The Asian renewables market can expect a dual boost this year, as the Chinese and Indian governments both look to step up investment in clean energy infrastructure.
According to Reuters’ reports, China’s energy agency today announced plans to invest 2.5 trillion yuan ($361bn) in renewable power generation by 2020 as the government looks to accelerate its transition away from coal-power.
The move comes in the same week as the government confirmed plans to cut ‘outdated’ coal capacity by 800 million metric tons a year by 2020 and increase the use of cleaner coal by 500 million tons.
The National Energy Administration’s (NEA) new five year plan running from 2016 to 2020 said the new investment in will help create over 13 million jobs in the renewable energy sector as the country looks to ensure around half of all new electricity generation comes from low carbon sources by 2020.
The plan follows a similar blueprint from the National Development and Reform Commission (NDRC), which last month published proposals to invest 1tr yuan in solar projects over the next five years, alongside 700 billion yuan of investment in wind farms, and 500bn for new hydro power projects.
The unveiling of China’s latest clean energy plans comes in the same week as a new report from consultancy Bridge to India predicted the Indian solar market will enjoy a “bumper year” throughout 2017, establishing it as the world’s third largest solar market after China and the US.
The report predicts the market could see 90 per cent growth over 2016 with 14GW of utility scale solar projects in the pipeline, including 7.7GW which are expected to be commissioned this year.
The analyst firm said that combined with an expected 1.1GW of new solar rooftop capacity, the country should add 8.8GW of capacity in 2017, establishing it as one of the world’s leading markets with around 18GW of total installed capacity expected by the end of the year.
The market is being aided by a favourable policy environment – with further announcements expected on how the government plans to support domestic solar manufacturers – and the plummeting cost of solar power, which has helped make solar technology the most cost effective source of new generating capacity in some parts of the country.
“There has been some concern about weak power demand growth in India and growing incidence of grid curtailment and what it means for growth of solar power,” the report notes. “But we believe that continuing reduction in module prices and downward trend in domestic interest rates will provide strong ongoing demand impetus to the market. Solar tariffs are expected to fall below the critical INR 4.00 (USD 0.06)/ kWh mark making solar power the cheapest new source of power.”
“We expect sustainable demand of 6-8 GW for utility scale solar in the coming years,” the report adds. “As the Indian market ramps up, it will become a key pillar for demand growth when demand in other leading countries including China, Japan and even possibly the USA is expected to slow down. We already see leading international equipment suppliers paying more attention to this market and developing specific pricing and product strategies for India.”