Here's why hyper-competitive auctions may harm Asia's wind power market

Government support may dwindle, a report warns.

Wind power was once the darling of many governments across the Asia-Pacific region, but increasing price competitiveness in the sector is leading policymakers to reconsider the level of financial support for wind farm projects.

A new report by Make Consultancy revealed that the trend towards auctions has pushed wind prices even lower than thermal prices in several markets, leading to declining support. Despite this, wind power development is expected to hit new highs on the back of demand from India, Australia, and Taiwan. 

The report, which tracked wind power growth in the region excluding China, showed that annual capacity in the region is expected to reach a peak of 12.1GW by 2022, with more than 96GW of new capacity to be added in APEC over the next 10 years.

In India, for instance, the dawn of large-scale auctions have enabled wind prices to drop by more than half in just under a year. Whilst wind development in the country will achieve record years of newly added capacity, grid limitations could easily curtail growth prospects.

As for Australia, political uncertainty over the replacement of the national renewable energy target will hinder growth potential, and growth will be driven by state-level initiatives.

In Japan, the central government is formalising new regulations to support more offshore wind development, reducing the process time for EIAs and reforming the power market to facilitate more choices for consumers.

Meanwhile, offshore wind development is enabling Taiwan to become a major wind power market in the sub-region. However, the market remains an outlier as almost all its wind power growth is reliant on offshore wind.

Further auctions will cater to long-term growth post-2025 as a domestic offshore wind supply chain emerges that can support future offshore projects in other markets in the sub-region.