APAC Energy Pulse – December 2024

A recent report by Wood Mackenzie predicts that average renewable energy certificate (REC) prices in the Asia-Pacific region will drop by 76% between 2023 and 2050. The projected decline is due to an oversupply in the REC market, driven by a fourfold increase in renewable power generation over the same period.

Since our last update, various initiatives and developments across the Asia-Pacific market seem to support the prospect of future growth.

In this issue of APAC Energy Pulse, we take a closer look at some of these initiatives and developments:

1. Singapore’s EMA granted conditional approval for the import of low-carbon electricity from Australia.
2. Singapore has increased its clean energy import target to 6 GW.
3. Indonesia's Constitutional Court has ruled that an element of the Job Creation Law that allows for unbundling of electricity is "conditionally unconstitutional."
4. Indonesia and Japan signed a Mutual Recognition Arrangement for bilateral carbon trading.
5. Malaysia announced a new way for consumers to procure physical green electricity directly from renewable energy generators.
6. Taiwan dropped its local content requirement for offshore wind projects.
7. Taiwan is considering developing renewable energy projects in the Philippines and importing the power generated to Taiwan.
8. India's Ministry of New and Renewable Energy (MNRE) issued guidelines to implement viability gap funding (VGF) and draft changes to leasing rules for offshore wind projects.
9. India's MNRE issued a draft Green Hydrogen Certification Scheme.
10. The Philippine's Department of Energy resumed accepting and processing renewable energy contract applications through EVOSS and enhanced its monitoring of and guidelines for renewable energy projects.
11. Thailand is expected to announce an RFP for its second round of renewable energy auctions soon.
12. Vietnam charged PVN with carrying out the country's first pilot offshore wind power project.
13. South Korea opened its third auction for offshore wind projects.

In More Detail: Energy Transition Updates from the Asia-Pacific Region

1. Singapore’s EMA granted conditional approval for the import of low-carbon electricity from Australia.
   
   What happened?
   
   
   • Singapore’s Energy Market Authority (EMA) granted conditional approval to Sun Cable to import low-carbon electricity from a solar farm in Australia’s Northern Territory to Singapore via 4,300 km of subsea cables.
   • While Sun Cable’s proposal has been found to be technically and commercially viable based on the information provided, Sun Cable will still need to offer a commercially viable price acceptable to customers, among other things, for the project to advance toward full regulatory approval.
   • The project, if approved, is expected to commence supply after 2035. It is expected to have a solar plant capacity of between 17 GWp and 20 GWp and a battery storage system capacity of between 37 and 42 GWh to level energy availability.
   Why does it matter?
   
   
   • If successful, this project would be one of the largest renewable energy installations globally.
   • This is the company’s second attempt at the project. The project began in 2019 but collapsed in 2023 when Sun Cable entered voluntary administration due to a funding dispute. Sun Cable's current owners took over in September 2023.
   • This is an ambitious project. It requires layering a significant distance of submarine cables crossing Indonesian waters, substantial time to complete surveys and testing and obtaining necessary approvals and permits (land and otherwise), among other things. The estimated construction cost  – US$24 billion – is significant.
   • The project would create opportunities for international and domestic contractors and suppliers to participate in engineering, procurement and construction. The project would also create a substantial source of green power for offtake by corporates and large consumers in Singapore.
2. Singapore has increased its clean energy import target to 6 GW.
   
   What happened?
   
   
   • In September 2024, Singapore announced a 50% increase in its target of low-carbon electricity imports from its neighbors by 2035. The target increased from 4 GW to 6 GW.
   • Singapore’s net-zero plan envisions electricity imports making up around one-third of the country’s energy needs by 2035. As of the beginning of December 2024, EMA has issued conditional approvals to 10 import projects from Australia, Cambodia, Indonesia and Vietnam. Of these, five projects were awarded conditional licenses in September 2024.
   • After obtaining a conditional license, the next step is for the developer to seek an importer license, the final step before construction, testing and commissioning.
   • Between obtaining a conditional license and an importer license, the project must obtain regulatory approvals and achieve financial closure.
   Why does it matter?
   
