Execution challenges, intermittency of renewable power and grid shortfalls are slowing the pace of energy transition in South and Southeast Asia (SSEA), S&P Global Ratings said Wednesday.

The rating agency said in a note that India leads in SSEA, targeting 500 gigawatts (GW) of renewable capacity by 2030, and to add 50 GW of such capacity each year.

However, it noted a larger scale of execution, bigger hybrid projects, rising storage tenders and robust private sector funding will likely drive these gains.

“Outside India, we assume countries in South and Southeast Asia will rely more heavily on fossil fuels over the next five years,

“Many are focusing on gas as a transition fuel, with renewables and storage only ramping up significantly from 2030 onward,” said S&P Global Ratings credit analyst Cheng Jia Ong.

He added hefty spending requirements to meet ambitious national targets and higher leverage remain key credit risks for utilities in the region.

According to S&P, stable supply sources with storage solutions will be key to energy transition.

Battery costs have come down sharply; better economics can spur adoption of battery storage, it added.

“Unregulated fossil-fuel based players face a range of challenges: stiff competition from cheaper renewable-power providers, liquefied natural gas price volatility, carbon taxes and increasing refinancing risk,

“Most regulated utilities, by contrast, will benefit from an ability to pass on added costs to customers,” said S&P Global Ratings credit analyst Vernice Tan.

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