The sun is shining on solar power in Southeast Asia

  • The sun is shining on solar power in Southeast AsiaThe sun is shining on solar power in Southeast Asia
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October 2019


Solar powering the growth of renewables

Global renewable energy (RE) capacity of 2,351GW (+7.9% yoy) accounted for nearly one third of total energy generation capacity as at end 2018 and RE capacity growth is expected to outpace non-renewable energy sources. Within the RE spectrum, solar energy is a key growth driver, followed by wind energy. These two energy sources account for 84% of all new renewable energy capacity installed in 2018, and reduced the overall share of hydro energy to below 50%.

Game changers for renewables, especially solar
In our view, solid growth in solar energy capacity has been driven by several factors, including: (1) grid parity, (2) lower battery storage costs, (3) smart grid; and (4) sustainability & green financing. Grid parity, through lower Levelised Cost of Energy (LCOE) and falling battery storage costs have made renewable energy, particularly solar energy, cost competitive compared to fossil fuel. As an indication, LCOE for solar energy and battery storage costs have declined by up to 80% since 2010.

Bright outlook for rooftop solar
Aside from cost competitiveness, rooftop solar power is also enjoying strong growth due to favorable regulations and incentives by governments in selected ASEAN countries. In Thailand, rooftop solar could enjoy a pick- up from deregulation and in Indonesia, a government measure to promote the solar industry could underpin demand for rooftop solar, although at a tariff that is 35% lower than the existing electricity tariff.

Malaysia has an ambitious RE target (20% of energy mix by 2025) and has a revised Net Energy Metering (NEM) scheme for Commercial and Industrial (C&I) companies that could boost demand for rooftop solar. Longer-term, Malaysia’s new 10-year master plan to reform the domestic power industry could further drive RE demand. In Vietnam, a generous feed-in-tariff (FiT) has been a key driver for rooftop solar, though there remain issues over curtailment and grid capacity.

In view of the opportunities in solar energy, UOB has rolled out the U-Solar Program, which is a “one-stop-shop” regional solar solution that will help solar project developers, contractors and end-users tap on the opportunities from solar energy. For more information on the above insights and banking solutions, please email contact us here.

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