   
   • The increase in Singapore’s clean energy import target represents Singapore’s commitment to and support of import projects. EMA continues to welcome proposals from companies interested in importing and selling low-carbon electricity in Singapore. We expect further collaborations between private sector developers in proposing such projects.
   • When completed, these projects will represent a substantial source of green power for offtake by corporates and large consumers in Singapore. They will help to meet Singapore’s ever-increasing demands for green power.
3. Indonesia’s Constitutional Court ruled that an element of the Job Creation Law that allows for unbundling of electricity is “conditionally unconstitutional.”
   
   What happened?
   
   
   • Indonesia’s Mahkamah Konstitusi (Constitutional Court) issued a ruling implying the provision of the Job Creation Law that allows for unbundling of generation, transmission, distribution and sale of electricity is “conditionally unconstitutional.” This means it would remain valid only if the government interpreted the Job Creation Law in ways consistent with the Constitution.
   Why does it matter?
   
   
   • This ruling follows a line of previous rulings that argue for restrictions on unbundling of electricity. The Constitutional Court’s ruling maintains the principle of “state control” over the electricity sector. It declares that practices such as unbundling are unconstitutional if they undermine state control over the electricity sector.
   • This ruling around the unbundling of electricity (including the nascent Indonesian wheeling regulations) puts Indonesia further behind its peer ASEAN countries in terms of liberalization of its electricity markets. It also further threatens the government and PLN’s stated sustainability and renewable energy goals. Investor uncertainty around this ruling could further delay key projects. 
   • Further rulings that hold unbundling to be unconstitutional could threaten IPP contractual revenues, transmission projects, behind-the-meter rooftop solar projects and the corporate PPA market in Indonesia. The government or the 
     People's Representative Council (DPR) are likely to issue regulations in response to the Constitutional Court’s ruling, as they have done with other Constitutional Court rulings in the line of cases preceding this one.
4. Indonesia and Japan signed a Mutual Recognition Arrangement for bilateral carbon trading.
   
   What happened?
   
   
   • At COP29, Indonesia and Japan announced they had signed a Mutual Recognition Agreement (MRA).
   • Under the MRA, the Japanese Ministry of Environment acknowledges the Indonesian GHG emission reduction certification system as consistent with Article 6 of the Paris Agreement and recognizes the results for projects in Indonesia.
   • Japan and Indonesia will continue to cooperate through a joint committee (the JCM Secretariat) to implement the Mutual Recognition Arrangement. Japan and Indonesia will share information on registered projects and begin discussing the land use and waste sectors. 
   • Indonesia’s Ministry of Environment and Forestry and the JCM Secretariat in Indonesia plan to inventory existing projects, which will cover carbon credits already generated, projects in the planning stage and Japan’s investment plans in mitigation projects.
   Why does it matter?
   
   
   • Under the MRA, carbon credits from Joint Crediting Mechanism (JCM) projects in Indonesia will be considered equivalent to carbon credits generated in Japan. All JCM projects will be registered in Indonesia’s national carbon registry and use the Indonesian emission reduction certification system.
   • Recognition under the MRA may increase demand for qualifying credits and strengthen Indonesia’s carbon registry and certification system. Indonesia may generate a vast supply of credits in the future.
   • The MRA may also stimulate Japanese investment in Indonesia by private sector players who must meet requirements under Japan’s nationally determined contribution.
5. Malaysia announced a new way for consumers to procure physical green electricity directly from renewable energy generators.
   
   What happened?
   
