Southeast Asia Needs US$200bn for Swift Energy Transition by 2030: IEA

Lower Auction Volumes, Supply Chain Challenges May Slowdown 20% of India's PV Capacity Additions in '23

The International Energy Agency (IEA) in its latest report has noted that Southeast Asia will need at least US$200bn worth of investment in the energy sector by 2030 to speed up their clean energy transition.

As per reports, the investments in renewables  need more impetus with sufficient policies to support the development of robust project pipelines. IEA noted that more than three-quarters of the total amount should be earmarked for clean energy.

The report pointed out, “With only three years left to reach regional interim renewables targets, which envision renewables to account for 35% of power capacity by 2025, accelerating investments in renewable power and enabling infrastructure, such as electricity networks and battery storage, is critical.”

As per IEA,  emerging and developing economies (EMDE) need to switch over  to private capital to finance renewable energy from the traditional method of depending on public finance. At present, public financing accounts for nearly 60% of clean energy investments.

Further, private capital will need to account for 60% of investments, which is still lower than the level seen across advanced economies at almost 90%,partially due to the elevated role of EMDE state-owned utilities as investors in electricity grids.

The report further adds, “To facilitate this shift, regulatory and financing frameworks must improve to reduce the costs, risks, and barriers around developing clean energy projects in EMDEs and the ASEAN region, in particular.”

In its March 2023 report, ASEAN Renewables: Opportunities and Challenges, the IEA and Imperial College London observed that the annual average energy investments in the region  was at US$70b between 2016 and 2020, and of this clean energy only accounted for below US$30b annually.

Over the past five years,the average annual capital expenditures of US$10b went to solar PV and wind energy ,which was reported to be amongst the lowest globally.However, almost half of private capital for power in Southeast Asia was invested in fossil fuel generation.

It was said in the report that overall, investments in clean energy showed a worrying trend- for every dollar invested in renewable power capacity in Southeast Asia, another dollar was invested in unabated fossil fuels.