APAC markets adjust energy transition plans

Countries may miss 2030 energy targets due to higher demand, slow renewable growth, and renewable power intermittency, a credit analyst warns.

As countries in the Asia Pacific region proceed with their energy transition plans, adjustments are being made to their strategies, S&P Global Ratings reported.

According to the Asia Pacific Energy Transition: Adapting To Looming Execution Risks chartbook, China is extending its reliance on existing coal plants, whilst India is investing in new coal facilities. Australia has also postponed the retirement of its coal plants, and Vietnam is shifting its focus towards gas. Meanwhile, Indonesia is emphasising hydro and geothermal energy as alternative sources.

Abhishek Dangra, a credit analyst at S&P Global Ratings, warned of the risk of countries missing their 2030 energy transition targets due to higher power demand, slower renewable capacity addition, and the intermittency of renewable power sources. 

Apple Li, also a credit analyst at S&P Global Ratings, cited the importance of stable supply sources with storage solutions. 

"Easier sites may be leveraged for initial pumped storage capacities, but economical battery storage for more than four to eight hours will be crucial," she said.

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Moreover, Parvathy Iyer, another credit analyst at S&P Global Ratings, said that government intervention will play a significant role in shaping the energy transition paths of countries like China and Indonesia. 

“Weaker competitiveness--with cheaper renewables--higher carbon taxes, and increasing refinancing risk will weigh on unregulated fossil-fuel based players. The ability to pass on costs will protect most regulated utilities,” the report stated.

Additionally, renewable developers face high capital expenditure and unregulated returns as key credit risks.