While large markets in Asia such as China and India have upped the focus on renewable energy, Asean still has more room to grow. That’s according to a recent panel held in Singapore at The Asset Events 4th Asia Infrastructure Finance Leaders Dialogue focusing on responsible infrastructure in Asia.

“In Asean, the only country pulling its weight in renewables is probably the Philippines followed by Vietnam,” observes Assaad Razzouk, group CEO of Sindicatum Renewable Energy. “Renewables need to be 60% by 2030 and pretty much 100% by 2050.”

The encouragement of private capital to invest in infrastructure was one solution proposed at the panel to spur renewable development with speakers such as Steve Mercieca, executive director, project & export finance at Standard Chartered, sharing that “we are seeing private investors actually trying to understand what renewable is and trying to make the most out of it to develop the sector.”

Looking to add a level of comfort for institutional investors looking at infrastructure projects, the International Finance Corporation (IFC) mentioned at the event that its managed co-lending portfolio programme (MCPP) has been quite effective in getting large commitments from institutional investors.

“Under the MCPP programme it allowed us to get commitments from large institutional investors who are building a portfolio similar to ours. We have US$8 billion committed by institutional investors,” says John Grosbeek, head of syndications, Asia Pacific at IFC. “The first investors were sovereign related entities and after that, we were able to attract some insurance companies from the private sector. The co-lending model works because there is a strong alignment of interest.”  

The effort to attract more institutional investors represents a move in the right direction as many commercial banks in Asia are facing challenges from having long-term assets on their balance sheet. “Many insurance companies have different dynamics compared to the banks as they are not subject to the Basel regulations for instance. There seems to be a natural fit there for infrastructure investments,” explains Grosbeck.

While markets such as China and India have picked up the slack when it comes to renewable energy development in Asia, there is “still a long way to go regarding renewable energy capacity in Asia compared to Western European markets,” says Sunil Gupta, regional head of Southeast Asia and South Asia.

Going forward, countries in Asean are being encouraged to review their energy policies to ensure that sustainability is part of their agenda. “The fact that the cost curve has gone down has attracted a lot of policy attention to try and deploy some of these technologies into the developing country world,” highlights Kian Min Low, chief development officer at JERA Asia. “The challenge is how to balance that with the need to grow responsibly.”