Eye on Asia | Asia must power ahead with renewables, rather than rely on volatile, pricey LNG
- Countries that increase LNG dependence will increase their exposure to a foreign currency-denominated commodity that could strain budgets and undermine long growth
Amid expectations that emerging Asia will drive global demand for liquefied natural gas over the next decade, more than US$109 billion of proposed LNG infrastructure projects are in the pipeline for the next few years. But as much as 66 per cent of LNG investments across seven emerging Asian markets are unlikely to ever be built, according to a recent report by the Institute for Energy Economics and Financial Analysis (IEEFA).
So what are the alternatives? In short, the development of renewable energy, grid infrastructure, and battery storage technologies is critical for countries seeking to reduce electricity prices, improve energy security, attract foreign direct investment, and improve prospects of economic growth.
For perspective, compare Asian LNG market prices with renewable energy auction prices. LNG recently traded as high as US$35 per million British thermal unit. This price, which excludes the cost of building a gas-fired power plant, is already much higher than power tariffs for most Asian households.
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Meanwhile, renewable energy prices do not come with fuel costs. Renewable energy prices are typically quoted in all-in life-cycle costs that include capital and operational costs.
