Asia Pacific's utilities and power sector to remain stable through 2026

High grid investment and storage deployment will help reduce renewable energy curtailment.

The Asia Pacific utilities and power sector is projected to remain stable through 2026, supported by consistent demand growth, capacity expansion, and increased capital investment in grid infrastructure.

In its latest analysis, Fitch Ratings said it “expects steady power and gas demand growth, higher margins on renewable-energy expansion and continued high capital expenditure for investments in renewables and grid infrastructure.”

“Standalone credit profile headroom for most government-related entities remains adequate. We expect credit metrics for rated project finance issuers to remain stable, resulting in adequate headroom for most rated entities,” the company said.

Fitch Ratings expects continued high renewable installations in the region in 2026, despite operational challenges.

Competitive bidding and greater merchant exposure in China will increase tariff uncertainty. The complexity of large or hybrid projects in India is likely to delay commissioning and cash inflows, whilst challenges with land acquisition and approvals for grid connection may delay project starts.

Renewable curtailment will also rise in some jurisdictions in Asia Pacific, constraining utilisation.

“These pressures are mitigated by continued declines in equipment costs and unit capex, which will further reduce generation costs and make renewables more competitive. High investment in grid infrastructure could relieve grid bottlenecks,” Fitch Ratings said.

“Expanded storage deployment and flexible demand programmes will smooth intermittency and reduce curtailment,” it added.