-Pacific region has witnessed the fastest growth in 25,574 CAGR (1) electricity generation to address the demand arising from: 23,396 870 Middle East 25,000 798 1,265 2.9% Rapid economic growth that has fueled the industrial and 1,165 3,993 20,000 commercial demand for electricity Europe 3,857 1,329 2.8% 1,303 Need to provide electricity access to the large population 15,000 5,426 1.2% base (China, India and Indonesia are among the top five most South and Central 5,333 America 0.7% populous countries in the world) 10,000 North ◼ Most of the countries in the region have lower per capita America 0.6% 10,940 12,690 electricity consumption compared to the countries in Europe and Asia-Pacific 5,000 Electricity Generation in TWH 5.1% America, thus providing ample headroom for future growth World 0 Example: India-1150 KWH(2), China-4280 KWH, Thailand-2870 2016 2019 KWH, US-12830 KWH, Germany-6960 KWH Share of Electricity Generation by Source (2019) 100% ◼ Fossil fuels like coal, oil and natural gas have (3) been the primary source of electricity generation 80% Others in most of the regions of the world Hydro 60% ◼ The Asia-Pacific region has primarily been Nuclear dependent on coal-based electricity generation 40% Coal because of the large reserves of the resource Percentage Percentage (%) Natural Gas 20% ◼ Coal generates the largest amount of carbon Oil dioxide per unit of electricity produced 0% compared to other fossil fuels like oil and natural Renewables North South & Europe Middle East Africa Asia-Pacific America Central gas America On an average,78%-80% more than natural Note: (1) TWH: Terawatt-hour gas and 35%-40% more than oil (2) KWH: Kilowatt-hour (3) Others includes sources like tidal energy and geothermal energy 4 Source: International Renewable Energy Agency, British Petroleum Statistical Review of World Energy 2018 and 2020, News Reports and GCA Analysis IMPACT OF FOSSIL FUEL LED ELECTRICITY GENERATION Dependence on fossil fuels like coal, oil and natural gas for electricity generation has adversely affected the environment; as the largest contributor to global carbon dioxide emissions, Asia-Pacific is a region of focus Regional Carbon Dioxide Emissions 40,000 34,008 34,169 ◼ Globally, there has been a rise in greenhouse gas emissions over the years Africa 32,936 33,279 (carbon dioxide approximately accounts for 72%-75% of total greenhouse Middle East 30,000 gas emissions) (1) CIS ◼ Electricity generation is one of the largest contributors (27%-30% globally) 20,000 Europe to this rise due to the current dependence on fossil fuels South & Central America Dioxide ◼ Around 60% of the electricity in the Asia-Pacific region is generated from 10,000 coal, making the region the largest contributor to global carbon dioxide North America emissions Asia-Pacific Million Tonnes of Carbon 0 ◼ Apart from air pollution caused by carbon dioxide emissions, electricity 2016 2017 2018 2019 generation from fossil fuels has other negative effects like water pollution, noise pollution and land degradation Other Adverse Effects of Fossil Fuel Based Electricity Generation Water Pollution ◼ Dust present in water used to clean coal contaminates water bodies ◼ Hot water (used to cool boilers), if released into water bodies, raises the temperature of the water body and adversely impacts its flora and fauna Noise Pollution ◼ Power plants emit high levels of noise due to the use of equipment like crushers, turbines and boilers Land Degradation ◼ Disposal of fly ash from power plants destroys soil properties Note: (1) The Commonwealth of Independent States (CIS) consists of 9 member states: Armenia, Azerbaijan, Belarus, Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan and Uzbekistan Source: British Petroleum Statistical Review of World Energy 2018 and 2020, News Reports and GCA Analysis 5 Overview of the Asia-Pacific 2 Renewable Energy Sector RENEWABLE ELECTRICITY GENERATION IN KEY(1) COUNTRIES Though there has been ongoing renewable energy capacity addition, significant headroom for increase in renewable energy adoption exists in