US$16.5 Trillion Needed for Clean Energy Investment

US$16.5 Trillion Needed for Clean Energy Investment

Assaad Razzouk, CEO of Sindicatum Sustainable Resources, knows what he’s talking about, so while he welcomes the outcome of Paris, now real work must begin: “We must imperatively turn our attention to the immense implementation gap between what’s going on in the real world and the broadly aspirational objectives of Paris.”  $16.5 trillion is needed to ensure we don’t exceed the 2 degrees milestone and “how do we unlock this money from the capital markets when clean energy is operating in a confusing, uncertain environment?” There’s more on renewable energy opportunities and investments in South East Asia from Armstrong Asset Management, The Blue Circle and ADB, plus a report on what’s holding back Vietnam’s wind energy.  Read more

Clean energy investments in South East Asia

Assaad W Razzouk, CEO of Sindicatum Sustainable Resources

From Huffington Post (16 December 2015):

Show Me the Climate Money: UN Climate Deal Is a Triumph, now Onto Bridging a Huge Investment Gap

The Paris Agreement reached on 12 December is a triumph of the human spirit, built around the world class diplomacy of France, the UNFCCC Executive Secretary Christiana Figueres and UN Secretary General Ban-ki Moon. Faced with an existential threat driven by climate change, 195 nations signalled a fundamental shift in the trajectory of growth of fossil fuels.

We must imperatively turn our attention to the immense implementation gap between what’s going on in the real world and the broadly aspirational objectives of Paris: Indeed there is a stark disconnect between what the world says it needs and wants (de-carbonization as soon as possible, through massive deployment of renewable energy worldwide and the electrification of everything), and where the $150 trillion financial markets (in other words, the money) are at.

Renewables Mess

We will need to invest $16.5 trillion to ensure we don’t exceed the 2 degrees milestone now enshrined in the Paris Agreement. How do we unlock this money from the capital markets when clean energy is operating in a confusing, uncertain environment?

Here are a few examples of the mess we are in.

In the United States, renewable energy champions are being brutally punished. Their stock prices are down 50 to 90 per cent this year and they are unable to raise funds to accelerate deployment. Utilities like NRG attempting to change with the times through rapid solar deployment are suffering the same fate, their visionary leaders shown the door. Regulatory uncertainty abounds: The tax benefits for solar investments in the US are up in the air from 2017, even though these merely level the playing field vis a vis oil and gas investments.

Meanwhile in the UK, the government seems to relish surprising the markets by suddenly shifting support from clean energy back to oil and gas. In Spain, Abengoa, the renewables champion, collapsed. In Italy and Spain, investors are still getting over the harm caused by retroactive regulatory changes.

In India and China, thousands of projects are chasing capital but can’t find it.

It does get worse.

According to an analysis by Climate Action Tracker, there are 2,440 new coal plants currently being planned worldwide, more or less guaranteeing we will all fry.

These planned coal plants are, as we speak, being financed by many of the same Governments and banks present at the Paris climate talks. Four countries whose citizens are at the forefront of suffering from the impacts of climate change – China, India, Indonesia and the Philippines – together account for three quarters of the planned 2,440 coal plants.

“Where is my $16.5 Trillion?”

The mess I describe above has consequences.

A large chunk of the $16.5 trillion will have to be invested in the form of equity capital, and the balance borrowed from banks.

But equity investors, rattled by too many conflicting signals, add a risk premium to invest in the infrastructure required to de-carbonize the world. This is the exact opposite of the direction of travel set by the Paris Agreement.

Many banks and other debt providers are talking climate but financing coal. A report by Bank Track shows banks supported coal with a whopping $257 billion between 2009 and 2014.

In practical terms, both the equity and debt necessary to finance the de-carbonization of everything is missing in action.

So how do we unlock the $16.5 trillion required to de-carbonize?

Here’s the “ABC” of what’s needed.

The “ABC” of Bridging the Implementation Gap

First, the Paris Agreement needs much more work to ensure it is tightened over time. At the moment, the signal it is sending to the financial markets is inconsistent and therefore in practice inaudible.

For example, fossil fuel subsidies must decrease over the next twelve months (instead of increasing as they have in the UK), while banks financing coal need to be stridently named and shamed.