   
   • On September 30, 2024, the application period opened for participation in Malaysia’s new Corporate Renewable Energy Supply Scheme (CRESS).
   • Under CRESS, consumers are permitted to procure physical green electricity directly from eligible renewable energy generators via open access to the country’s electricity transmission and distribution network. Energy produced by a renewable energy project under CRESS will be exported through the grid.
   • To participate in CRESS, among other things:
   • Renewable energy generators must be at least 51% locally owned and will pay system access charges (SAC) to the Single Buyer to use the grid and associated services. The SAC due is generally based on the amount of energy exported into the grid (with certain exceptions). The SAC rate will be reviewed regularly.
   • Consumers must be registered high voltage and medium voltage consumers of Tenaga Nasional Berhad.
   • Projects must have a capacity of at least 30 MW, with a direct physical link to the grid. Energy generated will be wheeled through the grid to the consumer, and there cannot be any dedicated connection with the consumer.
   Why does it matter?
   
   
   • CRESS is one of the latest steps in Malaysia’s transition to energy market liberalization, offering another option for consumers to procure electricity in a competitive environment.
   • CRESS follows the 2022 Corporate Green Power Programme introduced by the Energy Commission, which enabled corporates to meet their green power commitments via virtual power purchase agreements with renewable energy developers in Malaysia.
6. Taiwan dropped its local content requirements for offshore wind projects.
   
   What happened?
   
   
   • Taiwan has committed to dropping local content requirements for its future offshore wind allocation rounds and for the last round – 3.2 – that was completed in August, Taiwan has committed to introduce greater flexibility as to how the winning offshore wind projects meet the localisation requirements. 
   • Taiwan's introduced its current localization policy in 2021 to spur development of its domestic offshore wind supply chain.
   • In general, it requires that at least 60% of parts used in offshore wind farm projects are sourced locally (other than products and services that the domestic supply chain cannot readily provide).
   • This comes after the European Union (EU) challenged Taiwan’s localization policy at the World Trade Organization (WTO). The EU said that Taiwan’s localization policy discriminated against imports.
   • In November 2024, the EU agreed to drop the matter with the WTO in exchange for Taiwan honoring its commitments noted above.
   Why does it matter?
   
   
   • Taiwan’s local content requirements have been a key consideration for international project developers in terms of pricing, project economics and the availability and reliability of the supply chain.
   • Removing these requirements may spark greater interest among international project developers in future auction rounds. It also may create a more international profile of suppliers.
   • Easing localization requirements helps, but it does not assist with another pressing issue – the limited pool of local offtakers with sufficient creditworthiness to support project financing. (Offtakers that are creditworthy may expect the localization cost savings to be passed through.) Removing localization requirements will help developers, but it is by no means a magic bullet.
7. Taiwan is considering developing renewable energy projects in the Philippines and importing the power to Taiwan.
   
   What happened?
   
   
   • In October, Taiwan Minister of Economic Affairs proposed a plan to invest in and develop renewable energy projects in the Philippines and transport the green power generated to Taiwan via submarine cables.
   • This is part of Taiwan’s wider strategy to achieve net-zero emissions by 2050. It’s another sign of the need to explore new energy sources to address domestic energy supply constraints and the growing demand for green energy.
   What’s next?
   
   
   • This plan is still nascent and remains subject to successful feasibility assessments and further studies.
   • Importing electricity from the Philippines presents exciting new opportunities for developers and others. Yet significant challenges remain, including financial, technical, policy and regulatory hurdles and cost barriers. Those challenges will need to be addressed before this plan can be fully implemented. 
8. India’s Ministry of New and Renewable Energy (MNRE) issued guidelines for the implementation of viability gap funding (VGF) and draft changes to existing leasing rules for offshore wind projects.
   
   What happened?
   
   
   • On September 11, 2024, the MNRE introduced guidelines for the implementation of VGF for offshore wind projects in India.
   • The VGF scheme has been approved for 1 GW of offshore wind projects off the coast of Gujarat and Tamil Nadu, for a total of approximately US$892 million.
   • These guidelines envision a competitive bidding process. The Solar Energy Corporation of India (SECI) will be the implementing agency to select bidders who may receive incentives under the VGF scheme.
   • Separately, on September 26, 2024, MNRE issued draft amendments to the Offshore Wind Energy Lease Rules for comments from stakeholders. Pursuant to the proposed amendments, the Indian government may lease offshore areas within India’s territorial waters for offshore wind energy and transmission projects. Leases for construction and operation of offshore wind energy projects will last 35 years and may be extended on a case-by-case basis.
   What’s next?
   
