Market dynamics in India, Australia, Taiwan lead to 12.1GW annual wind capacity in Asia Pacific

By 2022, annual wind power capacity in Asia Pacific excluding China (APeC) will reach a peak of 12.1GW. More than double the capacity added by the end of 2017 at 5.5GW. The positive forecast is primarily thanks to market dynamics in India, Australia and Taiwan and MAKE expects cumulative capacity in the region to amount to 141GW in the 10-year outlook period. 

Wind development in India will achieve record years of new added capacity but grid limitations could curtail growth prospects. Having started the transition to an auction mechanism in 2017, growth of wind power is now mostly reliant on large-scale auctions. Such auctions have enabled wind prices to drop by more than half in just under a year. The central government now intends to pursue auctions at larger volumes and is now targeting upwards of 10GW of new auctions every fiscal year.

Political uncertainty over replacement of the national renewable energy target in Australia hinders growth potential. With political infighting in Australia between the ruling Liberal Coalition government and opposition Labor Party over the final design of the proposed NEG scheme, growth is currently driven by state-level initiatives and market economics given the competitiveness of onshore wind LCOE. In Japan, the central government is formalising new regulations to support more offshore wind development, reducing the process time for EIAs and reforming the power market to facilitate more choices for consumers.   However, grid constraints by regional utilities remain a problem in the short term but are expected to ease following the liberalisation of the power market and unbundling of transmission assets in 2020.  

Offshore wind development is enabling Taiwan to become a major wind power market in the sub-region. The market remains an outlier as almost all its wind power growth is reliant on offshore wind. Expect further auctions to cater to long term growth post-2025 as a domestic offshore wind supply chain emerges that can support future offshore projects in other markets in the sub-region.

In the rest of APeC, the increasing price competitiveness of wind power is leading policy makers to reconsider the level of financial support for wind power. This has resulted in support levels for wind power starting to decline as the trend towards auctions is pushing wind prices even lower than thermal prices in several markets.