IHS Markit: China’s overseas coal moratorium raises challenges for emerging Asian markets

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China’s announcement to the United Nations General Assembly that it will no longer build new coal-fired power plants overseas accelerates the energy transition in emerging Asian markets but also raises challenges, according to a news report. analysis of the IHS Markit Global Power and Renewables service.

In nine key Asian emerging markets * analyzed by IHS Markit in the region that receive significant foreign investment in energy projects, demand for electricity is expected to increase by 750 TWh over the period 2020-30, or roughly l equivalent of the total demand of France and Spain combined.

Much of the expected growth in electricity demand will have to be met by 24/7 baseload generation due to the high share of industrial customers in these countries compared to mature economies as well as the basic household electrification.

While renewables like wind and solar can help meet much of this new demand, the intermittent nature of renewables makes it more difficult to close the baseline production gap.

IHS Markit estimates that if solar and battery storage were used to meet all the additional demand, it would require 70 to 130 GW of batteries. By comparison, only around 5 GW of battery storage capacity was installed globally in 2020, the highest year on record.

“Battery storage technologies are not yet mature enough to be deployed today on such a scale to support wind and solar and meet the immediate growth in demand in emerging Asia. While battery storage is expected to be much more mature, scalable, and cheaper by 2030, future technology cannot meet current demand. “ – Xizhou Zhou, Vice President and General Manager, Global Energy and Renewable Energy, IHS Markit

Many regional governments have recognized natural gas as a “bridge” to meet the demand challenge in the short and medium term with the energy transition. This is because natural gas-fired power plants can be built relatively quickly and can meet baseload capacity requirements while still providing the flexibility to meet peak demand.

However, most of these markets face difficulties in sourcing gas, mainly due to domestic gas supply constraints and the lack of LNG import infrastructure. There are also questions about gas prices, especially LNG, relative to coal in Asia.

“Significant international financial support would be needed for natural gas to realize its potential as a ‘transitional fuel’ in Asia. Most countries remain low or lower middle income. firepower would require assistance. “ – Xizhou Zhou, Vice President and General Manager, Global Energy and Renewable Energy, IHS Markit

Due to this gap between supply and demand and limited alternatives for base load generation, IHS Markit expects a number of new coal-fired power plants – mostly those already in operation. construction or have secured funding and are in the planning stages – will still be in service for the next decade.

There are around 34 GW of coal-fired power plants under construction in the region (this figure does not include an additional 32 GW under construction in India), according to the latest data from IHS Markit. An additional 24 GW are in fairly advanced planning stages or have closed funding but have not yet started construction. IHS Markit expects around half of them – around 11 GW and almost all in Vietnam and the Philippines to still go live.

“IHS Markit still expects approximately 45 GW of new coal-fired power capacity to enter service in South and Southeast Asia over the next decade. If they were not put into service, such a gap would have to be closed with other solutions you could run into reliability issues and economic disruption in these emerging markets. “ – Xizhou Zhou, Vice President and General Manager, Global Energy and Renewable Energy, IHS Markit

Beyond 2030, IHS Markit expects very little or no new coal-fired power plants to be built in the region. This means that it will be essential for mature battery storage technologies to be developed grid-wide over the next decade to ensure long-term reliability of supply. Gas power will also be needed to provide base load and flexibility.

“The point is, for South and Southeast Asian markets, investment in power infrastructure must continue to grow for all technologies, just to meet demand. There is a complex balance between reliable supply and the transition to clean energy for rapid use. Growing regions. Ending the construction of new coal-fired power plants must be part of a much larger debate. – Xizhou Zhou, Vice President and General Manager, Global Energy and Renewable Energy, IHS Markit

* The nine markets include Vietnam, Indonesia, Thailand, Malaysia, Pakistan, Bangladesh, Philippines, Myanmar, and Cambodia.

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