Woodmac predicts APAC renewables growth but coal resilience in 2021


When China celebrates it’s New Year on February 12th it will be entering the year of the Ox. However, for the rest of the Asia Pacific 2021 is shaping up to be the year of China. That is, at least, the prediction of some of Wood Mackenzie’s (WoodMac) APAC analysts for the year ahead.


When it comes to renewables in 2021, WoodMac’s APAC Power & Renewables research director, Alex Whitworth, believes that the growth of wind and solar in the region will continue to accelerate but coal will remain resilient.

“I’m very optimistic on the growth of renewables installations in China,” said Whitworth. “Numbers being thrown around of more than 100 GW of additions in 2021 for wind and solar, which is double what we had expected at the beginning of 2020, primarily due to China’s 2060 carbon neutral target.”

“I’m also expecting to see an uptick in Chinese manufacturing and exports – ” Whitworth continued ” – as much of the rest of the world still struggles with the pandemic – which will drive rising electricity demand. While many countries are talking about shorter and more secure supply chains, China’s technology, manufacturing and low-cost advantages are steadily improving. ”


However, despite this continuation of long term positive trends, Whitworth says that coal is “proving highly resilient and while some countries are moving to accelerate retirements of coal plants, overall coal fire generation in Asia is on an upward trajectory in the next few years.”

In fact, despite China’s rapid renewable growth, over 40 GW of new coal plants were permitted by the government in 2020.

Relatedly, WoodMac’s Head of Thermal Coal Research, Dale Hazelton, predicts that the Chinese ban on Australian coal imports will last the entirety of 2021.

“While having access to Australian coal certainly makes things easier for Chinese buyers,” said Hazelton, “there are plenty of alternative sources available if they are willing to pay more. International supply chains can be realigned to continue to meet China’s demand. Domestic coal prices were allowed to soar last year, demonstrating the Chinese government’s willingness to fund this shift in the sourcing of its imports.”

However, it’s not just an easy matter of trading out Australia for Brazil or other trading partners. The effects of political tension are already being felt. According to a CNBC report, several major Chinese cities have “gone dark” as a result of the coal shortage which Chinese authorities are attributing to exceptionally high demand and routine maintenance.


Another side-effect of the Sino-Australian political tensions resulting in the coal ban is rebounding demand for liquefied natural gas (LNG), which has, according to Forbes, hit an all-time record price o $20.70 per million British thermal units. As one of the world’s biggest exporters of LNG Australia is raking in the cash, but, of course, this does nothing to domestic electricity prices and further rubbishes suggestions from the Morrison Government throughout 2020 that cheap gas prices would allow it to fuel the transition to renewables. Gas is no longer cheap. So much so that AGL and other energy giants are fighting it out in South-Eastern Australia for LNG import terminals to bring in foreign LNG to put pressure on domestic energy prices.

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