3 ways Asia can bridge the energy divide

Asia stands at pivotal crossroads in its energy journey, grappling with the dual pressures of economic development and decarbonization. In a region that is heavily reliant on coal for power generation, how do we strike a balance between addressing immediate energy demands and securing long-term sustainability? We must fast-track the convergence of industrial and investment revolutions – delays are no longer an option.

There needs to be a mindset shift in three areas:

The Laos-Thailand-Malaysia-Singapore Power Integration Project, launched in 2022, is a groundbreaking initiative in South-East Asia's energy landscape. Under phase one, Singapore has imported up to 100 megawatts of hydropower from Laos through Thailand and Malaysia. The two-year project, which represents the region’s first multilateral electricity trading framework, sets a precedent for cross-border collaboration in renewable energy.

It is also a prime example of how regional energy cooperation can drive sustainable development: Laos leverages its abundant hydropower resources for economic growth, Singapore decarbonizes its power sector and diversifies its energy supply sources to enhance security, while Thailand and Malaysia generate revenue by facilitating grid connections.

This novel project has overcome the challenge of distance to redefine the boundaries of regional collaboration and unlock untapped potential. If the negotiations to extend this four-nation power project succeed, electricity trade could potentially double, with additional supply coming from Malaysia.

China's solar energy success is another example of how large-scale renewable energy transition can support sustainable development without hindering economic growth. The country has reached its 2030 target of 1,200 gigawatts of installed solar and wind capacity – six years ahead of schedule. This rapid deployment has been instrumental in meeting the surging domestic energy demand, cementing China's leadership position as the world’s largest producer of solar panels, while creating jobs domestically and supporting the global green transition.

Notably, China’s ultra-high voltage (UHV) transmission network has enabled efficient renewable energy transport from remote, solar and wind resource-rich regions to populous industrial hubs, enabling renewable power to be utilized at scale without disrupting economic activities. Recently, a 1,000-kilovolt UHV alternating current project commenced operations, connecting clean energy resources in the north of China with economically dynamic regions such as Beijing-Tianjin-Hebei.

Asia needs to bridge a 75% funding gap to support climate mitigation. At least $1.1 trillion is needed annually to meet climate mitigation and adaptation needs across Asia, but the region is falling short on investments. In fact, over the past five years, the region has attracted the second-lowest level of investments in solar and wind power. According to a report by McKinsey and Singapore's EDB, to achieve net zero by 2050, the region must increase renewable capacity by seven to 12 times from the 2018-2021 levels.

Energy transition investments make both business and economic sense. There are opportunities to be seized but corporates must be bold for the renewables space to make the leap; this means taking the lead in driving bankable, commercially viable clean energy initiatives.

For a start, corporates can actively decarbonize their operations, while participating in key projects and initiatives that can help to move the needle in the green shift. For example, through a waste-to-value strategy, RGE’s agri operations meet its energy needs by converting palm oil mill effluent (POME) into renewable energy, and it will be supplying second-generation feedstock to its joint venture plant in Spain for the production of sustainable aviation fuel.

Recently, with joint venture partner TotalEnergies, RGE secured conditional approval from Singapore’s Energy Market Authority to import 1 gigawatt of solar energy from Indonesia to Singapore. The project has a domestic component to power industrial complexes in the Riau province, creating a win-win for Indonesia and Singapore to decarbonize.

Another example is how Amazon, as the world’s largest corporate purchaser of renewable energy, is helping to accelerate the global green shift while contributing to sustainable development. In 2023, the tech giant announced 74 individual power purchase agreements across 16 different markets, totalling 8.8 gigawatts of capacity.

Ultimately, corporates must recognize that their long-term success depends on securing the social license to operate; this requires more than greening their own operations. By actively contributing to the broader green transition through impactful and scalable initiatives, they can not only thrive but also drive meaningful progress in achieving a sustainable future for all.

There is an urgent need to establish robust market mechanisms to attract capital for renewable energy projects. While there is no lack of capital in the region, the challenge lies in building investor confidence and creating conditions that make these projects compelling investment opportunities.

The energy transition is a shared mission and its progress hinges on creating an enabling environment for the private sector to develop bankable and commercially viable projects. This will in turn unlock financing and drive growth at scale.

Currently, investors hesitate to commit capital, citing risks like infrastructure gaps and regulatory uncertainty. The private sector has a crucial role in managing risks that are within its control, such as securing land and the technical know-how to bridge any infrastructure gaps, ensuring project development certainty. Meanwhile, governments must provide regulatory certainty through clear, consistent and enduring policies that can weather political and any macro landscape changes. Governments can also stimulate demand by implementing effective mandates and subsidies, encouraging renewable energy adoption at scale.

Ultimately, it requires collective commitment and strong collaboration from all ecosystem players – the private sector and governments alike – to derisk and unlock capital flows for the large-scale renewable energy projects that Asia urgently needs. Only by working together can we turn ambition into action and accelerate the energy transition.