A new report by Wood Mackenzie found that coal will continue to be the dominant fuel source for power generation in Southeast Asia, peaking at 2027 before slowing down and accounting for 36% of the region’s generation mix in 2040.

By then, total power demand in Southeast Asia is expected to double from 1.05 petawatts per hour (PWh) in 2018 to 2.46 PWh.

To meet the rapidly increasing power demand, Southeast Asia will have to invest an average of US$17 billion annually in power capacity, WoodMac said.

Coal should account for most of this investment in the medium term, before being overtaken by spending on gas-fired generation. By 2034, investments in solar and wind power plants should surpass that of gas power plants.

“The narrative surrounding coal has been pessimistic across the world. This will result in the gradual slowdown of new coal-fired capacity in Southeast Asia. However, the reality of rising power demand and affordability issues in the region mean that we will only start to see coal’s declining power post 2030,” Wood Mackenzie research associate Jacqueline Tao said in a statement.

Incremental coal will decline over time as the cost of renewables decreases and pressure on environmental grounds increases, WoodMac forecasts. By 2040, solar and wind power plants will lead in the region’s power capacity mix at 35% or 205 gigawatts (GW).