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OECD Power and Renewables Market Briefing, Q1 2022
IHS Markit Climate and Sustainability is pleased to bring you
the OECD Asia Power and Renewables Market Briefing covering the
first quarter 2022 for Australia, Japan and South Korea. This is
the first publication, and will be followed by a series of regular
quarterly market briefings covering the latest insights for these
OECD (Organisation for Economic Co-ooperation and Development)
countries.
A recovery in electricity demand was seen in Japan and South
Korea during Q4 2021, thanks in part to an easing of COVID-19
related restriction in Japan, as well as the onset of a cold winter
pushing up electricity demand for heating. In contrast, on-grid
demand declined in Australia during the same period, as strong
growth in behind the meter generation along with cooler east-coast
weather dampening cooling power demand.
At the same time, wholesale power price in Japan and South
Koreas are on the rise—high crude oil prices have fed into the
weighted average cost of Korea Gas Company (KOGAS), resulting in a
surge in wholesale gas prices. KOGAS has begun to charge the full
cost of spot LNG purchases to power generators as the price hike
soar to four times the previous year's level. Japan's residential
electricity price have risen to a five year high, as crude oil and
LNG price hikes last summer begin to transpire within the electric
power companies' lagged fuel adjustment formula. As oil and LNG
prices continue on its high streak, end-user prices will likely
stay at its high level applying down-ward pressure to an economy
just recovering.
As the new fiscal year transpires, several new announcements
have been observed on the policy side;
Australia's federal government released its 2022-23
budget ahead of the coming elections, which included A$1.3
billion in low-emission technology including hydrogen and carbon
capture and storage, while providing fuding for the development of
natural gas infrastructure.
In November 2021, the Australian Parliament passed the
Offshore Electricity Infrastructure Act, paving the way
for the development of offshore renewable energy and transmission
infrastructure, leading to more than 19 offshore wind projects with
a combined capacity of 30 GW being announced.
Japan's 6th Strategic Energy Plan will came
into effect in April, which also included the subsidy scheme for
solar projects (>1MW in capacity) shift to a
Feed-in-Premium (FIP) subsidy structure.
South Korea announced the Korean Sustainable Finance
Taxonomy (K-Taxonomy) Guideline, which encompassed the use
of LNG as a 'transition' economic activity much to the relief of
new gas generators under growing pressure in attracting new
financing, while ruling out thermal power plants and nuclear power
plants.
Logan Reese, based in Brisbane, Australia, is an
associate director within the Gas, Power, and Climate Solutions
team, covering the gas, power, and renewables markets in Australia,
focusing on market fundamentals, power and renewable developments,
and policy developments.
Kaori Tachibana, based in Tokyo, Japan, is an associate
director within Gas, Power, and Climate Solutions team, covering
the power, gas, and renewable markets in Japan, looking at
supply/demand balances, infrastructure developments, policy
developments, and pricing outlooks.
Vince Heo (Yoonjae Heo), based in Seoul, South Kora, is
an associate director within the Gas, Power, and Climate Solutions
team, focusing on power and renewable market development and LNG
demand analysis.
Posted on 25 April 2022
This article was published by S&P Global Commodity Insights and not by S&P Global Ratings, which is a separately managed division of S&P Global.
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May 18
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