Location Selection and Renewable Energy Strategies: Navigating the Diverse Landscape of Alternative Energy in Asia

This article is part of a series in collaboration with Biggins Lacy Shapiro & Co. and Location Decisions. For more information on the global renewable energy landscape, check out their insights on the United States and Europe.

According to Forbes, more than 40% of Fortune Global 500 companies have either announced intentions to reach net-zero emissions by 2030 or have already achieved it. As companies seek to find their way through the labyrinth of alternative energy approaches, they need their location strategies to be aligned with their renewable energy (and/or net zero) strategies.

Virtually all companies, regardless of location, are being pushed to join the renewable energy movement to one extent or another, whether through consumer expectations, employee/stakeholder pressure, direct regulation (particularly in the European Union), indirect regulation by virtue of a threshold physical presence in a regulated market, or value chain mandates from customers who themselves are pursuing net-zero. Airbus Group, PepsiCo Inc., American Airlines Group Inc., Caterpillar Inc., Canadian Natural Resources Ltd., Siemens AG and others are leading the way. They are adopting a variety of strategic solutions, including purchasing carbon offsets, reducing emissions, minimizing their transportation carbon footprint, collaborating with supply chain partners, and using renewable power sources.

In our work advising companies on location strategy and site selection, we have recently witnessed a dramatic increase in clients prioritizing compatibility with net-zero targets, particularly with respect to renewable energy options. Each company has its own unique targets, definitions, and priorities; thus, the site selection process must be designed to identify locations well-positioned to help the company meet its objectives.

Renewable Energy Strategies in Asia

Similar to what is occurring in North America, an increasing number of companies operating in Asia are either including environmental sustainability in their initial site selection decisions or restructuring current investments to make them more sustainable.

Asia’s integration of renewables and individual country commitments for net-zero emissions vary throughout the region. This heterogenous backdrop poses diverse opportunities and hurdles for multinational corporations that have operations and/or expansion initiatives across Asia and must assess how to address energy needs while reaching internal sustainability goals. From the two mammoth markets of China and India to the more advanced economies of Japan, South Korea and Taiwan, as well as the divergent economies across ASEAN, it’s a complex environment to say the least. That said, the trend towards adoption of renewable energy is well established, and companies are leveraging a wide range of strategies to pursue their environmental objectives.

In its 2021 selection of Ho Chi Minh, Vietnam, for its first carbon-neutral facility, LEGO laid out plans to utilize rooftop solar panels and build a solar farm on an adjacent plot of land to meet its sustainability goals. LEGO aims to reduce their absolute carbon emissions by 37% in 2032. Like most companies trying to reduce their carbon footprints, LEGO is also installing leading-edge, energy-efficient production equipment to complement its clean energy initiatives.

*Lego factory in Ho Chi Minh City (Source: Lego Website)*

In Thailand, Jelly Belly Candy decided to invest in a new, more efficient chiller system and rooftop solar, which qualified the company for a tax credit equal to the investment from Thailand’s Board of Investment.

Meanwhile Coca-Cola in China has committed to investing in sustainable development projects in the fields of new products and packaging, carbon reduction and water saving.

As energy demand continues to rise, meeting the needs of the region will depend on continued strengthening of individual countries’ energy security through significant advancements in grid infrastructure.

China Leading the Way

China set ambitious targets for renewable energy development with its the 14th Five-Year Plan (FYP) on Renewable Energy Development (2021–2025) in June 2022. This comprehensive blueprint for further accelerating China’s renewable energy (RE) expansion and will likely exceed the central government’s 1,200 GW 2030 goal well ahead of schedule. To achieve its stated goal of peaking carbon emissions before 2030 and achieving carbon neutrality before 2060, China is accelerating its push towards renewable energy.

Over the past 15 years, China has become the global renewable energy leader with an installed utility-scale solar capacity of 228 GW, and a combined onshore and off-shore wind capacity of 310 GW. Just in solar, China already has more capacity than the rest of the world combined, while its wind generation has doubled capacity since 2017. Primarily located in China’s northern and northwest deserts, China’s renewables push boasts a prospective capacity greater than the 2022 total operating wind and solar capacity of the United States. Approximately 379 GW of prospective large utility-scale solar capacity and the bulk of the 371 GW of prospective wind capacity identified are scheduled for installation by the end of 2025.

In addition to establishing new overall targets, the 14^th FYP highlights the following key implementation actions:

Increase solar and wind power generation in China’s renewable-abundant West and distributed generation for local consumption along the East Coast;
Expand off-shore wind;
Develop energy storage of big hydro systems;
Optimize renewable layout in different regions, and establish new technologies and business models; and
Integrate renewable centers and micro grids in rural areas for poverty alleviation and rural revitalization.