Second, both developed and developing countries need to put in place financial-grade regulatory environments: Flip-flopping on policies, retroactive changes, inconsistencies and the lack of stable, long-term regulatory frameworks will maintain the current high risk premium for clean energy investments.

Third, we need a carbon price everywhere, of $40 a ton of CO2 or higher ($100 by 2020), embedded in the terms of trade between nations. While carbon pricing is talking about a lot, an effective one remains unlikely in the next few years.

In the meantime, our best hope is a worldwide push to ensure investors understand that their fiduciary duty includes analysing the long term risks caused by the exploration and production of fossil fuels. This can shift a mountain of investments from dirty to clean energy through the process of re-allocating risk premiums to fossil fuel investments instead of clean energy.


South East Asia’s Year End Push

By Andrew Affleck in AMM EnergEyes November 2015 issue

The renewable energy sector in South East Asia is showing few signs of a year-end slow down as projects race to meet deadlines to secure their PPAs. In Thailand, solar developers are starting to tie up loose ends as the 31 December 2015 deadline draws near while in the Philippines, projects are ramping up construction to meet both the 15 March 2016 deadline and the 500MW quota.

As developers busy themselves with construction, government bodies have been hard at work crafting the next phase of their renewable energy policy. Thailand has announced its government and Agricultural Co-op scheme where up to 600MW of solar projects will be up for bids in Phase 1. Eligible projects submitted under this scheme will be selected through a lottery system and results will be announced on the 24 December 2015. PPAs issued under this scheme will again face a deadline to complete construction by 30 September 2016.

The flurry of activity has built up strong momentum in this sector and we believe that the successful completion of projects will further catalyze more renewable energy opportunities in 2016.

Symbior Solar completes financing of 29MW of solar projects in Central Thailand

Symbior Solar (“Symbior”), a leading developer of solar PV power plants in Asia, announced today the closing of a project financing totaling THB 1.45 billion (US$ 40.5 million) with Krung Thai Bank Public Co. Ltd. (“KTB”), Thailand’s largest lender by assets. Arranged through Symbior’s subsidiary ATC Enviro Co. Ltd. the debt instrument completes the full financing of Symbior’s 29MW portfolio of solar power plants in central Thailand.

The latest set of solar PV power plants by Symbior span five sites in the Prachinburi and Samut Sakhon Provinces, with each individual plant’s capacity ranging between 3MW and 8MW. Construction began in June 2015 and commercial operation is planned for December 2015. The Provincial Electricity Authority will buy power from the plants under 25-year power purchase agreements at a tariff of THB 5.66 per kWh (approximately US$ 0.16/kWh) as part of the Very Small Power Producer Program. The solar PV power plants will collectively power approximately 18,000households with clean solar-generated electricity in the first year of operations and offset 483,650 tons of CO2 equivalent over their lifetime.

“The closing of this latest project financing with KTB is proof of the strong relationship with the bank who has already funded Symbior’s first project in Thailand in 2013. Despite the challenges of an extremely short implementation timeline of only six month, the Symbior team was able to drive the implementation forward and rely on KTB’s support to finance its solar PV pipeline in Thailand”, stated Florian Bennhold, CEO of Symbior Solar. “Together with our experienced EPC partners and our local team, construction progress of our projects remain on budget and on target to achieve commercial operation by the end of the year”, added Mr. Bennhold.

Proceeds of the financing will be used to pay for the projects ’ continuing construction and development costs. Together with investments and commitments from the Armstrong S.E. Asia Clean Energy Fund and Dragon Capital’s Mekong Brahmaputra Clean Development Fund, Symbior’s central Thailand projects are fully financed.

About Symbior Solar

Established in 2010, Symbior Solar is a graduate of Symbior Energy, the Hong Kong-based incubator of energy ventures. Symbior Solar has grown into a leading regional solar PV developer with a focus on frontier solar PV markets in Asia. Symbior Solar continues to expand its solar PV generation platform in Thailand, Indonesia, Bangladesh and Mongolia, supporting the region’s drive towards environmentally and economically sound energ supplies for a sustainable future. Symbior Solar’s current Thai projects are jointly funded by Armstrong Asset Management, Dragon Capital’s Mekong Brahmaputra Clean Development Fund and Symbior Solar.

