Opportunities and Challenges for Renewables Procurement in Asia
With the majority of a company's greenhouse gas (GHG) emissions stemming from supply chain activities and the Asian market serving as the primary hub for supply chains, US-based corporations are increasingly turning their gaze toward Asia to find opportunities for decarbonization. While strategies like optimizing supply chain efficiency and electrification are available to mitigate emissions, the most substantial and promising avenue currently lies in procuring renewable energy.
The Asian renewable energy landscape is rich in both potential and diversity. Each country within the region has its unique regulatory framework, policies, and incentives, creating a complex mosaic of opportunities and challenges. Specifically, variability exists across Asian markets when it comes to renewable energy product availability. While some markets such as Japan and South Korea have seen a significant uptake in supplier contracted renewables, others such as Singapore are almost completely dependent upon RECs. For US corporations, this means that each market requires a tailored approach. It's essential to understand the intricacies of local regulations, which can significantly impact project economics and risks. Staying abreast of evolving regulations is paramount for companies seeking to navigate this dynamic terrain and take advantage of emerging opportunities.
Source: 2022 RE100 Annual Disclosure Report
Building strong relationships with local stakeholders and demonstrating cultural sensitivity are not just formalities but prerequisites for success in Asian markets. The ability to effectively engage with government authorities, utilities, and local partners can smooth the path through regulatory hurdles, secure incentives, and de-risk renewable energy transactions. Understanding and respecting the cultural nuances of each market fosters goodwill and trust, which are invaluable assets in building long-term partnerships.
Identifying trustworthy partners and developers in Asian markets can be a formidable challenge. Market maturity varies widely, and the availability of renewable Power Purchase Agreements (PPAs) fluctuates. Diligent partner selection is vital to minimize risks associated with project development and performance over the term of the contract.
While the Asian market offers immense potential for US-based corporations aiming to decarbonize through renewable energy procurement, success hinges on understanding and navigating the region's regulatory diversity, fostering local relationships, and making informed partnership choices. By embracing these challenges and leveraging opportunities, US companies can further their decarbonization goals while playing a pivotal role in advancing the renewable energy transition across Asia.
**Apala Group is a consulting and procurement services firm dedicated to accelerating the clean energy transition and supply chain decarbonization in Asia and the Americas. We provide support to global corporations, project developers, NGOs and key market stakeholders in these regions. If you are interested in connecting to explore APAC or Latin America decarbonization solutions, please reach out to our friendly and knowledgeable team at contact@apalagroup.com.