According to a recent report issued by BMI, the country risk and analysis research arm of Fitch Solutions, the costs of integration of renewable energy, as well as battery storage solutions into the power grid, will play an increasing role in determining electricity prices in Asia.
The firm also raise modestly the potential for electricity prices to increase in the region over 2025, based on several factors, such as the transition from thermal coal to natural gas; regulators moving toward a more liberal electricity market; and utility companies recovering losses from the global energy crisis of 2021 to 2023.
BMI confirmed that first and foremost, costs of thermal coal will increasingly have less influence on electricity prices in Asia, primarily because the share of power generation by renewable energy sources is expected to increase over the next decade. In contrast, electricity prices are expected to have an increasing influence from integration of renewables, battery energy storage systems, and the costs of grid infrastructure, made by battery storage systems, made in the overall cost of electricity supply.
“Renewables integration into the grid and battery energy storage systems development will be key to a smooth transition, and their associated costs will significantly impact the overall cost of the energy transition,” said the report.