Construction cost, interest rates worsen RE competitiveness in APAC in 2022

The solar sector’s average cost by 16% in 2022 from 2020 levels.

The levelised costs of electricity (LCOE) of renewable power in the Asia Pacific have increased in 2022 driven by higher capital expenditure (capex) and interest rates, according to a report by WoodMackenzie.

The LCOE for solar utility projects led the increase across sectors, rising by 16% in 2022 from 2022. This meant that its average cost rose to $91 per megawatt-hour (MWh) in 2022 from $78 per MWh in 2022.

Meanwhile, the onshore wind rose by to $104 MWh in 2022 from $93 per MWh in 2022.

READ MORE: High capital cost for renewables to persist in 2023: report

The capex for solar and onshore wind also increase to 12% and 6% since 2020, compared to fossil fuels which only rose by 5% to 8%.

“Higher renewables costs mean that Asia Pacific’s average solar LCOE is at a 7% premium to coal power in 2022. This is despite higher fuel costs driving up the LCOE for new coal projects by 16% and gas by 11% in the last two years,” it said. 

South Korea suffered the highest cost inflation from 2020 to 2022, whilst China avoided the cost increases.