See the December issue of EnergEyes for a wrap up of Paris and renewable energy.


By the Editor:

The Blue Circle – the Singapore based wind energy developer – is pushing for wind energy as hard as it can in Mekong area, setting up meteorological masts in three locations in Vietnam to ascertain the best places and joining forces with Vesta to drive investment in wind energy projects in the region.

Barriers to Vietnam wind energy remain. Olivier Duguet is strongly advocating more investment and more development. What’s holding things up? The following article in Reve points to issues.

Are there similar constraints in getting renewable energy projects underway elsewhere in South East Asia. Solar is moving in leaps and bounds in Thailand and Philippines.

Singapore has grasped solar by the PV and started on an ambitious programme with Government working with the private sector players.

Indonesia  seems to be dragging the clean energy chain, as there’s money ready to invest but it seems that bureaucratic delays are holding it back.

ASEAN, APEC and ADB must push harder to eliminate the bottlenecks, introduce green tape to get rid of red tape and by-pass those who want to dip their greedy fingers in the clean energy funds.

At the Singapore International Energy Week, this question was put to a panel and it was pointed out to senior people in the energy business and those who should be facilitating investments.

Will Assaad’s plea and Paris’s good intentions be enough to get things moving in South East Asia? Along with the enthusiasm of private sector investors through Armstrong’s Clean Energy Fund for South East Asia and The Blue Circle you would hope to see things happening. But we suspect there is an inbuilt resistance in some Government quarters when it comes to allowing renewable energy on a scale that threatens some of the Government-owned utilities.

See the photo story from the Asian Development Bank and this quote from Bambang Susantono, ADB Vice-President for Knowledge Management and Sustainable Development: “With an abundance of almost every renewable energy source — including 40 percent of the world’s geothermal reserves — Indonesia can be a global clean energy leader. By tapping this stockpile, it can also avert a looming energy crisis and realize its huge economic potential.”



From REVE – Wind Energy and Electric Vehicle Magazine (4 October 2015):

Vietnam has significant potential for the development of wind power but it has captured only a small part of the country’s potential.

Only three of 42 wind power projects have been put into the national grid, according to a report of the Ministry of Industry and Trade’s Energy Institute.

According to experts’ opinion, there are several reasons for the delay of wind energy deployment in Viet Nam, such as lack of policies, purchasing price, limited co-ordination between central and local governments in the formulation of wind power development plants and a paucity of knowledge and technical capabilities required to carry out a wind power project.


The main obstacle for investment in wind power was the electricity purchasing price, Vu Duy Hung, a representative of Energy Institute, said at a workshop on promoting the development of wind energy recently.

The fact that the price was lower than the wind power price in other countries had not attracted investors, he said.

Meanwhile, imported equipment was still expensive, which kept the production cost of wind energy high.

Having the same opinion, a representative of Quang Trung International Energy Consultancy Ltd Co, Vu Quang Dang, said the wind power price had not matched the investment value.

The current electric buying price is at 7.8 US cent/kWh. The suitable price should be $10.4 US cent/kWh, Dang said.

In addition, limited database assessment of wind energy was another challenge for the development of renewable energy, he said.

He added that the country still lacked land for building plants, large ports to store wind turbines and big equipment as well as transporting vehicles.

To fully exploit this energy, new incentive policies should be created to promote investment in the field, participants said.

Deputy Minister Nguyen Cam Tu said the strengthening of research, exploitation and taking full advantage of energy sources like wind, solar, and biomass was necessary, in order to limit exhausted exploitation of natural resources which are not renewable, and serves the goal of sustainable development.

“The advantage of wind energy is that it is an available source, abundant, renewable, sustainable, and environmentally friendlier than other traditional energy sources, and has a competitive price if produced on a large scale,” he said.

However, to put wind energy projects in use on a mass scale, the country is still facing many difficulties such as the natural environmental condition, geographic location, high cost in investment, and equipment maintenance, as well as obstacles on commercial development, according to Tu.

He said the Government had implemented many support policies to remove difficulties for businesses in scaling up the renewable energy industry.

Enterprises should actively propose initiatives and invest more capital to develop this potential energy, he said.

The Government has set a target for wind power development at 1,000WM by 2020 and about 6,200MW by 2030.


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