Asia-Pacific to boost renewable energy capacity in 2026 despite geopolitical challenges, inflation

Asia Pacific countries are set to expand their renewable energy capacities in 2026, maintaining the momentum of the energy transition despite headwinds from geopolitics and inflation, industry experts said on Jan. 2.

Home to two of the world's largest greenhouse gas emitters – China and India -- the Asia-Pacific region is advancing renewable energy projects often backed by favorable policies and incentives.

"I'm not seeing anything which is affecting countries and their budgets in such a way that the energy transition would get slower," Ajay Shankar, distinguished fellow at The Energy and Resources Institute or TERI, told Platts, part of S&P Global Energy.

"The commercial logic for the transition is so strong that it can grow without subsidies from the government."

Shankar acknowledged rising costs for solar PV modules and project implementation, but emphasized that renewable power still holds a significant price advantage over conventional energy costs.

While geopolitical tensions have led to budget reallocations in Europe — particularly toward defense — they have had minimal impact on Asia's energy transition, which remains largely driven by market forces backed by government subsidies, Shankar said.

"We expect to continue seeing market volatility and a challenging geopolitical environment in 2026," Loh Chin Hua, CEO of Keppel, a prominent firm in Singapore advancing new technologies for renewable energy, said in a statement on Jan. 2.

"At the same time, inflation, which is here to stay, is expected to reinforce institutional demand for real assets with resilient, inflation-hedged cash flows." Loh added that these trends favor asset managers with the discipline to originate, develop, and operate such assets.

Keppel is scheduled to launch Singapore's first hydrogen-compatible power plant in the first half of 2026.

Polysilicon prices seen up

In China, a coalition of an industry association and nine polysilicon suppliers — controlling 90% of China's and 84% of the world's polysilicon capacity — formed a platform company in December to raise polysilicon prices, according to S&P Global Energy analysts Jessica Jin and Xin You.

The new platform aims to acquire debt, phase out outdated factories, and reduce domestic capacity to 1.5 million mt (or 780 GW), seeking to restore supply-demand balance and address long-standing industry oversupply.

"Polysilicon appears to be the most appropriate node for initial consolidation owing to higher market concentration, more rigid capacity and a greater impact on the entire supply chain," Jin and You noted.

China's technological advancements are expected to hold the key for Asia's energy transition, given the region's reliance on Chinese renewable energy equipment, including electrolyzers to produce hydrogen, Shankar said.

"China is actually well-positioned both in terms of technology, deployment of technologies, scale of creating capacities, as well as deep pockets," Shankar said. "If they really make up their mind, they can make the transition much faster than anybody would be assuming today."

Renewables, batteries grow

Australia is on a strong trajectory to increase renewable power in its grid, a path that Minister for Climate Change and Energy Chris Bowen said will help lower national energy costs.

"Australians know that our government is going to continue to do whatever we can to reduce power prices as much as possible, and that's exactly what we're doing through a range of policies," Bowen said in a recent media interview seen on his website.

He highlighted that 185,000 Australian households have installed home batteries since July 1, reducing energy bills by up to 90% on average. Additionally, 6,000 households have upgraded their energy efficiency through the Housing Energy Upgrade Fund.

In the December quarter, renewables accounted for nearly 50% of the national energy grid, while wholesale prices fell by 48%. Bowen also noted the recent Solar Sharer policy, which requires energy companies to offer three hours of free power in the middle of the day.

India added 31.24 GW of new renewable capacity in the April to November period of 2025, up from 14.91 GW new capacity addition in the same period of the previous year, the latest data from the Central Electricity Authority showed.

In India, the cost of power from new thermal capacities is around Rupees 6/kWh ($0.07/kWh) while solar energy has come down to Rupees 2.5/kWh to Rupees 2/kWh, according to Shankar.

India and Australia are laying emphasis on raising the count of battery storage to address the intermittency of wind and solar power, and Shankar said that despite inflationary pressures, the power cost of batteries is down, which will help its proliferation.

Between 2025 and 2030, China is projected to lead the region with the highest renewables capacity expansion at around 1.39 TW, compared to India's 145 GW, according to S&P Global Energy data.