Energy demand in Asia will double ten years from now, according to the Asian Development Bank (ADB). Enhancing renewable energy usage in Asia will be vital, which investors, energy providers, and the World Green Organisation (WGO) discussed at the 2nd ESG forum organized by the Asset Events.
Despite sustainability being top of the agenda for many Asian governments, corporates and investors, coal remains one of the main power sources in the region. “Most of the developing economies in Asia are far from energy-sufficient. So, the most attractive options for most of these countries is to build something big, large-scale and very concentrated, which is coal,” explains Tak Chow Yee, general manager, corporate development at Hong Kong Electric.
Echoing Yee’s observation, Maud Savary-Mornet, regional director for Asia-Pacific at ResponsAbility, sees immense opportunity for renewable energy investment. “If you move to Mumbai, you will see polluting cars, polluting rickshaws, and construction work sites, etc. And when you pass the slums, you are reminded that 240 million people [in the country] do not have electricity. But it also creates an opportunity.”
To quantify the opportunity, Scott Reinhart, partner at Brawn Capital, predicts, “Solar is just 2% of the world energy generation mix and is projected to be 22% in the next 30 years.” Such projected growth could represent as much as a US$4 trillion opportunity globally, with Asia receiving the majority of the new investment over the next three decades.
Apart from installing more renewable power plants, an energy distribution solution that can streamline the fluctuation of renewable energy generation is also important. A coal power plant can provide stable baseline energy for the whole day, but not a solar power or wind power plant when sunlight or winds are lacking.
Drawing from the European experience, countries in the region should connect with each other more closely to arrive at an Asian solution. “If you have a peak in Denmark, you can use it in Spain. That is what Asia needs,” says Tom Uiterwaal, CEO at Reconergy Hong Kong. “It is the interconnectivity of the electricity systems with different countries. So, the peak can be consumed somewhere else, then you can balance the whole production in Asia. Not only will that require investment, but it will also require trust.”
In Asia, we are already seeing a few green shoots of regional collaboration. Under the Laos-Thailand-Malaysia-Singapore Power Integration Project (LTMS-PIP), Malaysia is already constructing an undersea cable to connect to Singapore’s power grid, with the first phase totalling 550MW to be completed by year-end while the second phase is to be finalized by April next year.
Yet regulators must be reminded that it will take consistent financial commitment from them to transform this coal-dependent region to renewables dependence. As William Yu, founder and CEO at WGO, warns, “We are seeing examples that in some countries in Asia, there were both feed-in tariffs and government subsidies for green power. But in the end, after many years, the governments did not have enough funds to pay the subsidies.”