The Asia Pacific region has become an investment hub for utility and construction companies. With the growing economy, there has been an increasing demand for power and hence has resulted in plans for the boost in power generation. Though oil and gas has been the primary source of power in this region, renewable energy is also making strong in-roads in most of the nations in the region.
As expected, China emerges as the largest power market by installed capacity among the Asia Pacific countries with a share of 55.5% in the total installed capacity. Japan is the second largest market having a share of 18.1% in total installed capacity. This was followed by India and South Korea having a share of 9.8% and 4.7% in the total installed capacity. Australia has a market share of 3.6% in total installed capacity and is the fifth largest country by installed capacity among the Asia Pacific countries.
Increased demand for electricity
Most of the Asia Pacific countries will see a growth in electricity consumption. Increase in electricity consumption will require increased generation in the countries. High economic growth, increasing population and industrial growth in these countries will contribute to higher levels of electricity consumption in the coming years. “This scenario is leading to a strain on the existing electricity infrastructure in the region and countries are increasing their power generating capacities to meet their growing electricity demand,” said the authors of GBI Research’s report. Owing to this, demand for power is growing quickly translating to wide area of growth opportunities in all segments of the power sector.
Expansion of power infrastructure
The governments of countries in the region have embarked on privatization and restructuring of the electricity industry. To achieve efficiency of electricity, competitive prices and fair competition, they are opening up their markets to increase participation from the private sector and competitiveness in the power sector.
With the increasing demand, the transmission network has been put under tremendous pressure to supply power without any interruptions. “To ease the pressure and supply electricity efficiently, many new transmission projects are currently underway or in a planning stage,” comments GBI Research. The region has to invest heavily in order to increase its installed capacity and improve its existing infrastructure.
Huge investments in green technology R&D
Countries like China and Japan are fastest growing industrial economies in recent decades. This rapid industrialization has challenged these countries to address greenhouse gas emissions over the next few decades. Therefore, with the increase in the use of renewable energy sources, countries are planning to develop green technology, which further gives way to strategic investments in the R&D of the green sector.
Countries are planning to use supercritical technology which has higher levels of fuel efficiency and lower greenhouse gas emissions. Each of these power plants will require huge investments, and GBI Research concludes that “this will further open roads for private/foreign investments”.
In order to promote investments, government is also providing various incentives and benefits to the developers of renewable power plants in order to increase clean sources of energy for future electricity generation.
Changing power mix
Consequently, while the region is still heavily dependent on thermal fuel sources (coal, gas and oil) for power generation, a change in the power generation mix in the region is expected in the future due to the shift in focus by Asia Pacific countries to other fuel sources such as renewables (solar, wind, etc.) and nuclear.
Countries such as New Zealand, South Korea and Philippines have set targets to generate 38%, 11% and 10% respectively from renewable sources by 2020/2025. Focussing on clean sources, hydroelectricity has been central to meeting New Zealand’s energy needs and it accounted for 58.4% of the total generating capacity of the country. The governments of countries like Taiwan are also planning to explore the oceans surrounding the country to generate electricity through ocean wave energy and ocean thermal energy.
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