Opportunities abound for sustainable infrastructure investment

The urgent need to develop sustainable and climate-resilient infrastructure in Asia has created more than US$1.8 trillion (S$2.45 trillion) of investment opportunities, yet only a sliver of private sector capital has gone into infrastructure projects in recent years.

Investors could consider channelling their funds in sustainable infrastructural developments, such as district cooling systems or biogas technologies, according to a recent report by the Asia Sustainable Infrastructure Advisory panel.

The panel is made up of international experts and chaired by Second Minister for Finance Indranee Rajah.

It also highlighted waste-to-energy solutions, battery energy storage systems, energy efficiency optimisation and proven renewable energy options, particularly solar, as other opportunities that have a strong investment case.

The report, which was released on Thursday (26 Oct 2023), stated that infrastructure plays a critical role in facilitating the transition towards a low-carbon future, but emerging economies often face challenges in structuring and implementing infrastructure projects that require private sector funding.

These solutions identified by the report are part of the wider energy transition and circular economy developments, which the report said were key pillars to scale infrastructure development and financing in Southeast Asia and South Asia, so that the region can transit to low-carbon economy.
 

Investing in district cooling systems is one example of how investors can increase the performance of existing brownfield assets and reap savings from more energy-efficient buildings.

The current cost of battery energy storage systems has gone down by 75 per cent from 10 years ago, and it is expected to fall further to less than half of the present price by the end of 2030, said the report.

Efficiency for cooling can be achieved through economies of scale with a district cooling system, it added.

Another option for improving energy efficiency is by retrofitting existing buildings. Investing in the performance of operational assets can help extend their lifetime, thereby maximising capital investments and leading to outsized gains, said the report.

Given that methane and other greenhouse gasses are released in landfills due to the decomposition of organic waste materials, the report stated that there are significant opportunities to invest in technologies to capture and extract energy from these biogas emissions as the region still predominantly disposes of its waste in landfills.

“The growing need for waste infrastructure presents an opportunity for large-scale deployment of biogas technologies. This will not only help curb greenhouse gas emissions, but also create circular ecosystems that generate more value in terms of revenue streams or carbon credits for emissions abatement,” read the report.
 

As for battery energy storage systems, the report stated that these are essential in the transition to a sustainable energy mix given its capabilities to store and release energy as and when required, which is a solution to the problem of intermittency of renewable energy sources.

The current cost of battery energy storage systems has gone down by 75 per cent from 10 years ago, and it is expected to fall further to less than half of the present price by the end of 2030, said the report.

Among proven renewable energy solutions, the report stated that solar photovoltaic (PV) technology is the most viable for Southeast Asia in terms of cost and generation potential, which is 10 times more than the region’s next most viable renewable resource.

It also has one of the lowest implementation costs – the weighted-average Levelised Cost of Energy (LCOE) globally for utility-scale solar PV fell by 88 per cent as of 2021.

There are also emerging signs of attractive financing terms. The report cited a survey by the Cost of Capital Observatory, which found that the cost of debt was 0.5 per cent lower for utility-scale solar PV than for gas power in Indonesia.

“This allows solar deployment to be a decarbonisation strategy for the near-term while higher-investment energy projects such as wind and hydropower can be planned for the medium-term,” read the report.

Source: The Business Times © SPH Media Limited. Permission required for reproduction.