India and Australia are expected to lead a regional shift in power generation costs over the next few years, which will see renewable energy sources become cost competitive and cheaper than fossil fuels in the next few years, according to new figures published over the weekend by Wood Mackenzie Power & Renewables.
Regionally, India and Australia will simply be the tip of the spear, with wind and solar expected to be cheaper than all fossil fuel sources across the Asia Pacific region by 2027.
Wood Mackenzie published its new report over the weekend, entitled Battle for the future: Asia Pacific renewable power competitiveness 2019, which is the company’s first Asia Pacific renewables competitiveness report, outlining a comprehensive assessment of the competitiveness of wind and solar as compared to fossil fuels today. Locked behind a traditional industry-specific price barrier, Wood Mackenzie nevertheless highlighted a few key points from its report on its website.
Leading the way will be India, according to Wood Mackenzie, which shows that the Levelized Cost of Electricity (LCoE) of Indian solar PV has already fallen to US$38 per megawatt-hour (MWh) this year, 14% below that of coal-fired power.
“India is the second-largest power market in Asia Pacific with installed power capacity of 421 gigawatts (GW),” said Wood Mackenzie research director Alex Whitworth. “Solar capacity is expected to reach 38 GW this year. High-quality solar resources, market scale and competition have pushed solar costs down to half the level seen in many other Asia Pacific countries.”
Next in line is Australia, which is expected to see its own solar PV LCoE undercut coal-fired power next year. Australia’s solar PV LCoE has already fallen by 42% over the last three years, and is cost competitive against natural gas, and will reach US$48/MWh in 2020, beating out all fossil fuel competitors.
“Maintaining grid stability and reducing curtailment of intermittent generation has been a recurring challenge in Australia,” Whitworth added. “Energy storage is one of the key options available to help balance power demand and keep uninterrupted supply.”
Across the whole region, then, while India and Australia will lead the way, Wood Mackenzie expects to see the average LCoE for wind and solar cost competitive with coal-fired power by 2027. Only Malaysia, Indonesia, and Japan will have higher renewable LCoEs as compared to coal.
“We are living through a revolution in the costs of renewable power technology,” Whitworth concluded. “Lower costs will boost wind and solar generation’s share of the power mix from the current 6% to a much higher level in coming years. This will create both opportunities and disruption in the industry.”
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