   
   • The offshore wind industry in India is still in its nascent stages. In November 2022, the MNRE issued a draft tender to lease seabed blocks to carry out study surveys, and subsequently develop offshore wind projects, off the coast of Tamil Nadu in the Gulf of Mannar. In February 2024, SECI issued a Request for Selection for the allocation of seabed lease rights for 4 GW of offshore wind projects off the coast of Tamil Nadu.
   • Following the announcement of the VGF, SECI launched a tender in September 2024 for a 500 MW offshore wind project off the coast of Gujarat under a build-own-operate arrangement.
   • India continues to take steps towards achieving its renewable energy targets and demonstrating the country’s commitment to developing offshore wind. It remains to be seen how the VGF incentives and (if passed) the amended leasing rules will stimulate growth of offshore wind in India. 
9. India’s MNRE issued a draft Green Hydrogen Certification Scheme.
   
   What happened?
   
   
   • On September 4, 2024, MNRE unveiled a draft Green Hydrogen Certification Scheme that allows producers to prove their product qualifies as green hydrogen, granting access to state subsidies and other regulatory support.
   • The scheme seeks to provide a framework to regulate green hydrogen production in India. It sets out guidelines and a methodology for calculating emissions intensity. It also outlines a certification process to guarantee the origin of green hydrogen and prescribes monitoring requirements for green hydrogen production. 
   • The scheme currently identifies electrolysis and biomass conversion as the two primary pathways eligible for certification. New pathways can be proposed, subject to review by the technical committee.
   Why does it matter?
   
   
   • The scheme, if implemented, is expected to encourage investment into India’s green hydrogen sector by:
   • Ensuring Indian green hydrogen producers adhere to internationally recognized and established environmental standards.
   • Enhancing the credibility of Indian-produced green hydrogen in the domestic and international markets.
10. The Philippines’ Department of Energy resumed accepting and processing renewable energy contract applications through EVOSS and enhanced its monitoring and guidelines for renewable energy projects.
    
    What happened?
    
    
    • As of November 25, 2024, the Philippines’ Department of Energy (DoE) resumed accepting and processing renewable energy contract applications through the Energy Virtual One-Stop Shop (EVOSS) System. Developers may now submit official letters of intent and applications for renewable energy contracts through EVOSS.
    • EVOSS was temporarily suspended on June 25, 2024 to allow the DoE to update and align the application process in accordance with the revised omnibus guidelines governing renewable energy contracts. These guidelines govern the award and administration of renewable energy contracts and the registration of renewable energy developers, among other things. 
    • One notable change is that developers must obtain a certificate of authority (COA) before signing a renewable energy contract. The COA empowers developers to obtain permits and conduct surveys and pre-feasibility activities before the start of the 25-year contract. 
    Why does it matter?
    
    
    • These measures represent the Philippines’ commitment to smoothening and accelerating the process by which renewable projects are developed, which in turn helps foster greater investment and development in the sector. 
11. Thailand is expected to announce a formal Request for Proposal for its second round of renewable energy auctions soon.
    
    What happened?
    
    
    • In September 2024, Thailand’s Energy Regulatory Commission (ERC) issued regulations governing the purchase of electricity from renewable sources through a Feed-in-Tariff (FiT) Scheme.
    • The regulations set out terms for private sector participation in the upcoming renewable energy procurement round under Thailand’s FiT scheme.
    • This round will be open only to companies that applied for wind and ground-mounted solar energy generation projects under the first “big lot” procurement round in 2022. The companies must have passed the minimum qualifications and technical readiness criteria but failed to achieve a high enough technical score to be awarded a power purchase agreement.
    • The total target purchasing capacity in this upcoming round is 2,180 MW, comprising 600 MW for wind and 1,580 MW for ground-mounted solar. Power purchase agreements will be awarded on a “non-firm” basis with a term of 20 to 25 years.
    • After this round, further capacity will be opened for allocation for projects using biogas, wind, ground-mounted solar and waste-to-energy. Eligible applicants will include unsuccessful participants in the upcoming round and participants that applied in the 2022 round but failed to pass the minimum qualifications or the minimum technical readiness criteria.
    Why does it matter?
    
