The shift towards clean energy in Asia Pacific (APAC) has moved beyond a sustainability imperative to become a commercially viable option for corporates.

Declining cost of technologies, conducive policies and a surge in corporate demand for long-term energy security are making renewables a competitive option for businesses across the region, said Deepak Khetarpal, the sustainability head for Southeast Asia, Japan and Korea at SE Advisory Services, Schneider Electric’s global consulting branch. Schneider Electric is a French multinational corporation specialising in digital automation and energy management.

APAC is fast emerging as one of the world’s most dynamic markets for renewable energy procurement, driven by these factors alongside advances in energy storage and distribution that are accelerating the region’s transition towards clean power.

Khetarpal noted that solar photovoltaic (PV), one of the mainstream technologies in renewable energy today, has come down by more than 100 per cent over the last two decades, accounting for roughly 50 to 60 per cent of renewable energy capacity developed in the Asia Pacific from 2011 to 2024.

“A similar trend has been observed in the cost of batteries and energy storage systems over the last four to five years where large-scale investments in lithium-ion resources, particularly in Australia and China, are fueling research and development that further drives down costs,” he said.

Khetarpal added that this trend is expected to continue, and renewable energy costs will drop further for the next couple of years before reaching a stabilisation point.

The surge in corporate demand for clean energy, driven primarily by compliance and sustainability commitments and targets, is also accounting for the cost-competitiveness of renewables.

Many organisations, for instance, are striving to meet their Science Based Targets initiative (SBTi) or RE100 commitments, global frameworks that require companies to align their operations with net-zero pathways or source 100 per cent of their electricity from renewable energy, which are creating corporate demand.

“Overall, the response from corporates has been positive. They understand that going for renewable energy is not just about sustainability, it is impacting their bottom line in many countries,” Khetarpal said, adding that countries across the region are also formulating supportive policies to enable corporate power purchase agreements (CPPAs) in addition to pursuing regulations for grid development.

CPPAs are long-term contracts in which companies buy electricity directly from renewable energy producers at agreed prices.

Liang Lei, senior reporter of renewable energy certificates at Argus Media, noted that policy momentum on renewables is picking up across Asia despite geopolitical headwinds in other regions.

“More countries are setting ambitious near-term renewable energy targets and allowing for private-sector participation in the clean energy space,” he said.

Such developments, Liang explained, are setting the stage for renewable capacity to scale up, improving economies of scale and cost competitiveness.

“The prevailing dynamics of Asian clean power markets should encourage corporations to act early. The demand for renewable energy certificates is expected to increase, with growing power demand from new data centres and manufacturing hubs in the region,” he said.

Uneven energy landscape

Despite the favourable cost economics, the clean energy landscape in APAC remains uneven, with each market moving along its own trajectory as highlighted in Schneider’s latest report on renewable energy procurement.

This consists of cost-competitive, strategic and emerging markets, each offering different opportunities and challenges in renewable energy adoption.

In cost-competitive markets like India, Vietnam and parts of Australia, renewable energy is already cheaper than fossil fuel–based grid electricity. Khetarpal noted that switching to renewables in these markets can offer corporates immediate cost savings of 15–20 per cent in Vietnam and as high as 25–50 per cent in India.

“These savings will continue in the long term because of the way electricity tariffs are structured in these markets hence adopting renewables now is a very wise decision,” he said.

Countries like Singapore and Japan, on the other hand, fall under the strategic market category, where the cost of renewable adoption is higher due to upfront costs associated with land constraints and high real estate prices that limit large-scale solar deployment. Offshore wind (in Japan), while promising, also remains costly because of complex construction requirements.

Khetarpal highlighted that while companies in these markets may need to pay a premium to adopt renewable energy, it still makes “long-term economic sense” as heavy reliance on imported fossil fuels exposes them to both energy security and market volatility.

Emerging markets such as Thailand and Indonesia are also progressing toward renewable adoption, though policies to enable CPPAs are still being developed.

Ketharpal believes both countries are expected to follow the path of Vietnam, which only recently introduced supportive regulations and has since seen growing traction in corporate renewable deals.

Liang also added that countries in emerging markets like Thailand and Malaysia are increasingly exploring CPPA opportunities as they have committed to carving out a portion of their electricity market for direct private sector deals between renewable energy generators and corporations.

He noted that CPPAs dealmaking is also picking up in the Philippines due to a concurrent rise in clean energy installations and industrial activity and more mature markets such as Japan, South Korea and Australia are actively pursuing grid upgrades and energy storage technologies to prepare their power sector for greater injection of variable renewable energy.

“Another sizeable opportunity lies in cross-border power interconnections, which would connect more corporates with renewable energy generators in a larger market,” he said, adding that the Asean Power Grid, a regional initiative to connect Southeast Asian countries’ electricity networks for cross-border power trade and energy security, will be a key initiative that can help distribute renewable energy to demand centres in the region.

Challenges in clean energy procurement

Despite the momentum in renewable energy adoption, APAC still faces structural and regulatory barriers that could slow the pace of corporate procurement.

For Khetarpal, regulatory uncertainty remains one of the region’s biggest challenges.

“If you don’t have the right electricity system structure, like in Thailand and Indonesia, where there is single or limited government run buyers of electricity, it doesn’t naturally allow for CPPAs,” he said.

In such cases, conducive policies and clear regulations are needed to give businesses the confidence to commit to long-term clean energy contracts.

CPPAs are the premier choice for clean energy procurement because they provide corporates with long-term contracts and price certainty amid market volatility with the added benefit of additionality.

Schneider Electric, which advises around 40 per cent of the world’s Fortune 500 companies on PPA procurements, plays a catalytic role in helping companies structure agreements that balance sustainability and financial goals.

Argus Media’s Liang noted that resolving policy uncertainty and slow progress in regulation requires close engagement between the government and the private sector, to balance cost efficiency and environmental outcomes.

He said stakeholders wishing to structure flexibility into CPPAs will need to understand the factors that drive the prices of both renewable electricity and their environmental attributes in Asia.

“Renewable energy producers need to pick suitable price indices should they want to base the environmental attributes proportion of their PPAs on market-reflective prices,” he added.

Apart from this, grid constraints to cope with renewable energy and underdeveloped market structures are the two significant other challenges in renewable energy procurement in APAC.

Ketharpal said while some investments are being made to upgrade grid infrastructure across different markets, more needs to be done so the intermittency of renewables can be managed more effectively either through battery storage, smart grids or other means.

He also pointed out that with the lack of a developed wholesale or retail electricity market CPPAs may only work in the short term and for long-term viability fundamental reforms are needed in terms of market structure.

With these challenges ahead, companies beginning their renewable energy procurement journey in APAC need to develop a sound strategy that requires identifying clean energy options as well as a structured understanding of markets, policies and internal readiness.

Khetarpal said for corporates operating across multiple countries, this means understanding which markets offer immediate cost efficiency and those that require longer-term planning. Once this mapping is complete, firms should assess local regulations, incentives and reporting frameworks to mitigate policy risks and maximise available benefits.

He added that internal alignment is equally critical to ensure successful execution.

“If you’re considering a corporate PPA, it’s a long-term contract that affects your finance, legal, and treasury functions,” he said.

“So, getting internal buy-in early helps avoid delays and ensures smoother implementation.”

Read Schneider Electric’s full report to learn more about market trends and renewable energy procurement in Asia Pacific.