COMMENTS 5
How do you maintain ‘bankability’ within Asia’s renewable energy projects?
Aidan Turnbull Editor
and over-reliance on fossil fuels. The region needs around US$700 billion in energy investment right through to 2035, according to International Energy Agency estimates - a demand that's made Asia the world leader in adding renewable energy capacity. It’s claimed that renewable energy could bring electricity to the 65 million people in Southeast Asia without it — but only if industry and governments can improve market regulations and the bankability of renewables projects. Rapidly emerging economies, a favourable climate for solar and wind energy generation, and a total population of 640 million makes the region a potential hotspot for the clean energy industry. But only about 45% of the total number of renewable energy
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projects in Southeast Asia are ‘bankable’, estimates Allard Nooy, chief executive officer of infrastructure investment company InfraCo Asia. “The remaining 55% of projects currently in the market are unbankable without government or other mechanisms,” he says. ‘Bankability’ refers to the financial viability of a renewables
project, and whether or not a bank will support it. For instance, Vietnam’s draft template for solar investments released earlier in 2017, was criticised for being ‘unbankable’. A second but no less pressing issue is regulation. Nooy said
countries such as the Philippines still take a protectionist approach to foreign direct investment, limiting the amount of
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cross Asia, countries are working to meet growing demand for electricity, with many targeting renewables amid growing concerns about pollution
funds entering the renewable energy space. The region has an abundance of natural energy resources, but lags behind developed economies when it comes to building clean energy generators.
Southeast Asia’s energy demand has grown by 60% in the last
15 years, according to the International Energy Agency. Countries such as Indonesia and Vietnam are meeting this demand through the construction of new coal-fired power plants. Experts cite fossil fuel subsidies as one reason for this. While the falling cost of renewable energy would push Southeast Asia towards more sustainable means of electrification, financing it would appear to remain a stumbling block. The development of microgrids, which generate electricity
locally within a limited area independent of national energy, is one example. Calling microgrids “the future”, Holger Schenk, director of technology at Solar Philippines has publicly said the difficulty in rolling out microgrids was “not in the hardware or software, but in making projects bankable.”
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