Asia Pacific Regional Integrated Service Research Highlights, Q1 2021

South Asia power and renewables capital cost and LCOE outlook 2020-50; Chinese Premier's 2021 State of Nation Report; India's 2021 prognosis on the power, gas, coal, and renewables market; South Korea confirms the long-term electricity plan, but long-term challenges remain on carbon goals; and much more

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• Asia Pacific Clean Power Additions Rankings (CPAR) and Project Pipeline Tracker: First quarter 2021
• South Asia Power and Renewables Capital Cost and LCOE Outlook, 2020-50
• Chinese Premier's 2021 State of Nation Report: Emphasis on getting to peak carbon emissions before 2030
• India's 2021 prognosis on the power, gas, coal, and renewables market
• South Korea confirms the long-term electricity plan, but long-term challenges remain on carbon goals
• Short-term sensitivity of Japan's LNG imports to nuclear uncertainty
• An alternate approach to develop regasification terminals in South and Southeast Asia
• Mounting financial challenges for Australia's utility-scale solar developers
• Bangladesh's new gas pipelines will facilitate import growth
• China's national carbon market commences in 2021
• The surging demand of green energy in Taiwan will drive the T-REC price up in the near term
• China's gas storage outlook: Altering LNG import seasonality

In the first quarter of 2021, 23 new insight papers have been published in the IHS Markit Asia Pacific Integrated service, apart from the regular updated reports. This research highlight summarized the key impact papers and provides an overview the market signposts in Q1.

The graphic of the quarter is selected from the newly launched report "Asia Pacific Clean Power Additions Rankings (CPAR) and Project Pipeline Tracker," showing the ranking of upcoming clean power projects in each market.

<span/>Asia Pacific Clean Power Additions Rankings (CPAR) and Project Pipeline Tracker: First quarter 2021

IHS Markit has launched its Clean Power Additions Rankings for Asia Pacific, comprising two different indexes: one focused on non-hydro renewables and one more broadly on low-carbon power that also includes nuclear and hydro. These rankings provide quarterly updates on power generation projects that are under construction and in preconstruction development in 16 key markets in the region. The tracker is meant to show the upcoming power project capacity mix in each of the Asia Pacific markets we track, covering 13 power generation technologies, drawing from the IHS Markit Asia Assets, Projects, and Costs database.

Read more in our article, "Asia Pacific Clean Power Additions Rankings (CPAR) and Project Pipeline Tracker: First quarter 2021."

<span/>South Asia Power and Renewables Capital Cost and LCOE Outlook, 2020-50

These reports provide an overview of the levelized cost of electricity (LCOE) for conventional and renewable power generation sources in 2020 and the outlook to 2050 for South Asia. Five reports include a combined South Asia report comparing the levelized cost of generation across four major markets in the region (India, Pakistan, Bangladesh, and Sri Lanka), and individual market reports providing the LCOE analysis and the sensitivities to major input assumptions and drivers.

Read more in our article, "South Asia Power and Renewables Capital Cost and LCOE Outlook, 2020-50."

<span/>Chinese Premier's 2021 State of Nation Report: Emphasis on getting to peak carbon emissions before 2030

On 5 March 2020, Chinese Premier Li Keqiang delivered his annual "State of the Nation" address, formally known as the Government Work Report ("the Report") to the National People's Congress, which commenced its annual legislative sessions last week. The Report released key policy targets for 2021 and disclosed policy directions for the 14th Five-Year Plan (FYP), which spans the 2021-25 period.

Read more in our article, "Chinese Premier's 2021 State of Nation Report: Emphasis on getting to peak carbon emissions before 2030."

<span/>India's 2021 prognosis on the power, gas, coal, and renewables market

The socio-economic impact of COVID-19 considerably affected energy markets during 2020. Negative electricity demand, lower utilization of coal-fired capacity, growing financial stress in the distribution and generation segment, reduction in power prices, and challenges for renewable and thermal additions marred the performance of the power and renewables sector. On one hand, the domestic coal market witnessed demand constraints, which resulted in higher inventory costs and a lowering of imports. On the other hand, natural gas demand remained buoyant as it was supported by lower LNG spot prices, making it attractive in the power and fertilizer sector.

Read more in our article, "India's 2021 prognosis on the power, gas, coal, and renewables market."

<span/>South Korea confirms the long-term electricity plan, but long-term challenges remain on carbon goals

The government released the final version of its 9th Basic Plan for Electricity Demand and Supply (9th BPE) on 28 December 2020. Following the country's 2050 carbon neutrality announcement in October 2020, South Korea aims to boost renewables and convert coal to gas to achieve its greenhouse gas (GHG) emissions target.

