By Sam Kimmins and Ken Haig
We need to supercharge efforts to accelerate the clean energy transition in Asia. Growing corporate demand already overwhelms the limited supply of renewable electricity in the region, where most of the emerging economies still derive more than half of their power from coal generation. Strengthening the collaboration between the public and private sectors—and particularly enabling corporate investment in renewables—will be key to accelerating the clean energy transition.
As it stands, energy research firm Wood Mackenzie estimates that US$1.3 trillion in investment is expected to go towards renewable energy in Asia by 2030, with the region already accounting for 17% of the renewable electricity procurement of Climate Group’s RE100 initiative. RE100 has 400 members, and since 2021, 58% of all new members have been headquartered in Asia-Pacific.
Amazon is the world’s largest corporate purchaser of renewable energy, having invested in over 400 projects globally, with an appetite for more to meet the company’s 100% renewable energy goal by 2025. There’s a reason why corporate clean energy investments already account for much of the world’s new renewable power projects today, and that is because it is a win-win-win for consumers, developers, and regional grids: corporate consumers are able to meet their net-zero targets and growing energy needs with clean energy, developers have a clear path to the guarantees and incentives they need to build more capacity, and regional grids benefit from additional renewable capacity without taxpayers needing to bear additional cost burdens.
Progress looks promising, but more is needed
Considerable decarbonization opportunity remains in APAC, where corporate renewable electricity investments prove challenging due to limited availability, grid capacity constraints, and undue regulatory complexity. The Southeast Asia Green Economy Report 2023: Cracking the Code finds that while the existing pipeline of renewables projects in Southeast Asia is impressive—194 gigawatts’ worth—90% remain stuck in permitting and approval stages. Resolving this backlog and addressing regional transmission challenges will unleash significant additional market opportunities.
For example, Singapore’s Energy Market Authority (EMA) estimates that to effectively decarbonize its energy supply by 2050, more than half of the country’s power will need to come from cross-border renewable power transmission, but regional transmission at this scale remains challenging.
Governments are playing a vital and growing role in accelerating the uptake of renewable electricity by introducing laws and easing regulations to encourage corporate power purchase agreements (PPAs). Corporate PPAs are long-term deals between electricity producers and corporate customers, enabling buyers to purchase renewable electricity. They also enable developers of renewable energy projects to construct new infrastructure without relying on government tariffs. Corporate renewable electricity procurement also helps create green jobs and grow domestic clean energy industries.
Corporate PPAs are an efficient mechanism for promoting the uptake of renewable electricity—a fact that is recognized by an increasing number of governments across the region. In Japan, for example, a stimulus plan was introduced for decarbonization projects, including innovative approaches to accessing corporate PPAs, where significant strides have been made in the country’s promotion of PPAs. In South Korea too the government has lowered barriers to entry for corporations looking to access PPAs.
Indonesia’s Just Energy Transition Partnership (JETP) proposal calls for “accelerating the deployment of renewable energy so that renewable energy comprises at least 34% of all power generation by 2030,” but with less than seven years to go, the percentage of renewables in Indonesia’s energy mix still sits at 14% today. Creating the enabling conditions for quickly scaling corporate investments in new renewables projects in Indonesia would greatly help to accelerate progress towards this 2030 goal—all at no additional costs to Indonesian taxpayers.
Reforms for a renewable transition
While governments in APAC have started putting into action more policies to promote corporate renewable electricity purchasing, much more can (and should) be done to leverage the demand and supply momentum in region.
According to a report by the Economist, a large proportion of corporates advocate for regulatory frameworks designed to improve business confidence in corporate PPAs, and thus growing demand for them. Regulatory frameworks which incentivize the creation of varied, affordable, and diverse clean energy sourcing options, beyond what is currently available, will also broaden the solutions that companies of all scales can access, enabling a much greater range of consumers to seamlessly source clean energy. This could include creating electricity markets that enable corporate buyers to purchase directly from suppliers, and supporting a credible and transparent system for certifying renewable electricity consumption.
Clean energy PPAs are one of the most effective pathways for businesses to participate in Asia’s clean energy transition, and the region has a lot to be optimistic about. That’s why the Asia Clean Energy Coalition (ACEC) was established in 2022 by Climate Group, the Global Wind Energy Council (GWEC) and the World Resources Institute (WRI), to convene a coalition of world-leading renewable energy buyers in Asia, in collaboration with sellers and financiers, to strategically shift policy in key Asian national and regional markets. ACEC is an expert hub for strategic communications and policy coordination, founding members of ACEC include Amazon, Apple, Cisco, Enel Green Power, Google, Iberdrola, Ingka Group (Largest IKEA franchisee), Mainstream Renewable Power, Meta, Nike, Ørsted, Samsung Electronics and Sembcorp.
PPAs are projected to grow considerably for two main reasons: more companies headquartered in APAC are setting 100% renewable electricity targets, and corporate PPAs are gaining recognition and greater government support in major countries like India, Japan, and South Korea.
The potential for corporate investment in renewable electricity is huge. However, with an increasing number of companies basing investment and supply chain decisions on their ability to source renewable electricity, there is also a big economic risk for countries that fail to secure this investment and accelerate their renewable energy transition. APAC governments should capitalize on the clean energy demand and provide momentum by creating supportive policy frameworks for corporate procurement of renewable electricity and encouraging innovative renewable energy transmission projects – accelerating the region’s path to zero carbon grids.
Sam Kimmins is the director of energy, climate group while Ken Haig is head of energy & environment policy Asia Pacific & Japan, Amazon Web Services