India On The Rise

India is the 3rd largest energy consuming country in the world and has plans to tie its continued economic growth to global renewable leadership. Not to be outdone by neighboring China, India’s Government has set an ambitious target of having 500 GW of installed renewable energy by 2030, which includes the installation of 280 GW of solar power and 140 GW of wind power. India has set a target to reduce the carbon intensity of the nation’s economy by less than 45% by the end of the decade, achieve 50 percent cumulative electric power installed by 2030 from renewables, and achieve net-zero carbon emissions by 2070.

Currently, India ranks 4th globally in Renewable Energy Installed Capacity (including Large Hydro), 4th in Wind Power capacity & 4th in Solar Power capacity (as per REN21 Renewables 2022 Global Status Report Renewable Energy in India).

Japan Has Some Catching Up To Do

In April 2022, Japan announced that it would aim for a 36 to 38% of energy to come from renewables in pursuit of becoming carbon-neutral by 2050. However, Japan has some catching up to do. Japan used to be a global renewable energy leader, but many other countries are far outpacing Japan in terms of annual per capital deployment of renewable energy. Australia, Finland, Sweden, Finland and the Netherlands are installing solar and wind five times faster (per capita) than Japan. While China, Spain, Germany and the USA are installing solar and wind twice as fast.

The Japanese government’s Clean Energy Strategy Interim report lacks clear recognition of the crucial role of solar and wind in global decarbonization and, instead, it promotes nuclear energy, imported hydrogen and carbon capture storage. This strategy has faced public headwinds stemming from the Fukushima disaster and higher costs for other methods.

That said, with the right policies, Japan can achieve future in which it no longer imports oil, coal, gas or uranium. Unlimited energy can come from rooftop solar panels, solar farms and offshore wind turbines. Implementing such approaches could provide a high degree of energy independence and resilience in the face of a pandemic, war or trade disruption.

South Korea’s Dependence on Imports Presents Challenges

In 2022, South Korea joined the global push for sustainability becoming the 14th country to legislate carbon neutrality by 2050. The country also established an interim target of 40% emissions reduction by 2030 compared to 2018 levels. However, South Korea faces daunting challenges as much of its industries are considered highly energy-intensive. Currently, South Korea imports over 90 percent of energy resources given that the country lacks sufficient domestic energy resources. South Korea’s roadmap for its power industry is contained it is 9th Basic Plan for Long-term Electricity Supply and Demand 2020-2034 (9th Basic Plan) released in December 2020.

In 2021, South Korea generated 576k gigawatt hours (GWh) of electricity power with 18 percent and 15.3 percent increase in renewable (43,085 GWh) and gas (168,262 GWh) power generation. While there was a significant decrease in coal power generation, coal still represents approximately 34 percent of the total electricity generation. Approximately 27 percent of electricity is generated from nuclear power with the government targeting at least 30% by 2030.

South Korea plans to target increases in gas and renewables to offset coal and nuclear energy. Working from the 9th Plan, South Korea is moving toward a cleaner future with renewable energy making up almost 34 percent of the total energy capacity by 2030, marking a significant increase compared to the current 15 percent. Solar and wind will drive most renewable capacity additions with offshore wind playing a major role, accounting for nearly 40% of South Korea’s wind energy production in the plan.

Leaders In ASEAN – Indonesia, Vietnam and Thailand

The clear leaders for renewable energy in ASEAN are Indonesia, Vietnam and Thailand. As the largest country in ASEAN, and fourth largest in the world with 250 million people, Indonesia’s move towards renewables is significant. Indonesia’s national energy plan has in place an ambitious renewable energy target of a 23% contribution to Indonesia’s energy mix by 2025, 10% up from the current 13%. However, coal remains the largest energy source for electric power plants at 56% of the total. That said, the Indonesian Government is placing a greater emphasis on clean coal technology to reduce emissions from fossil-fuel powered plants.

Solar power is the largest renewable energy resource in Indonesia with a potential of about 200 GW which can be accomplished through rooftop solar. Growing demand for installations across the country is coming from homeowners, government buildings, public facilities and commercial facilities. In addition, the Indonesian government is working on building floating solar projects, specifically on the island of Java, as floating solar projects present less challenges in terms of land acquisition. But perhaps the largest area of new opportunities lies in sub-sectors such as biofuel and waste-to-energy. For biofuel, the government plans to develop green refinery facilities to leverage its vast palm oil resources as biofuel for industrial fuel needs. Since late 2018, biodiesel sold in Indonesia has had a 20% biofuel mix but in 2019, Indonesia became the first country in the world to implement a 30% biofuel ratio. Concurrently, the Indonesian government has launched waste-to-energy projects in 12 cities across the country Indonesia, including some that are moving forward with project bids expected in the future. While many projects are not moving as fast as expected, the waste-to-energy initiatives have made progress.

