Engineers walking in front of wind turbines

Asia adapting

Written by Matthew Heling

Buzzing motorbikes, towering megacities, abundant street food, ancient temples, warm rain – there’s no place like Asia. But in the world of energy, Asia is not always so unique.

As elsewhere in the world, energy costs have skyrocketed, driven by global forces, with growing pressure to decarbonise and rigid regulations that can limit options.

Businesses and public entities are developing resilience to these challenges by developing new options to meet their energy and sustainability needs. A standard approach is via new physical energy infrastructure. Typical
contemporary examples include businesses installing solar rooftop panels (and do not forget energy efficiency!)
and utilities expanding grid capacity to support growth in renewables. More innovative examples include the planned
“SunCable” transmission line that would create a massive interconnection between Australia and Singapore, expanding the options for both countries (and Indonesia along the way).

Another approach to enhancing resilience is via novel commercial and regulatory mechanisms, whether with regard to existing or new infrastructure. For example, the availability of onsite PPAs and/or net-metering policies make solar rooftop systems more attractive and achievable for end consumers. Implementing novel commercial arrangements (enabled by regulations) in transmission lines can similarly open new opportunities, such as the new PPA enabling power transactions between Laos and Singapore via an existing transmission path through Thailand and Malaysia.

One development with potential to dramatically shift the energy landscape in Asia – as it has also begun to do in other regions of the world – combines physical, commercial, and regulatory angles. A corporate PPA (CPPA) between a generator and an end-use consumer, enabled either directly or indirectly by the local utility and T&D system, is a commercial arrangement that – when enabled by local regulations – can facilitate the physical development of new renewables plants.

CPPAs as win-win-win

The availability of CPPAs can benefit the entire electricity value chain. End consumers get a new option to reduce or
stabilise energy costs and meet carbon reduction goals (see Box 1).

Box 1: Taiwan - Asian CPPA trailblazer continuing to present CPPA opportunities

Taiwan was among the first jurisdictions in Asia to allow RE plants to sign PPAs directly with nonutility
offtakers. An early attention-grabber was TSMC's agreement with Orsted's 920-MW Greater Changhua 2b & 4 offshore wind farms.

CPPAs continue to be available in Taiwan and are underpinning some of Taiwan's most recent offshore
wind developments. AFRY expects a substantial portion of Taiwan's planned 15 GW of offshore wind
in 2026-2035 to be supported by CPPAs.

Developers gain another source of offtake. And governments gain a tool for enabling renewable energy development without needing to foot the bill. Increasingly around the world, corporations are using CPPAs to “green”
their electricity supply and their supply chain, while simultaneously providing new renewables plants the revenue certainty to support their financing and construction.

CPPA availability in Asia

Rapid growth ahead

CPPA availability in Asia has generally lagged relative to other regions such as Europe and the US. However, CPPAs are already available in some jurisdictions in Asia, and enabling programs and regulations are being developed in others.

In Taiwan, Japan, and South Korea, it is already possible to execute a CPPA in at least some form - although the requirements and mechanics are substantially different in each case. Vietnam is actively developing a CPPA program (called "Direct" PPA), with a 1-GW pilot expected to be launched in the coming months.

A summary of CPPA availability across selected countries in Asia is presented in Box 2. AFRY expects CPPAs to become increasingly available in Asia as regulatory and commercial constructs become tested and increasingly standardised.

New considerations for end consumers

The essential benefits of CPPAs for end consumers are clear: a potential electricity source that is cheaper, more stable, and cleaner. However, realising the benefits requires levelling up in some key areas.

  • Procurement teams.

For many end consumers, and especially in many Asian countries where retail service is provided by integrated utilities, electricity procurement is limited to paying monthly electricity bills from the local electric utility. Soliciting CPPA bids, evaluating offers, and negotiating contracts in the context of electricity purchasing requires additional levels of expertise and sophistication.

  • Energy economics and regulatory evolution.

Particularly when evaluating offers, it is critical to understand how retail tariffs and relevant fees such as “wheeling fees” will evolve – and possibly interact with the CPPA – in the future.

Man standing in front of wind turbine

New considerations for developers

While CPPAs present developers with additional and potentially more-lucrative offtake options, maximising benefits from this new route to market similarly requires some additional capabilities.

  • Marketing and sales.

Finding a CPPA offtaker will require outreach to multiple candidates; and developing mutual trust will be particularly important when striking a deal with a newly available type of agreement.

  • Assessing creditworthiness.

The creditworthiness of the local utility offtaker can often be assumed to be strong, but now the creditworthiness of each potential CPPA offtaker must be vetted.

  • Ensure product sufficiency.

Depending on the local regulations, in particular settlement granularity, it may be necessary to consider the details of how a plant’s output will meet the offtaker’s need. For a CPPA between a solar plant and an industrial factory, does it matter when the solar plant is (or is not) generating electricity?

Seizing the opportunity

In this era of rising, volatile energy prices and increasing pressure to decarbonise, corporations and states are looking for new options to secure clean, low cost electricity. While regulations can sometimes interfere with these goals, other regulations, critically those enabling CPPAs, can create new options and bring benefits to much of the electricity value chain. Realising these benefits requires doing some things differently or in more sophisticated ways. Those who successfully navigate these requirements can position themselves well in the energy world of today and tomorrow.

Engineers walking in front of wind turbines

Energy Management Consulting in Asia

AFRY Management Consulting is pleased to be serving our clients in Asia from our offices in Bangkok, Beijing, Hanoi, Jakarta, Manila, Pune and Shanghai.


Matthew Heling - 东南亚区负责人,AFRY管理咨询

Matthew Heling

Head of Management Consulting - Energy, Asia Pacific

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