"Analysis: China remains key to success of Southeast Asia’s energy transition", 9 October 2023

"Accelerating just and inclusive energy transition” was a key action given by leaders in their statement at the 43rd summit of the Association of Southeast Asian Nations (ASEAN) in September...Effecting this transition is no simple matter, however. Large-scale deployment of renewables requires enormous investment. Yet in ASEAN, as in developing countries elsewhere, such projects face a range of problems. Private investors are less enthusiastic, and it is difficult to get projects off the ground...

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ASEAN countries are densely populated, so land acquisition is a major headache for renewable-energy projects...This, coupled with the high proportion of privately held land in ASEAN countries, means that land acquisition often entails complex negotiations...

Project approval is also a major issue...Approval typically involves separate regulatory bodies and fragmented systems that may have information and regulatory gaps...

Another problem of new energy projects is power-grid capacities. In Vietnam, for example, total installed solar PV capacity hit 16.5 GW in 2020, almost 160 times higher than 2018. This rapid growth put the grid under massive strain, forcing the country’s largest power company to cut back on PV power generation...

Other problems facing ASEAN countries include delays in the development of the power market and a lack of high-quality power-purchase agreements...

As a leading investor in ASEAN’s energy sector, China can provide significant support for the region by promoting private-capital investment in renewable-energy projects. Specifically, China may consider the following three approaches:

First, through policy dialogue and capacity-building programmes, China could offer targeted policy support to ASEAN for building renewable-energy-based power systems...

Second, China could deepen cooperation with multilateral financial institutions, funding renewable energy projects in ASEAN through the “blended finance” model of public–private partnerships...

Thirdly, financial institutions in China and ASEAN could strengthen cooperation and innovate financial products that are more attractive to Chinese institutional investors...