Asia Pacific’s Corporate Power Purchase Agreements (CPPAs) emerge as a pivotal approach for corporates as they move forward on their Net Zero journey.
KPMG has released the ‘Decarbonization through renewable energy: Understanding Asia Pacific’s Corporate Power Purchase Agreement landscape’ report, which gives an overview of the renewable energy market in the Asia Pacific region.
The report, which provides enterprises with a clear view on the CPPA market and summarizes both opportunities and barriers in the current renewable energy market, looks at government policies and regulations, types of basic power purchase and sale contracts, and renewable energy related policies and objectives of some major power plants. It further elaborates on the electricity market framework, Corporate Power Purchase Agreement (CPPA), renewable energy certification, policies, purchase and sale cases of 12 markets in the Asia Pacific region.
The report highlights six key trends driving the future development of the renewable energy market in the region.
- CPPA market in the Asia Pacific region is still less developed but shows significant potential for growth.
- Regulatory framework to implement changes to the CPPA framework is rapidly evolving in the region.
- The phase-out of generous feed-in-tariff (FiT) scheme is expected to increase the appetite for CPPAs.
- Economics and net-metering are driving the rooftop solar installation and increasing adoption of on-site PPA.
- There is a growing interest in CPPA across Asia Pacific to achieve their respective sustainability commitments.
- Asia Pacific is progressing towards a low-carbon energy future.
As an increasing number of countries respond to climate change and announce their commitments to Net Zero, supporting mechanisms and measures continue to bloom. Besides domestic and foreign regulatory requirements, the demand for an enterprise to have sustainable operations and supply chains have also become the driving force for corporations to purchase green electricity.
“It has been challenging for businesses in the Asia Pacific region to source renewable electricity due to limited availability, regulatory complexity and high costs. But what enterprises should recognize is that this also offers some of the biggest opportunities for clean energy investment and growth, so long as they understand the complexities of the environment in which they operate, and are able to deploy the right strategies,” says Steven Chen, Global Infrastructure Power Sector Lead, KPMG in Taiwan.
According to the Paris Climate Agreement, there is a target to achieve carbon neutrality and Net Zero carbon emissions by 2050. However, with the intensification of climate change and the global energy crisis caused by the Russian government’s war in Ukraine, the price of renewable energy has risen in response. “This situation will likely result in two important outcomes. Firstly, corporates are now much more willing to enter into long-term corporate PPAs as it offers a hedge against increasing energy prices. Secondly, the European Union and other Governments have aligned energy security with clean energy solutions, which can help accelerate renewables deployment globally,” says Michael Hayes, Global Head of Renewable Energy, KPMG.
“Tackling climate change is a collective responsibility. CPPAs offer a powerful and efficient pathway for businesses to spur Asia's energy transition. It also facilitates accelerated decarbonisation, development of green innovations as well as supports infrastructure growth – enabling countries to move forward in their Net Zero journey. It is particularly relevant to RE100 companies as they target 100 percent transition to renewable energy. Data centre operators, technology companies and MNCs can fast-track their green credentials by tapping CPPAs, thereby reducing the environmental impact of their operations and meeting their renewable energy procurement targets. More players joining the CPPA eco-system will help drive technology innovation, bring cost efficiencies and create robust financing structures,” says Sharad Somani, Head of Infrastructure, KPMG Asia Pacific.
Every market in the region has a different electricity market liberalization progress and regulatory framework, which makes green energy procurement challenging, and impacts the path to Net Zero. “Asia Pacific is one of the most vulnerable regions on this planet when it comes to climate change. Many governments are already pushing for increased renewables to reduce greenhouse gas emissions and drive energy transformation, resulting in a more friendly environment for the development of renewable industry. In addition to Net Zero targets at a national level, renewable electricity procurement at a corporate level is vital when it comes to taking action on commitments related to RE100 and science-based targets,” says Niven Huang, Head of ESG, KPMG Asia Pacific.
For more information, download the full report: Decarbonization through renewable energy: Understanding Asia Pacific’s Corporate Power Purchase Agreement landscape