How the Tech Sector Can Drive Renewable Energy Opportunities in APAC

Technology companies were early adopters of bold renewable energy goals. But the renewable energy markets in Asia Pacific have failed to keep pace. In this article, we explore the barriers technology companies must overcome and the outsized role they play in accelerating progress for the region.

Table of Contents

1. The Technology Sector’s Increasing Demand for Renewable Energy

2. Barriers in the APAC Region

3. How Country Commitments Can Accelerate Growth

4. The Road Ahead for APAC Technology Companies

The Technology Sector’s Increasing Demand for Renewable Energy

The move toward renewable energy is a global phenomenon, with corporations taking a leadership role in advancing the clean energy transition. Since 2015, the number of companies joining the RE100 Initiative and pledging to achieve 100% renewable energy by 2050 has increased by 412%. As part of this surge of environmental commitment, Asia Pacific (APAC) participation has also steadily increased, as shown in Figure 1. In 2020, 42% of new RE100 members were based in the APAC region and, to date in 2021, 80 percent of the new RE100 members are headquartered in Japan.

Within this corporate vanguard, the Information and Communications Technology (ICT) sector is playing an outsize role in accelerating the transition to clean energy. ICT companies account for about 18% of the current RE100 membership, and collectively have purchased almost a quarter of total renewable energy. And this demand is expected to grow. According to a recent forecast, the renewable energy demand from the current RE100 members in the technology sector will nearly triple by 2030, from 61TWh today to 171TWh, as illustrated in Figure 2.

The corporations making a difference include not only U.S.-based brands such as Google, Facebook, and Microsoft, but also a number of APAC corporations. Together they have not only increased the demand for renewables but have also set stringent conditions on their renewable energy procurement strategy. Moreover, these renewable energy strategies adopted by large technology companies have transformed electricity markets by contributing to the overall greening of the grid. Among the notable examples:

• Microsoft intends to have power purchase agreements (PPAs) for clean energy to match all electricity consumed across its data centers, buildings, and campuses by 2025. Also, like many clean energy leaders, their strategy promotes additionality – that is, actually helping to bring new renewable generation to the grid.
• Google’s clean energy procurement strategy not only emphasizes additionality, but also ensures that the company’s energy demand is 100% matched in real-time with carbon-free energy.
• Earlier this year, Amazon became the largest corporate buyer of renewable energy after signing PPAs for 3,400MW, bringing its total clean energy portfolio to 6,860MW.
• Taiwan Semiconductor Manufacturing Company (TMSC), a key supplier of chipsets for Apple, signed PPAs for 1,200MW of clean energy, making it the leader in corporate PPAs in Taiwan.
• Tencent recently became the first large Chinese technology company to announce its intention to achieve net-zero emissions by 2060, with renewable procurement as a main decarbonization lever.

In the same way that the ICT sector has driven the renewables market in the U.S. and Europe, it has the potential to accelerate renewable energy opportunities in the Asia Pacific region. The recent growth and proliferation of technology and communication companies in this area is unprecedented, accounting for 52% of revenue growth over the last decade. Furthermore, as seen in Figure 3, the APAC region is predicted to be the fastest-growing location for data centers over the next five years.

As the ICT sector’s operational footprint increases in the APAC region, so will its energy requirements and corresponding carbon footprint (Figure 4). Unique, disruptive changes in this sector make it hard to quantify future renewable energy demands, but it is predicted that in order to transition to 100% clean energy, the ICT sector’s demand for renewable energy would account for between 11% and 30% of the total renewable energy generation in the region.

The Challenges Facing the APAC Renewable Energy Market

Yet, while the potential is clearly there for the growing ICT sector in the APAC region to boost renewable energy opportunities, there are significant barriers. New research published from RE100 indicates that while its members are using on average 81% renewable electricity in Europe and 59% in the Americas, in the Asia Pacific region, this figure is as low as 16%. We believe that these low adoption rates are a result of two key factors:

1) Undeveloped Markets and Procurement Pathways for Renewables

Compared to Europe and the Americas, Asia Pacific markets for renewable energy procurement are much less developed (Figure 5). At the end of 2020, there were only 75 PPAs, totaling 4.5GW, in the APAC region, compared to 233 in Europe and 959 in the United States, totaling 14GW and 43GW respectively.

Many of the RE100 APAC members resort to using Energy Attribute Certificates (EACs) or international Renewable Energy Certificates (RECs) as an expedient way to claim renewable energy sources, since other options are unavailable.

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2) Inconsistency Among Markets in Different Countries

The markets in the APAC region are exceedingly diverse, ranging from fully developed markets – such as Singapore, Japan, and Australia – to developing markets like Indonesia and Vietnam. Also, while Australia, Singapore, and Japan are completely deregulated, Malaysia, Indonesia, Thailand, and Vietnam are only partially liberalized. This creates a wide diversity of regulatory environments among countries, which limits renewable energy opportunities.