Vietnam

Vietnam has been increasingly focusing on renewable energy to address its growing energy demands while also reducing its reliance on fossil fuels and mitigating environmental impacts. Vietnam has set ambitious renewable energy targets. The government aims to increase the share of renewable energy in the total energy mix, targeting 15-20% by 2030 and 25-30% by 2045, under the Power Development Plan (Policies & Action). These targets provide a clear roadmap for the expansion of renewable energy capacity. Moreover, the Vietnamese government has implemented supportive policies and regulations to promote renewable energy development. These include the Renewable Energy Development Strategy, which provides guidelines for the development of renewable energy sources, and the Electricity Law, which encourages private investment in renewable energy projects.

Vietnam has collaborated with international organizations and foreign governments to facilitate the development of renewable energy projects. This cooperation includes technical assistance, capacity building, and financial support to enhance renewable energy infrastructure and deployment. Importantly, Vietnam is upgrading its power grid to accommodate the integration of renewable energy sources. This includes investments in smart grid technologies, energy storage systems, and grid infrastructure upgrades to improve the reliability and stability of the grid while integrating intermittent renewable energy sources.

In the next five years, Vietnam is likely to continue its efforts to accelerate the deployment of renewable energy. Vietnam will likely continue to expand its solar and wind energy capacity through the development of new projects and the repowering of existing ones. This could involve both utility-scale and distributed renewable energy installations. While solar and wind energy currently dominate Vietnam’s renewable energy portfolio, the country may also explore other renewable energy sources such as biomass, hydropower, and potentially offshore wind to further diversify its energy mix. Vietnam may refine its policy and regulatory frameworks to further encourage investment in renewable energy projects, streamline project approval processes, and enhance grid integration capabilities. More about Vietnam’s push to renewable energy can be read about in Tractus’ recent article: Vietnam’s Green Energy Transformation.

Thailand

Thailand is actively pushing forward the use of renewable energy as part of its efforts to diversify its energy sources, reduce dependency on fossil fuels, and mitigate climate change. Thailand has established renewable energy development plans and targets to increase the share of renewables in its energy mix. The Alternative Energy Development Plan (AEDP) sets out targets for various renewable energy sources, including solar, wind, biomass, and hydroelectric power. The Thai government provides incentives and policies to promote renewable energy investment. These include feed-in tariffs, power purchase agreements, tax incentives, and soft loans for renewable energy projects. These measures aim to attract private investment and stimulate the growth of the renewable energy sector (Thailand’s Clean Electricity Transition – IEA)

Solar Energy: Thailand has significant solar energy potential, and the government has been actively promoting solar power projects. Large-scale solar farms, rooftop solar installations, and community solar initiatives are being developed across the country. Thailand aims to increase its solar capacity to meet growing energy demand and reduce carbon emissions. Thailand: Solar energy capacity | Statista

Wind Energy: Wind energy is another focus area for Thailand’s renewable energy development. The government has identified areas with high wind potential for the development of wind farms. Policies and incentives are in place to encourage investment in wind power projects, including power purchase agreements and grid connection support.

Bioenergy: Thailand has abundant biomass resources, including agricultural residues, municipal solid waste, and biomass crops. Bioenergy projects, such as biomass power plants and biogas facilities, play a significant role in Thailand’s renewable energy portfolio. The government promotes the use of bioenergy through incentives and regulations to support biomass utilization and reduce waste.

Hydropower: While hydropower is already a significant source of renewable energy in Thailand, the government continues to explore opportunities for hydropower development. Small-scale hydropower projects and upgrades to existing hydroelectric facilities contribute to Thailand’s renewable energy goals while considering environmental and social impacts.

In the next five years, Thailand aims to accelerate its efforts for deployment of renewable energy. The country plans to scale up existing renewable energy projects and attract further investment in the sector. Additionally, it hopes to continue to strengthen policy frameworks and regulatory mechanisms to support renewable energy development by expanding renewable energy infrastructure, including transmission and distribution networks, to facilitate the integration of renewables into the grid. Thailand’s push toward renewable energy reflects its commitment to sustainable development, energy security, and climate action.

Authored by

Michael Hirou is USA Country Manager at Tractus. He is based in California.