Turning reservoirs into 'energy batteries'.
MODERN lifestyles depend on a variety of energy sources for everyday needs, ranging from food production to the transport of goods and people, to heating and lighting. These energy sources, if not extracted sustainably, require a lot of resources to obtain. As our energy-hungry world confronts the formidable challenge of significantly cutting greenhouse gas emissions, countries are increasingly turning to alternative sources such as solar and wind as a more sustainable solution.
In Asia, renewable energy is increasingly gaining traction as governments across the region recognise the potential of alternative energy sources to stimulate economic growth, drive technological innovation and cut pollution levels. Based on a Bloomberg New Energy Finance report, global clean energy investment exceeded US$300 billion again in 2018 despite lower unit price of solar investment. Asian clean energy investment in 2018 was led by China, which invested about US$100 billion, followed by Japan at US$27.2 billion, India at US$11.1 billion and Australia at US$9.5 billion. Vietnam stood out among the Asean countries at US$3.3 billion, an impressive 18-fold increase compared to the previous year (and the trend will likely continue in 2019).
There has been a significant shift in favour of renewables in Asia, primarily on environmental, health and safety, and technological grounds. Governments, companies and the public now generally accept that carbon emissions need to be reduced and there is also a new acknowledgement of nuclear power's potential risks in a post-Fukushima world. China and India are increasingly resisting thermal power (coal in particular). Taiwan also opened up a floodgate of offshore wind farm investments. Meanwhile, renewable solutions have become more efficient and readily available as countries become increasingly developed, which has lowered investment costs and accelerated uptake.
The renewable energy mix will vary in each country across the region, with many making use of location-specific advantages. For example, Indonesia is pushing forward with geothermal power development while Vietnam is fast becoming a hot spot for renewable energy, being endowed by its solar and wind resources.
In Singapore, however, the renewable energy options are relatively limited. The country has one of the highest population densities in the world and therefore much of the land is urbanised, so space for ground-mounted solar farms is lacking. Being so sheltered geographically means that wind speeds are generally low anyway, and a lack of rivers and tidal waves offshore rules out significant hydro power generation. Furthermore, the country's electricity predominantly comes from gas-fired power plants, which makes it difficult for companies to source renewable energy locally.
Despite the fact that Singapore is not well situated for significant renewable energy development, the country is on the lookout for opportunities to prove itself as a serious player in the global renewable energy arena. Located just over one degree north of the Equator, Singapore has annual solar irradiance of about 1,200 kWh/m2/year (ie moderate sunshine). The main economically and commercially viable resource is therefore solar energy and widespread urbanisation across the island makes rooftops an ideal platform from which to draw this energy. Recent developments in solar technology have meant that rooftops in Singapore can be transformed into energy sources via the installation of solar panels run by photovoltaic systems. In March this year, ING pioneered a S$50 million loan deal for sustainable energy firm Sunseap to help the group fund a 50 MW portfolio of about 20 rooftop solar projects in the country. Sunseap has since secured a further S$43 million loan to support this effort.
Singapore is also seeking to turn some of its numerous reservoirs into sources of photovoltaic power. National water agency PUB recently announced plans to install one of the world's largest single floating solar photovoltaic systems in the Tengah Reservoir by 2021. This is an exciting development and demonstrates how Singapore is seriously looking at the use of renewable energy. It is known internationally that Singapore has successfully turned part of the island into natural reservoirs to serve its water needs. This brings hope for Singapore to one day turn its reservoirs into "energy batteries".
Besides energy usage, Singapore is also attracting more industry players and moving towards becoming a renewable energy hub in the region. A growing number of renewable energy players, including Vena Energy - the largest independent renewable energy company in the Asia-Pacific region - are headquartered here. Other companies which have their regional offices based here, as well as local companies such as Sindicatum Renewable Energy, are also using the country as a base to expand their business into other parts of Asia.
At the same time, the demand for sustainable financing is also growing in the renewables space. Sunseap's loan for its portfolio of rooftop projects in Singapore was the first green loan for rooftop solar projects in Asean. Earlier last year, ING also supported Sindicatum, a regional developer, owner and operator of clean energy projects, on its green bonds issuance to finance renewable energy projects in India and the Philippines. It is estimated that over 100,000 people will benefit from clean, renewable energy from the projects in these two countries. As corporates' interest in investing and consuming green energy in the region grows, such green financing will become a model for future transactions, attracting more interest from both sponsors and lenders.
International and local energy developers and the Singapore government have also been contributing to a number of pilot renewable energy projects in Singapore such as a district cooling system, floating solar testbed or micro-grid demonstrator. The latter was a cooperation between EDF - a French integrated electricity company - and Nanyang Technological University (NTU) with the objective of piloting an affordable integrated electricity supply system for isolated territories in South-east Asia. These efforts will be of value and a model to the region like what we have seen some years ago when ING arranged and financed Singapore's first waste-to-energy private public partnership (PPP) project in Tuas. Such technical and financing knowhow could be referred to as benchmarks for subsequent project development and financing in Singapore and the region.
Renewable energy is not poised for deployment only in the more developed parts of Asia. Vietnam, supported by its government's succinct renewable energy programme, is expected to record one of the most noteworthy sustainability pushes in the region this year. Solar, wind and waste-to-energy power projects are high on the country's agenda, and there will correspondingly be opportunities for Singapore-based companies and financial players to contribute to lowering the country's carbon footprint.
A proactive approach by Enterprise Singapore and the Monetary Authority of Singapore, for instance in launching the new government agency Infrastructure Asia, coupled with active participation by development financial institutions (many of which have set up offices in Singapore), will also be among the catalysts promoting green energy investment and financing in wider Asia.
Singapore is a gateway to the region's infrastructure opportunities and ecosystems, and its forward-thinking efforts and partnerships will certainly be valuable in supporting the much needed sustainable development goals of the region, including climate action.
11 July 2019
THE BUSINESS TIMES