<span/>Short-term sensitivity of Japan's LNG imports to nuclear uncertainty

Nearly ten years after the Fukushima disaster, the outlook for Japan's nuclear industry—and its implications for the LNG needs of the world's largest buyer—remains highly uncertain. Before the Great East Earthquake of March 2011, Japan had a fleet of 58 nuclear reactors supplying one-third of the country's power needs. Ten years later, only nine have restarted under the stricter post-Fukushima regulations. Twenty-one reactors are in the process of being decommissioned due to the high cost of the necessary safety upgrades, while 25 operable reactors are at different stages within the safety review.

<span/>An alternate approach to develop regasification terminals in South and Southeast Asia

Project sponsors fashion different business models to mitigate project risks and obtain financing as each country faces unique challenges. For instance, the largest constraint for project developments in India is the pipeline connectivity from the regasification terminal to the national pipeline grid. For Vietnam, it is negotiating power purchase agreements and navigating saturated transmission and distribution networks. Consequently, financing regasification terminals in South and Southeast Asia has been particularly difficult.

Read more in our article, "An alternate approach to develop regasification terminals in South and Southeast Asia."

<span/>Mounting financial challenges for Australia's utility-scale solar developers

The rapid uptake in solar photovoltaic (PV) capacity in Australia's National Electricity Market (NEM) has created financial challenges for utility-scale solar projects participating in the wholesale market. Prices during peak solar generating hours (10:00 am-3:00 pm) once stood at a premium to average daily market prices but starting in 2017 flipped to a worsening discount as the penetration of solar generating capacity increased.

Read more in our article, "Mounting financial challenges for Australia's utility-scale solar developers."

<span/>Bangladesh's new gas pipelines will facilitate import growth

In 2020, Bangladesh's LNG imports were resilient. In the first half of 2020, natural gas demand was severely impacted by a countrywide lockdown arising from the COVID-19 pandemic; however, LNG imports remained strong. This strength was enabled by the start-up of new gas pipelines, the decline in domestic gas production, and LNG offtake from contractual obligations. This result continued to be demonstrated in October 2020, when Bangladesh imported its highest level of LNG.

<span/>China's national carbon market commences in 2021

On 5 January 2021, China's Ministry of Ecology and Environment (MEE) announced that the first compliance cycle of the national emission trading scheme (ETS) will cover the period from 1 January 2021 through 31 December 2021. This announcement signals the formal commencement of China's national carbon market, even if trading does not begin right away.

<span/>The surging demand of green energy in Taiwan will drive the T-REC price up in the near term

Taiwanese authorities have slated a two-stage power market reform to deregulate renewable energy development. After several years of regulation amendment, the first renewables indirect supply transaction was fulfilled in 2020, proving the effectiveness of the policy. The materialization of wheeling power boosted the liberalized market considerably. The delivery of the Taiwan Renewable Energy Certificate (T-REC) achieved 130,193 in 2020, quadrupling the amount issued in 2019, while the trading volume in 2020 was more than 21 times that of 2019. Coupled with the latest announced renewable portfolio standard (RPS) imposed on large electricity users and increasing demand for clean energy from companies, Taiwan's renewables trading market is on the verge of taking off.

Read more in our article, "The surging demand of green energy in Taiwan will drive the T-REC price up in the near term."

<span/>China's gas storage outlook: Altering LNG import seasonality

China is well known to have limited gas storage capacity. Typically relying on the LNG spot market for additional winter purchases depending on its need, China plays a vital role in North Asian LNG spot price swing. The progress of China's gas storage capacity, therefore, will also significantly impact its seasonal LNG purchases and spot prices.

Read more in our article, "China's gas storage outlook: Altering LNG import seasonality."

Additional Insights and Strategic Reports published in first quarter 2021

• China's wind power additions outlook to 2025: Can the industry continue scaling up without subsidies?
• Australia's Energy and Climate Policy — The Great Divide
• Will Power of Siberia deliver more gas to China than previously planned in 2021?
• China's wind power additions soared to 71 GW in 2020: Is it for real or full of hot air?
• China's LNG Imports: Procurement strategy and infrastructure outlook
• LNG emerges victorious in the Philippines' power tender
• China's new renewable consumption targets: An enabler to fulfill the 2030 climate commitment
• Myanmar power expansion plan falters in the wake of the military coup
• Electricity forward and derivatives market in India
• China's domestic LNG price spike recalls the 2017/18 shortage, but with key differences
• Philippines' Meralco power auction offers opportunity to support LNG developments
• Japan's JEPX rallies amid winter supply crunch
• China sets standard lifetime utilization hours: Paves the way to resolve the subsidy payout delay

For more on our energy research in Asia Pacific, visit our Asia Pacific Regional Integrated Energy Service page.

Logan Reese, is an associate director on the Asia Pacific Regionally Integrated team at IHS Markit, focusing on Australia power and gas markets.

Ankita Chauhan is a senior renewable analyst on the Climate and Sustainability team at IHS Markit, covering research and analysis for Indian and South Asian markets.

Posted on 11 April 2021

This article was published by S&P Global Commodity Insights and not by S&P Global Ratings, which is a separately managed division of S&P Global.