Week 1: Renewable energy is a key driver


Week 1


Renewable energy investments help fuel Emerging Asia’s economic growth, providing not just investment capital and jobs but in many situations a cheaper alternative source of energy.

Despite the market turmoil surrounding Brexit, the attraction of growth prospects of Emerging Asia should continue to expand, spurred on by an emphasis on renewable energy projects, as economic growth is expected to remain strong at an average of 6.2% over the period 2017-2021.

The reason: continued domestic consumption, spurred on by developing alternative energy sources. Of particular note is India, which is expected to be near the top of the list in terms of rapid growth, while China will see a slowdown. Overall, growth in the Association of Southeast Asian Nations (ASEAN) which averaged 4.8% in 2016 is projected to average 5.1% over the period of 2017- 2021. Growth will be strongest in the Philippines, Vietnam and the CLM (Cambodia, Lao PDR and Myanmar) countries, according to consensus expectations.

Accompanying this growth will be a push for renewable energy sources, such as wind, solar and hydroelectric. India and China are making the largest investments in renewables, while Vietnam, Thailand, Malaysia and Lao PDR are promoting renewables, with large investments in hydropower.

India, China and Indonesia have received the largest in ows of money (about 60%) from green eld Foreign Direct Investment (FDI.) e FDIs allow investments, technology and expertise in renewables that are creating a demand for new green jobs, fueling strong growth in employment in the sector throughout China, Brazil, the U.S and India.

According to recent studies the renewable energy industry’s main challenge is to set the right conditions for the development of renewable energy in Emerging Asia and requires addressing the challenges of grid access, administrative barriers and energy pricing mechanisms.

It is recognized that Emerging Asia has enormous potential for renewable energy projects and that the industry is in fact vital to the region to mitigate the e ects of climate change and facilitate the transition to a low-carbon economy. Other substantial bene ts include opportunities for enhanced energy security, job creation and reduced air pollution.

China has su ered an economic slowdown, and exports over the past ve years also have slowed. Low interest rates have also factored into slower economic growth and this has strained the region’s banking system. Productivity levels also have stagnated and this can be improved if companies use more technology and adopt more productivity improvements from companies outside of the region.

Despite some challenges investments into renewable energy have increased and just two years ago in 2015 total investment into renewable power and fuels in developing countries exceeded that in developed economies. For that year China, Indian and Brazil, committed a total of USD 156 billion with China along increasing its investment by 17% to USD 103 billion, accounting for 36% of the global total. Whilst we are still counting the totals achieved in 2016, indications are strong that this rising level of investment continues and we have seen signi cant increases in renewable energy investments, particularly in India, South Africa, Mexico and Chile.

Driving this growth, for example in India, is that fact that solar energy is now cheaper than coal, so many utility companies there are pushing for renewables over conventional power projects. e second-largest private sector power-generating company in India, Tata Power, wants to expand its renewable energy portfolio by acquiring 300 megawatts (MW) of wind projects in northwest India.

Vietnam is another emerging nation that has found renewables as a major force to expand its power grid into the countryside, while also creating jobs. Vietnam’s GDP grew at an annual rate of 6.8% between 1990 and 2013, and is projected to approach 7% annually from 2016 to 2030. What’s driving the country’s e ort is increased industrialization, combined with a growing population, and demand for more energy, especially electricity. is has resulted in an increase of energy consumption at an average annual rate of 5.7% between 1990 and 2012, and a rise in electricity use of 14% annually during the same period.

These projects are so important that the Asian Development Bank (ADB) has named renewable energy, environmental sustainability and responses to climate change as one of the country’s top three priorities, along with ADB’s country partnership strategy for Vietnam of promoting job creation and competitiveness, increasing the inclusiveness of infrastructure and service delivery, according to a recent report.