The Asia Pacific region presents immense growth prospects. With economic growth surging in many parts of the region, the demand for electricity is on the rise.
Although most households have access to electricity, their average consumption is much lower compared to highly developed economies. Over the next 15 years, this scenario is expected to shift significantly as rising wealth boosts demand.
Despite this, the region has been slow in adopting renewable energy, with the notable exception of China. Policymakers are striving to change this trend, but fossil fuels will continue to play a crucial role in the region’s power supply.
Future Investment in Key Markets
How will investments unfold in major markets over the next decade?
Australia
In Australia, the retirement of coal-fired power plants—estimated at US$12 to US$20 billion over the next 10 years—and growing electricity demand will make renewable energy central to the power supply in several states from 2024.
The country plans to add 7.3 GW of onshore wind and over 50 GW of solar energy by 2030. Achieving this will heavily depend on improving regulatory conditions related to planning approvals.
With over 3 million homes already equipped with residential solar photovoltaics (PV), this sector will continue to expand. Between 2023 and 2035, US$132 billion will be invested in wind and solar PV, accounting for 98% of total power generation investment. By 2035, renewables will provide 74.7% of electricity, up from 49% in 2023.
Japan
Japan remains heavily reliant on fossil fuels for power generation. Although the country has previously offered attractive incentives for decentralized solar PV, it has invested little in utility-scale projects. Wind power contributed just 0.9% of electricity in 2023, a very low figure by global standards.
Japan faces challenges such as limited land availability, high population density, and opposition to renewables in rural areas. Utilities have been resistant to renewables, and necessary grid investments have not been made.
The invasion of Ukraine by Russia has increased Japan’s focus on energy security. By 2035, solar PV is expected to double its share of total electricity to 16%, with US$163.7 billion invested.
Offshore wind will be crucial due to land constraints, although high project costs are expected to decrease over the decade. Policy improvements and technological advancements will support growth, with US$72.9 billion invested by 2035.
To enhance energy security, Japan’s GX Implementation Council announced a new policy in 2023 to restart 17 nuclear power reactors (11 of which are already online) and extend the operational life of existing nuclear facilities from 40 to 60 years. Additionally, 22 reactors slated for decommissioning will be replaced with next-generation reactors or restarted.
Despite these efforts, coal, natural gas, and other fossil sources will still make up 54.3% of electricity generation by 2035.
South Korea
Energy security is a top priority for South Korea, which is almost entirely dependent on imported energy. The 2023 10th Basic Plan for Long-term Electricity Demand and Supply highlights nuclear power and renewables as significant growth areas.
However, the government has reduced the renewable target from the 9th Basic Plan from 30.2% to 21.6% by 2030, indicating a weaker commitment to renewables. Frost & Sullivan predict the target will not be met, with only 17.3% achieved by 2030 and 23.1% by 2035.
Offshore wind is a promising area, with US$117 billion invested, increasing wind power’s share from 0.7% in 2023 to 8.6% by 2035.
Nuclear capacity will rise, with plants likely receiving life extensions. Nuclear will continue to be a key baseload power source, consistently providing 30% annually over the next decade.
Additionally, natural gas capacity will expand. South Korea has long-term supply contracts with Australia and Qatar for LNG, with natural gas expected to account for approximately 30% of electricity generation throughout the decade.