China, Australia are Asia’s key energy storage market drivers

ASIA PACIFIC

Mainland China and Australia are the key drivers for Asia’s energy storage market as Fitch Solutions projected the markets to see a significant growth in their non-hydropower renewables capacity in the next decade.

Coal projects under China’s Belt and Road Initiative (BRI) will likely decline after the government’s announcement to stop funding coal-fired power plants overseas, Fitch Solutions reported.

China is amongst the global leaders that have pledged to stop coal financing, alongside Japan and South Korea in September 2021.

After 2021, there were no new project announcements from the top three financiers and state banks which are the Japan Bank for International Cooperation, China Development Bank, and Bank of China.

Despite this, Fitch noted that China will still lead global financing but its share will decline. Based on Fitch’s Key Projects Data (KPD), there are still 94.8 gigawatts of coal capacity in its BRI project pipeline.

“Although we expect recent divestment commitments from the Chinese government on halting overseas coal places risks on this pipeline,” the report read.

“In contrast, our Q421 KPD assessment contained significantly higher coal capacity.” Vietnam, Indonesia, the Philippines, Zimbabwe, Pakistan, and Mozambique all have 40% less coal capacity in the pipeline than in Q421.

A total of 32 coal projects, which are currently in the planning stage, are at risk of being cancelled by China, it said.

Just last March 2022, a policy document, “Opinion on Jointly Promoting Green Development of the Belt and Road,” tackled the pledges of Chinese authorities to stop building new coal-fired power plants in other markets.

“Although there is debate over what this means for plants in the pre-construction phase, we believe there are risks to the 69 projects and 71.5 gigawatts in the Belt and Road Initiative, and the 32 projects financed by Chinese banks,” the report read.

Suspended coal plants

Citing data from the Centre for Research on Energy and Clean Air, Fitch added that about 12.8GW across 15 China-backed coal plant projects overseas have either been cancelled or suspended since September 2021.

A total of US$63b is at risk from China’s withdrawal from coal financing, according to Global Energy Monitor.

Fitch said Zimbabwe and Vietnam are the most at risk of China’s project cancellation which is expected to reduce coal expansion and drive support for alternative energy sources. India has 12.9GW, Zimbabwe has 12.3GW, Vietnam has 15.6GW, and Pakistan has 5.1GW of project capacity in the preconstruction stage under its BRI pipeline.

“This is 5%, 700%, 39% and 17% of our total estimated thermal capacity in 2022 respectively. Therefore, Zimbabwe and Vietnam have the highest exposure to China pulling out,” the report read.

Around 53% of Vietnam’s energy supply is sourced from coal and the country would have received 44% of its coal financing from Chinese banks and 17% from Japanese financiers. It has 12 projects under the BRI with a capacity of 19GW and it plans to build new plants with 1.2GW.

In a report, Fitch forecast that 31% and 26% of the total electricity generation of China and Australia will come from renewable sources by 2031, respectively. This is in comparison to the 35% projected in the US, which will lead the market globally.

“A large proportion of this will come from intermittent wind and solar power. Furthermore, we highlight that markets, particularly those with a high energy import dependence, are struggling with energy supply issues, which will support the more rapid development of energy storage systems,” the report read.

In terms of battery systems development, Fitch expects the United States and Australia to lead globally as the markets combined account for 55% of projects in the pipeline, based on their Key Project Database (KPD).

Fitch also sees battery storage will sustain its lead amongst all types of energy storage, considering it is the most cost-effective energy storage solution. On top of this, costs of battery energy storage systems are likely to “decline significantly” in the coming decade.

The US currently has 115 battery storage projects in various stages of development. This is expected to have a non-hydropower renewables capacity of 608 gigawatts by 2031.

Australia, meanwhile, has 41 gridconnected battery and 50 hybrid battery storage projects in the pipeline.

Fitch noted that battery systems are the leading storage technology type. Of the nearly 500 energy storage projects, 43% were hybrid projects, whilst compressed air and thermal storage accounted for 2% and under 1%, respectively.

“We believe that battery storage will continue to outperform all other types of energy storage, as it is currently the most cost-effective energy storage solution with costs expected to decline significantly over the coming decade,” Fitch noted.

“The National Renewable Energy Laboratory (NREL) expects lithium battery system costs to fall by 40% by 2030.”

JERA’s 340MW offshore wind project Greenko to develop pumped storage Nakasato Wind Project goes online

JERA is targeting to develop an offshore wind power generation project with a maximum generation capacity of 340 megawatts (MW) in Akita Prefecture in Japan.

The project, which will involve as many as 29 wind turbines, will be located off the coast of Oga City, Katagami City, and Akita City.

JERA believes that the favourable wind conditions and shallow seabed off Oga and Katagami cities in Akita Prefecture make the area suitable for the development of bottom-fixed offshore wind power generation.

Renewable energy firm Greenko is investing around $1.2b (Rs10,000) crore to install a pumped storage project with a daily storage capacity of 11 gigawatt-hours.

The project located near Gandhi Sagar in Neemuch district will dispatch the infirm renewable electricity stored in the project during lean demand hours to support the state’s peak power demand, which leads to cost savings.

The project is expected to start operations by December 2024 and will be linked to the Inter State Transmission System Network.

Vena Energy said the 47-megawatt (MW) Nakasato Wind Project in the outskirts of Nakadomari Town in Aomori Prefecture in Japan has begun operating. In a statement, Vena Energy said the wind project which consists of 13 wind turbines spans an area of 47 hectares.

It can supply energy to up to 22,000 local households annually. It can also reduce 61,000 tonnes of greenhouse gas emissions and save up to 87 million litres of water annually.