Zhilin Sim’s Post

More reasons to move away from fossil fuels, with onsite renewable energy production presenting win-win situations for energy producers and offtakers. Southeast Asia’s growth in energy demand has been among the fastest in the world, at an average of 6 % annually, second only to China [Eco-Business Aug 2021]! Growing climate change awareness will catalyse more #renewableenergy projects across Southeast Asia. 💡 Some of my takeaways from this report by Bird & Bird and Sandra Seah's team on Onsite PPA laws, and government incentives in key ASEAN economies like #Indonesia, #Vietnam, #Thailand, #Malaysia, #Philippines, and #Singapore: 🎯 Although renewable energy projects require upfront capital investment, operational costs have become low and predictable. 🎯 This paves the way for more Onsite Power Purchasing Agreements (PPAs) between an offtaker (industrial, commercial, retail facility) and a project developer/Independent Power Producer (IPP), with solar PV being particularly common. 🎯 #PPA benefits for the offtaker would be the ability to lease unused space (e.g. rooftops) and lock in a fixed price for the life of the agreement, ensuring long-term electrical price stability. The power producer benefits from a long term space lease and guaranteed sale of energy to both the offtaker and main grid (if there is excess). 🎯 The report answers 4 very important questions in each of the above ASEAN jurisdictions: I - Does the IPP require a licence under applicable electricity laws to construct the solar PV or supply clean power? II - Does the IPP enjoy any government subsidies, tariffs or tax credits for constructing the solar PV or supplying clean power? III - What are the standard features of the PPA? IV - What happens in the event of a sale of the facility by the owner? 🎯 A Green Finance Action Plan has also been developed by Singapore's central Bank (Monetary Authority of Singapore (MAS)) and the Singapore government announced this year that it will issue S$19B (EUR 11.9B) worth of green bonds to finance infrastructure projects. 🎯 If you are an EU/UK clean energy company looking at financing in Southeast Asia, these new initiatives make Singapore an attractive hub to access capital, and manage regional solar projects and talent. Take some time to study the market - ensure that you negotiated the best PPA deal for your company, avoid potential pitfalls like facility sale, and don't miss out on any government incentives/financing schemes to improve your project's ROI. #accessasean