In addition to individual regulatory constraints, there are also financial barriers. For example, in Japan, Singapore, and Taiwan, renewables are more expensive than traditional fuels, making them less attractive in purely economic terms.

Navigating these barriers can be challenging, especially for corporations expanding their footprint in the APAC region. A recent survey of RE100 members indicated that eight of the ten most challenging markets for achieving 100% renewable energy are in Asia Pacific countries. The chart below highlights some of the common barriers to procurement.

The Good News: Country Commitments are Accelerating Renewables Growth in APAC

Despite the considerable challenges facing APAC corporations looking to increase their use of clean energy and ultimately reach 100%, we have seen a surge in company commitments that will reduce the barriers to renewable energy procurement and access (Figure 6).

Policy Changes Designed To Increase Access To Renewable Energy For Corporations

• South Korea: The South Korean government revised the country’s Electric Utility Act to allow for third-party PPAs in the first half of 2021. Additionally, the government approved a green tariff program with Kepco that will allow the purchase of green energy from utilities. Finally, changes have been mandated to allow corporations to purchase unbundled renewable energy certificates.
• Taiwan: The Taiwanese government has passed a mandate that requires large power consumers with loads above 5MW to procure clean power; renewable usage must reach ~10% by 2025.
• China: Corporate PPAs were introduced as pilot programs in Zhejiang and Guangdong provinces.

Countries Making Ambitious Climate Commitments

• South Korea: Recently, the South Korean government announced a Green New Deal that entails large-scale investment in renewable energy, phasing out of coal operations and financing, and achieving net-zero emissions by 2050.
• China: In September 2020, China committed to achieving peak carbon before 2030 and carbon neutrality by 2060. These targets mandate that 35% of the country’s power demand be sourced from renewable sources by 2030, decreasing the dependency on coal.
• Japan: The Japanese government has committed to achieving net zero emissions by 2050 and plans to fund significant efforts as a part of its post-COVID green growth stimulus of US$19.2 billion.

• Singapore: The government of Singapore recently announced a Green Plan that will earmark $19 billion for public sector green projects, with a strong push for green energy transition.

The Road Ahead for APAC Tech Companies

To successfully navigate the complexities of these diverse markets, and to take advantage of new opportunities provided by national initiatives, ICT companies with ambitious renewables goals must embed flexibility within their clean energy strategy and explore innovative solutions, including those that facilitate cross-border procurement.

Develop A Flexible Strategy

As highlighted above, every country has its specific economic, technological, and regulatory parameters, which have to be dealt with on an individual basis. In devising a strategy that will successfully lead to increased use of renewables, and ultimately to 100% green energy, it’s essential to familiarize yourself with the details of each country’s policies and to take advantage of any renewable energy opportunities that are available. In situations where conditions are uncertain, ICT corporations should focus their efforts on purchasing Renewable Energy Certificates, which have annual contract durations; this will enable your organization to quickly adopt PPAs as they become more available.

Explore Innovative Solutions

Though still limited in number, there are already a number of examples of countries and corporations finding innovative clean energy solutions. For example, VPPAs are currently being developed by the private sectors between Malaysia and Singapore, and the Indian government is evaluating the feasibility of VPPAs to increase access to renewable energy for corporations.

There are also technical innovations being pursued to facilitate the importation of clean energy. For example, Suncable is planning to establish the world’s first intercontinental power grid between Singapore and Australia. This project aims to harness and store solar power generated in Australia and transmit this energy via a high-voltage direct current transmissions system to Singapore. The arrangement would address the land scarcity issues in Singapore, while supplying up to 20% of the country’s total electricity needs. The Singapore and Japanese governments are also evaluating the technical and economic feasibility of importing green hydrogen from Australia to accelerate their clean energy transition. As some of the first end customers for this electricity, technology companies will play a critical role in making these solutions economically viable.

Advocate For Change

In addition to developing individual corporate strategies and keeping an eye on the latest technical developments, one of the most important steps APAC ICT companies can take is to request changes in the RE100 criteria that would allow them to claim imported renewable energy to achieve RE targets. This would serve to promote cross-border transfers and help transform the Asia Pacific power grid – leading the region, and the world, that much closer to 100% renewable energy.

The APAC Region is on the Cusp of a Major Transition to Clean Energy

While adoption of renewable energy in the Asia Pacific region has been slow, the market is changing rapidly. With increased demand fueled by the technology sector, growing pressure to decarbonize the region, and an influx of new commercial and technological innovations, the APAC region will see tremendous growth in renewable energy opportunities in the coming decade. As economic, technological and regulatory conditions evolve, organizations with ambitious sustainability goals can ride the crest of the wave to accelerate their transformation.

To explore the renewable energy opportunities available in your region and develop an actionable clean energy procurement strategy, contact our renewable energy planning consultants.

The authors would like to thank Chaitanya Vangala for his contribution to this article.

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