the Asia-Pacific region Installed Renewable Generation Capacity (GW) 17 3 28 205 326 JAPAN INDONESIA Total-789 Total-97 (2019) CHINA (2019) 4 1.84 62 210 0.20 Total-8 THAILAND 10 2 2 SOUTH SOUTH KOREA (2019) 45 0.08 4 3 2 5.62 Total-17 Total-12 35 Total-128 (2019) (2019) INDIA (2019) TAIWAN 2 11 38 AUSTRALIA 0.4 3 1 2 1 8 6 1 VIETNAM Total-7.5 Total-8 Total-29 Total-25 (2019) (2019) 13 (2019) (2019) 4.1 0.84 MALAYSIA 6 18 7 Hydro Wind Solar Biopower Adoption of Renewable Energy (2019) 40.0% 34.7% 32.4% ◼ Headroom for growth 27.0% 30.0% in adoption of 21.0% 20.0% 18.0% 18.0% 20.0% 12.0% 10.0% renewable energy 6.9% 6.0% 10.0% 2.0% exists in Asia-Pacific Share of 0.0% ◼ This is expected to Renewable Renewable in European American China India Thailand Japan Australia Indonesia Vietnam South Taiwan Malyasia Generation (%) Total Electricity Union Countries Korea further boost Countries renewable energy Note: (1) For the purposes of this report, countries with significant renewable energy capacity addition plans have been included capacity addition Source: International Renewable Energy Agency 7 TARGETS FOR GROWTH IN RENEWABLE ENERGY ADOPTION IN KEY COUNTRIES Individual countries have set targets to increase the share of renewable energy in electricity generation Targets Key Trends / Enablers ◼ 100% Foreign Direct Investment (FDI) is allowed in the renewable energy sector in India without any prior approval from the government (automatic route) Renewable Energy Renewable Energy India(1) 133 226 338 ◼ Various policy initiatives by the government aim to Installed Capacity (GW) Installed Capacity (GW) create an enabling environment for addition of 2020 2022 2027 renewable energy installed capacity by incentivizing project developers and building transmission infrastructure ◼ China has achieved its earlier 2030 target of 20% and is making a shift from feed-in tariff system to Electricity Generation From Renewable 27% 35% competitive bidding China Sources As a Share of Total ◼ Renewable energy projects are classified as Share in 2019 Target for 2030 ‘encouraged’ and do not require any minimum domestic participation ◼ The Marine Renewables Energy Act, implemented in 2019, is expected to boost offshore wind projects. The Act will allow long-term exclusive usage of sea areas Electricity Generation From Renewable 18% 24% for such projects Japan Sources As a Share of Total ◼ The country is also planning to introduce a feed-in Share in 2019 Target for 2030 premium tariff system. It is expected that renewable energy generators would be paid a premium over the wholesale prices determined through a spot market ◼ Several utility scale battery storage projects are being Electricity Generation From Renewable developed in order to ensure grid reliability 18% Sources As a Share of Total 48% Australia ◼ Several innovative funding structures and new Share in 2019 Target for 2030 financing terms are being introduced in the renewable energy sector Note: (1) In India, the targets are set for the financial year: April to March Source: International Renewable Energy Agency, Sector Reports, News Reports and GCA Analysis 8 TARGETS FOR GROWTH IN RENEWABLE ENERGY ADOPTION IN KEY COUNTRIES Individual countries have set targets to increase the share of renewable energy in electricity generation Targets Key Trends / Enablers ◼ The government has drafted a direct Power Purchase Agreement (PPA) model that would allow corporate Renewable Energy 25 130 customers to buy power directly from renewable energy Vietnam Installed Capacity (GW) producers 2019 2030 ◼ The government has also allowed foreign investors to own up to 100% equity in power generation projects ◼ The country plans to add 48 GW of renewable energy installed generation capacity by 2030 consisting of 30 GW of solar and 16 GW of wind energy installed capacity Electricity Generation From Renewable South 6.9% Sources As a Share of Total 20% ◼ The Renewable Portfolio Standard (RPS) Scheme is the key Korea enabler to promote the growth in renewable energy installed Share in 2019 Target for 2030 capacity.