Southeast Asia investments in the Clean Energy Transition are nowhere close to sufficient.

Hi fellow Earthlings,

• The demands of the energy transition will require much more investments in the next 6 years to stay on target and commitments versus the current behaviour which is to either reduce or more of less stay flat year on year. Investments need to substantially increase in:

  • Low emissions electricity (ie renewables)

  • Grid and storage investments

  • End-use (consumption and transport) and energy efficiencies

Southeast Asia accounts for 4% of energy consumption and 2% of energy investments. Southeast needs to not only accelerate bespoke and owned investments but attract global funds to be able to meet their own transition targets.

Stopping its addiction to Fossil Fuel remains crucial: 10GW of Coal Power Plants are still in pipeline as of this day.

• Southeast Asia is the only market where investment in Energy have decreased when comparing with 2019 levels.

• Southeast Asia is now the laggard region for required investments and aspirations of transition in clean power, fuels and end use.

• Southeast Asia has the largest gap between ambitions and actual investments in energy in the world.

• Early stage investments remain healthy but growth stage deals and particularly valuation and quantum of investment was reduced…

…but the reduction was lesser than in other Venture Capital categories

• Southeast Asia Venture Capital in Energy is not even yet represented as its own and represents less than 5% in every category.

• Southeast Asia also receive one of the lowest level of investment in the world from DFIs

• China based DFIs are now financing Southeast Asia Energy more than the rest of the world combined

• DFIs in China have limited massively their investments in Fossil Fuels but have yet to replace it by investments in renewables and energy efficiencies

• We are making progress in all categories of investments to achieve the NZE Scenario target for 2030 except an increase required in “Buildings” and a decrease across all Fossil Fuels (Coal, Natural Gas and Oil)

• Still a long way to go on investments for the acceleration of the roll-out of renewables and Energy Efficiencies

• The right trend for where investments is going towards: Coal investments have decreased by 40% since 2021

• Solar returns are now the safe and less volatile option in the world but still short of returns from Oil and Gas.

• CCUS investments are concentrated in North America, Europe and China mainly.

• Oil and Gas main players do contribute to 4% of their overall capital spending in Clean Energy (only?)

Must do better? Hopefully if we all put our efforts together, we can drive significant change to our Energy mix and transition to a renewable world together.

Take care all,

@David Pardo for Sif.vc

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