Coal remains the cheapest option for APAC

This is as renewables costs rose last year.

The cheapest new-build power generation option for Asia Pacific will still be coal until 2024, despite the high fuel price environment due to the rise in renewables costs in the last year, according to a report by Wood Mackenzie.

New low-carbon technologies remain expensive, Wood Mackenzie said, noting that renewables and battery storage power costs were 41% to 72% higher than levelised cost of electricity (LCOE) for gas in 2022.

“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,” the report read. 

Green hydrogen and ammonia blended power costs are more than twice the costs of coal and gas today, adding that they will have a 60% premium by 2060. The costs of green ammonia and hydrogen are seen to decline by 49% and 53%, respectively, by 2050 but will still be at least double the fuel cost of gas or coal.

However, Wood Mackenzie said that the cost of a “firmed” mix of renewables, gas turbine backup, and storage is seen to reduce to $90 per megawatt-hour (MWh) in 2030, from $130MWh in 2022, making it competitive against gas and nuclear.

Renewables saw a rise in costs due rise in interest rates and construction costs.