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The investment potential for solar and offshore wind power supply chains is projected to surpass US$1.1 trillion by 2050, with the capacity to generate 873 gigawatts (GW) of clean energy, according to a new report from the Institute for Energy Economics and Financial Analysis (IEEFA).
Significant Opportunities in Renewable Energy Supply Chains
“This report highlights the immediate opportunity to capitalize on the renewable energy supply chain,” says Grant Hauber, IEEFA’s Strategic Energy Finance Advisor for Asia. “Solar energy offers immediate investment benefits to the Asia Pacific, while the advantages of participating in the offshore wind supply chain will develop over the next several years.”
The report focuses on seven Asian markets: Japan, South Korea, Malaysia, Taiwan, Vietnam, the Philippines, and Indonesia. It projects that solar photovoltaic (PV) plans aim to achieve 634 GW of capacity by 2050, requiring an investment of US$394 billion, with US$346 billion of that amount potentially directed towards local supply chains. Offshore wind represents a US$621 billion opportunity to deliver 239 GW of capacity, with US$425 billion expected to be localized.
Investment Breakdown and Economic Benefits
Additionally, there is an opportunity in the maritime sector worth US$72 to US$97 billion to build offshore wind installation and service vessels, with nearly all this investment expected to be sourced regionally.
“The report maps out each element in the project supply chain, quantifies the capital investment potential, and aims to encourage more ambitious and long-term policies,” says Hauber. “This helps investors and policymakers appreciate the size of the opportunity.”
Localizing the Renewable Energy Supply Chain
Hauber emphasizes that countries do not need to manufacture solar PV modules or wind turbines to realize substantial domestic manufacturing and investment benefits. According to the report, non-panel and non-turbine spending will account for at least 75% of total investment through 2050, representing a US$770 billion opportunity for domestic industries over the next 25 years.
“There are materials, components, infrastructure, logistics, and services that can provide significant value to the domestic economy over sustained periods and potentially marketed regionally and beyond,” Hauber explains.
China currently dominates the global supply chain for solar PV panel manufacturing, delivering nearly 85% of global demand at costs that are unlikely to be matched for at least the rest of this decade. Instead of producing PV modules, countries can invest domestically in other project-level components that make up completed solar farms.
Offshore Wind and Maritime Sector Opportunities
Offshore wind resources in Asia are abundant, high-quality, and predictable. The region’s traditional maritime economies possess inherent advantages in shipbuilding, steel fabrications, marine maintenance, and offshore services, making them well-suited for large-scale offshore wind projects.
“The wind energy capacity available to nearly every country in the Asia Pacific is greater than their current total installed capacity from all sources of generation,” says Hauber. “Wind farms are becoming competitive enough to undercut imported natural gas and coal, even in markets where those prices are subsidized and in the absence of carbon pricing.”
Shipbuilding for offshore wind presents a standalone opportunity worth up to US$97 billion, with most of that investment needed in the near term. The global push for offshore wind farms creates substantial opportunities for shipyards throughout the Asia Pacific to meet these growing demands.
Looking Ahead
Currently, only about 20% of wind farm inputs are locally sourced in the region, but with sustained demand, this could grow to between 66% and 80% of the total investment value. The combined offshore wind farm and specialty vessel market represents an investment opportunity of around US$878 billion through 2050.
Untapped Potential and Policy Recommendations
The report focuses on currently announced capacity targets for solar and offshore wind, but the market’s potential could be much larger. If capital costs for solar PV and offshore wind continue to fall as predicted, these technologies will offer the lowest levelized costs of electricity on each national grid. With such attractive energy costs, capacity targets are likely to expand to capture the economic benefits.
Currently, most Asia Pacific countries appear to be underestimating this opportunity. Despite nearly every country in the region having world-class solar and wind resources, planned renewable capacity additions remain a limited share of electricity supply.
For example, Indonesia has one of the smallest solar bases in Asia, with the least aggressive additions relative to its available resources. Japan, despite having one of the best wind resources globally, has very modest offshore wind program targets, aiming for less than 5% of total demand by 2050.
“Policy alignment is now needed to help countries realize this potential,” says Hauber. “Focusing on maximizing low-cost capacity additions at scale will create recurring demand, allowing local industries to capitalize on the solar and offshore wind supply chain.”
Ultimately, Hauber notes, domestic businesses benefit from higher development volume, consumers benefit from the lowest long-run marginal cost of electricity, and governments benefit from both these wins and significant progress toward decarbonization targets.
