Supporting Corporate Renewable Investment in South East Asia
By Marc Tagub and Mark Lister
The recent surging investments in solar and wind energy in Southeast Asia, the increasing affordability of renewable energy, and growing commitments by corporates to take the clean energy transition seriously have still not shaken fossil fuel’s dominance as the main energy source in the region. According to latest data from the International Energy Agency (IEA), coal (457,136 GWh) and oil (20,276 GWh) accounted for 43% of total electricity generation in the ASEAN region in 2018. This trend is mirrored across the entire Asia-Pacific: even with the enormous uptake of renewable power in places like China and India, coal still accounted for 59% of Asia-Pacific’s electricity generation by source in 2018.  It is indeed true that a “corporate transition” toward clean energy is happening in the region, but it is proceeding nowhere near quickly enough, and the gulf with other leading regions in the world is widening.
Led by the Climate Group and in partnership with the Carbon Disclosure Project (CDP), RE100 is a global initiative of influential businesses committed to achieving 100% renewable electricity. RE100’s Annual Progress and Insights Report 2020. Published in December 2020, surveyed 261 of its members with an annual electricity consumption of over 278 terawatt-hours per year (more than that of Australia). The report cites a key finding: the Asia-Pacific region is among the most challenging markets in the world for businesses seeking to go renewable. Despite significant opportunities for clean investment and growth in the region, switching to 100% renewable electricity is not an easy undertaking. Global companies trying to address the barriers need more than standard business and marketing strategies; they need an understanding of energy market fundamentals and policy, technology appraisal capabilities, and strong knowledge of the players in the local energy sector landscape—all areas in which businesses may have limited internal expertise.
This is not to say that investment in renewable energy is stalling around the world, either for the public or private sectors. According to a recently published EU Power Sector in 2020 report, by the think tanks Ember and Agora Energiewende, renewables overtook fossil fuels as the European Union’s main source of electricity for the first time in 2020.
This win over fossil fuels can be attributed to a combination of factors: (a) decisions by many EU countries to phase out coal power plants to meet emission reduction targets; (b) the fall in electricity demand due to Covid-19; (c) increasing use of natural gas for electricity generation; and (c) growth in wind and solar energy generation.
RE100’s Annual Report notes that its almost 300 corporate members are running on 81% renewable electricity in Europe, and that more than 95% of its members’ renewable electricity consumption is sourced from 15 countries in the bloc. The majority of these countries meet a high percentage of corporate electricity demand through domestic renewable generation. RE100 further reports that its members are running on 59% renewables in North America; in contrast, the figure for the Asia-Pacific region stands at a meager 16%.
Why is the renewables story different in Asia-Pacific?
While there is significant variation between countries in the region, the lagging performance of renewables for the corporate sector in the Asia-Pacific region is certainly not due to low demand. 42% of new RE100 members in 2019 are based in the Asia-Pacific region, and the region has the world’s fastest growing business demand for clean energy. According to RE100, seven of the ten most difficult geographies for sourcing renewables are in Asia-Pacific: Australia, China, Indonesia, Japan, Singapore, South Korea, and Taiwan (see table).
Challenges for Corporates in Sourcing Renewable Energy in the Asia-Pacific Region
While most ASEAN countries were not specifically a part of RE100’s focus, our work in this region tells us that corporates looking to procure renewables in countries such as Malaysia, Myanmar, Philippines, Thailand, and Vietnam face even higher barriers. More needs to be done across the Asia-Pacific region to meet the scale and speed of demand-driven renewables investment that regions such as Europe and North America are already achieving.
Due to growing global recognition of the impact of climate change and the need to mitigate greenhouse gas emissions, corporates and investors alike continue to reposition their energy-related portfolios from fossil fuels to renewable energy. It’s our view that this trend will not likely reverse any time soon. However, the speed at which this is happening may be overstated at times. Despite the often breathless announcements and press releases covering large new renewable energy investments across Southeast Asia, the data suggest that it’s mostly business as usual in the region (for more on this conclusion, please read our related blog.)
Changing the narrative
Governments in the Asia-Pacific region must embrace policies that create investment opportunities in low-cost clean energy options. RE100 reports that direct trade between renewable electricity suppliers and corporate buyers of all sizes is an unrealized investment opportunity in the region. Asia Pacific governments must make these deals easier to make.
The clean energy transition, including for corporates who aim to transition to renewable electricity, demands collaborative work among government, non-government energy and non-energy stakeholders. Based on our experience, this collaborative work requires deep understanding of the energy sector and the policy landscape in the region and the ability to convene key actors.
 Gigawatt hours (GWh) is used as a measure of the output of large electricity power stations  IEA, Electricity generation by source, ASEAN 2000-2018  IEA, Electricity generation by source, Asia Pacific 2000-2018
 Research that we did with the Stockholm Environment Institute’s Asia Centre, and published last year, found that climate risk is either not a significant factor, ignored in light of other concerns, or only superficially integrated into decision-making around power sector investments in Southeast Asia (see “Further reading”).