    
    • These upcoming rounds represent second opportunities for participants who failed to secure allocation in the 2022 round. They reflect additional capacity injected by Thai regulators earmarked for procurement under the FiT scheme.
    • These initiatives reflect Thailand’s commitment to renewable energy development and project an encouraging signal to the market for things to come.
12. Vietnam charged PVN with carrying out the country’s first pilot offshore wind power project.
    
    What happened?
    
    
    • In October 2024, Vietnam’s Deputy Minister of Industry and Trade announced that Vietnam Oil and Gas Group (PVN) is developing a detailed proposal for piloting offshore wind power projects.
    • This initiative supports meeting the objectives in Vietnam’s National Power Development Plan VIII (PDP8).
    • The pilot offshore wind project is expected to be implemented in the southern region of Vietnam.
    • PVN has asked to collaborate with the Vietnam Electricity and other relevant agencies to expedite research and construction for the project. The goal is to start power generation before 2030.
    • The Deputy Minister suggested international partnerships will also be necessary.
    What’s next?
    
    
    • Policies and mechanisms to support the offshore wind supply chain will also need to be developed.
    • As of October 2024, Vietnam's Ministry of Industry and Trade had received nine proposals from major international energy developers (such as CIP, BP, Petronas and Corio) expressing interest in developing offshore wind projects in Vietnam.
    • Vietnam is expected to approve a revised version of PDP8 by mid-2025. The government hopes the full 6,000 MW capacity target outlined in PDP8 will be allocated by then.
    Why does this matter?
    
    
    • Vietnam has significant potential for offshore wind development, with strong wind resources and stable geological foundations.
    • With the commitment and drive from the government, we see Vietnam’s offshore wind sector as an exciting jurisdiction for international offshore wind investment and development going forward.
13. South Korea opened its third auction for offshore wind projects.
    
    What happened?
    
    
    • As noted in our previous update, the Ministry of Trade, Industry and Energy of Korea announced a revised framework for offshore wind auctions.
    • This year’s auction, which is the third auction for offshore wind projects in Korea, was open for bids until November 22. The auction capacity for offshore wind this year is 1.5 GW – 1 GW for fixed bottom and 500 MW for floating offshore wind. The available capacity for floating offshore wind may be reassessed after the deadline. 
    • The clearing price was announced in advance, unlike last year’s auction. The price was KRW 176,565 / MWh (mainland) and KRW 177,559 / MWh (Jeju). This applies to floating offshore wind, though this may be reassessed after the deadline.
    • Also, from this year’s auction, the REC multiplier for successful projects will be fixed at the time of the auction announcement. This is a significant enhancement for projects compared to the previous rounds, where the REC multiplier was not known for certain until the project was commissioned.
    • We understand seven projects bid in this year’s auction.
    • For fixed bottom, the projects were the Anma offshore wind project (532 MW), Taean offshore wind project (504 MW), Hanbit offshore wind project (340 MW), Handong-Pyeongdae offshore wind project (105 MW), Yawol offshore wind project (104 MW) and Aphae offshore wind project (83.85 MW).
    • One floating offshore wind project bid – the Bandibuli offshore wind project (750 MW).
    • The auction results are to be announced this month.
    Why does it matter?
    
    
    • The offshore wind industry will closely watch the outcome of this year’s auction. The key factors will include the nature, experience and jurisdiction of the sponsors, the identity and nature of the turbine suppliers, the capacity awarded in the auction process and the ultimate price awarded to the successful projects.

Want to know more? Contact one of the authors (Karthik Kumar, Michael Tardif, Adam Smith, Albert Yu, Ari Bessendorf, Lynette Lim, Kelly Choo or Deska Widianto).