The rise of cleantech in Southeast Asia

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Southeast Asia is home to more than 676 million people, and its economy is poised to surge in the next few years. But along with its rising economy, the region’s demand for electricity in the region is skyrocketing at a rate of 4% per year – twice the rate of the rest of the world.

According to a report by Verisk Maplecroft, among the top 100 cities that will face environmental and climate-related threats, 99 are situated in Asia. Major cities like Jakarta and Manila top the list.

The 2019 estimates of the International Energy Agency (IEA) show that for 2015 to 2020, investments for renewable energy in Southeast Asia would only reach US$9.3 billion. Based on IEA’s Stated Policies Scenario (STEPS) – which predicts the impact of existing and announced energy policies – that figure would probably breach US$16.4 billion from 2025 to 2030.

Though that number is a marked increase, it likely won’t be enough. IEA’s sustainable development scenarios (SDS) – an outline for how the world can achieve the United Nations’ sustainable development goals – projects that a major transformation in the world’s energy system would require US$49.7 billion in investments for the same time period.

The situation is far from hopeless, though. Since the adoption of the Paris Agreement in 2015, governments across the globe have pledged to enact carbon neutrality plans.

Southeast Asia, for its part, has set a target of supplying 23% of its energy requirements with renewable energy by 2025. In the region, we’ve also seen several governments programs put in place such as like the solar farm in Tengeh Reservoir in Singapore and the Bangui Bay Wind Farm in the Philippines.

Despite government efforts in the space, investment in cleantech startups is lagging behind. In fact, from 2011 to 2021, 92% of the total US$575 million investments in the sector came from Singapore.

In China and India, investments in the cleantech sector outpaced Southeast Asia’s numbers by 12x and 7x, respectively. That said, there’s huge potential for digital technologies in the region – in the last five years, the number of investments and total deals has bloomed in Southeast Asia.

SOURCES