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.
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.
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.
"Thailand has committed to reduce GHG emissions by 20%-25% by 2030", says Ganesan Kolandevelu, Head of Climate Change and Sustainability Services, KPMG in Thailand.
"With electricity consumption on the rise, this means that authorities need to fully support renewable energy, introduce schemes to benefit corporations that reduces their GHG emissions, while also introducing clear regulations surrounding CPPA, net metering and off-site PPA. Given the complex nature of the subject, this needs to be done by considering all aspects as well as bringing in key experts to help with the process."