SUSI Partners introduces a new investment platform targeting renewables development across the fragmented region.
To ensure a global net zero transition, investors must plug the funding gap for utility-scale renewable technologies across Southeast Asia, according to Wymen Chan, Head of Asia at Swiss-based infrastructure fund manager SUSI Partners.
Through its Asia Energy Transition Fund (SAETF), SUSI Partners has partnered with clean energy developer Pacific Impact Development to launch a platform that will upscale renewable energy assets across Association of Southeast Asian Nations (ASEAN), including the Philippines and Cambodia.
SUSI Partners will raise the capital and identify investment opportunities and Pacific Impact will act as the developer and project manager for the platform.
“The investment mandate for SAETF is centred around the premise that Southeast Asia is a high-growth region with great macroeconomic fundamentals, but it’s generally overlooked by investors, particularly when it comes to its relatively nascent renewables sector,” Chan told ESG Investor.
“Significant investment will ultimately be required to enable the needed renewable infrastructure build out.”
Between US$200 billion to US$240 billion needs to be annually invested into renewables, energy efficiency and enabling technologies and infrastructure to achieve the World Energy Transitions Outlook (WETO) 1.5°C scenario, according to a 2022 report by the International Renewable Energy Agency (IRENA).
This level of investment is almost triple the amount currently planned by Southeast Asian governments, IRENA said, adding that while ASEAN aims to ensure 23% of primary energy is being supplied by renewables by 2025, nations collectively achieved just 14.3% by the end of 2021.
The new platform will upscale greenfield projects spanning the likes of wind and hydro technologies, Chan said, noting that “solar, in particular, offers attractive investment opportunities – mostly because it has grid parity across most of the markets in the region”.
“It’s also one of the easiest to implement, as it’s essentially a plug-and-play technology requiring very little civil engineering,” he added.
The IRENA report said that ASEAN’s solar PV installed capacity needs to reach 240 gigawatts (GW) by 2030 if the region is to remain aligned with its 1.5°C temperature scenario. This would require US$150 billion in funding by the end of the decade.
The International Energy Agency’s (IEA) ‘Southeast Asia Energy Outlook 2022’ said that Southeast Asia is also set to “play a major role” as a key global supplier of critical minerals, which can further augment renewables capacity production.
Indonesia and the Philippines are two of the largest nickel producers in the world, and Indonesia and Myanmar the second and third largest tin producers, the IEA said, adding that Myanmar is also responsible for 13% of global rare earth production.
SUSI Partners will spend the next few months assessing the viability of potential renewables projects that can be funded by the platform, said Chan.
Working around fragmentation
There is continued regulatory and market fragmentation across ASEAN that makes progress in the clean energy transition more difficult, noted Chan.
“Southeast Asia isn’t homogeneous at all – there are a range of different business cultures and regulatory regimes across the board,” he said.
That fragmentation can be seen in the regional discrepancies in corporate disclosures on their greenhouse gas (GHG) emissions.
While 80% of assessed companies in the Philippines disclosed their CO2 emissions, just 5% of Vietnamese companies did the same, according to a 2022 report published by sustainability standards-setter Global Reporting Initiative (GRI).
However, Chan noted that some markets are making some positive progress, with national regulators introducing sustainable finance and disclosure rules, including Thailand and the Philippines.
“ASEAN is one of the fastest-growing regions in the world, and is increasingly the manufacturing centre as supply chains are being diversified away from China to places like Vietnam and Cambodia,” said Chan.
“Net zero is a global goal and it can’t be achieved without investing in all jurisdictions. Investors cannot overlook Southeast Asia if they want to achieve net zero.”