Against the background of the global acceleration of the transition to clean energy, the Asia-Pacific region is becoming a new hot spot for renewable energy investment. In 2024, with the upgrade of Japan’s hydrogen energy strategy, the deepening of South Korea’s Green New Deal, Australia’s promotion of the construction of a renewable energy export hub, and the successive introduction of supporting policies by Southeast Asian countries, renewable energy investment in the region will present unprecedented opportunities. The Asian Development Bank predicts that the renewable energy sector in the Asia-Pacific region will usher in a period of rapid growth in the next five years, with investment scale reaching a record high. This article will provide an in-depth analysis of the investment opportunities and challenges in the renewable energy field in the Asia-Pacific region from the dimensions of policy, market, technology, financing, etc. , and provide practical reference for enterprises to explore this blue ocean market.
Asia Pacific Renewable Energy Market Overview
The renewable energy market in the Asia-Pacific region is facing unprecedented development opportunities. According to the latest research from Bloomberg New Energy Finance (BNEF), the total investment in renewable energy in the Asia-Pacific region will reach US$366 billion in 2023, a year-on-year increase of 22%, accounting for 52% of the total global investment. Among them, investment in solar and wind energy projects increased by 28% and 19% respectively, with the overall growth rate leading other regions in the world. Judging from the data in the first quarter of 2024, the number of approvals for large-scale renewable energy projects in the region has exceeded 1.5 times that of the same period in 2023, indicating that the market popularity continues to rise.
From the perspective of regional competition, developed economies such as Japan, South Korea, and Australia have dominated the fields of high-end equipment manufacturing and system integration by virtue of their technological advantages and complete policy systems. It is worth noting that emerging markets such as India and Vietnam are rapidly emerging as new growth poles in the region by virtue of their cost advantages and market scale. Vietnam, in particular, will benefit from the eighth version of the Power Development Plan (PDP8) released at the end of 2023. It is expected that the installed capacity of renewable energy will exceed 60GW by 2025, and the market potential is huge.
Currently, renewable energy investment in the Asia-Pacific region shows three significant trends: The first is the large-scale development of offshore wind power. Japan, South Korea, and Taiwan have all formulated ambitious offshore wind power development goals. It is expected that by 2025, new offshore wind power installed capacity will be installed in the region. will exceed 25GW. Secondly, the layout of the green hydrogen industry is accelerating. Countries such as Australia and Singapore are building green hydrogen production and trade centers, and investment in related infrastructure is growing rapidly. The third is the rapid expansion of energy storage projects. Benefiting from the dual demand from the grid side and the user side, large-scale energy storage projects have gradually become an investment hotspot.
From the perspective of market participants, local enterprises and foreign-funded enterprises have formed a differentiated competitive landscape. Taking Japan as an example, local companies such as Mitsubishi Heavy Industries and Marubeni have obvious advantages in the fields of system integration and general engineering contracting, while European and American companies occupy an important position in core equipment manufacturing and technological innovation. It is worth noting that since 2023, cross-border mergers and acquisitions in the region have been significantly active, and cases of local companies rapidly improving their competitiveness by acquiring overseas technology companies continue to emerge. For example, the acquisition of U.S. fuel cell manufacturer Plug Power by South Korea’s SK Group reflects the desire of local companies for core technologies.
Specific to each segment, the photovoltaic industry shows an obvious trend of vertical integration. From upstream silicon materials to downstream system integration, the integration speed of all links in the industry chain is accelerating. In the wind power field, technological upgrading is the main line, with high-power units and intelligent operation and maintenance becoming the focus of development. It is worth noting that as countries have launched carbon neutrality timetables, comprehensive energy projects integrating photovoltaics, wind power, and energy storage have begun to emerge. Such projects usually have larger investment scales and longer return cycles, but policy support is also stronger. big.
Judging from the latest bidding data, the average winning electricity price of renewable energy projects in the Asia-Pacific region continues to decline in the first quarter of 2024, and some regions have achieved grid parity. This trend is expected to continue, driving the industry to accelerate its development toward scale and specialization. For investors who plan to enter this market, they need to pay special attention to three aspects: first, the continuous improvement of subsidy reduction mechanisms in various countries, second, increasingly stringent localization requirements, and third, the continued improvement of technical thresholds. It is recommended that investors fully consider the impact of these factors when selecting project locations and technical routes.
In-depth analysis of investment opportunities in key markets
1. Japanese market
The new energy basic plan revised by the Japanese government in early 2024 clearly states that the proportion of renewable energy will increase to 36-38% by 2030, an increase of 2 percentage points from the original target. To achieve this goal, Japan’s Ministry of Economy, Trade and Industry has launched a new round of incentive policies, including specific measures such as simplifying the project approval process and expanding the scope of open sea areas. Of particular concern is that the new policy includes rooftop photovoltaics in industrial parks within the scope of subsidies, which is expected to release more than 50GW of market space.
In the field of hydrogen energy, Japan is accelerating the layout of the entire industrial chain. Tokyo has announced an investment of 200 billion yen to build a hydrogen energy demonstration zone and plans to build 100 hydrogen refueling stations by 2025. At the same time, leading companies such as Mitsubishi Heavy Industries and Kawasaki Heavy Industries are developing a new generation of liquid hydrogen transport ships, which provides important opportunities for international hydrogen energy trade. For foreign-funded enterprises, there is significant room for cooperation in subdivided fields such as hydrogen production equipment and hydrogen storage materials.
In terms of offshore wind power, Japan implements a strict concession bidding system. The planned sea area for bidding in 2024 will reach 500,000 hectares, an increase of 35% compared with 2023. It is worth noting that the new round of bidding places special emphasis on local manufacturing requirements, and foreign-funded enterprises need to establish stable cooperative relationships with local suppliers. According to the latest regulations, the localization rate of core equipment must reach more than 40% to obtain the maximum subsidy.
Japan has established clear thresholds and preferential policies for foreign investment access. Companies need to meet conditions such as technical capability certification, financial strength requirements and localization commitments. At the same time, for key projects in specific areas, foreign investors can enjoy support policies such as equipment import tariff exemptions and corporate tax concessions. It is worth noting that forming joint ventures with local enterprises can obtain additional policy support, and it is recommended that foreign-invested enterprises actively seek local strategic partners.
2. Korean market
South Korea’s “Green New Deal 2.0” plans to invest 82 trillion won in 2024-2025 to support the development of renewable energy. Among them, offshore wind power and hydrogen energy industries are key areas of support. At the specific implementation level, South Korea has established a clean energy transition fund to provide low-interest loan support for the early development of projects. At the same time, R&D subsidies of up to 50% are provided for technological innovation projects.
The latest revision of the Renewable Energy Quota System (RPS) increases the obligation ratio to 25% and introduces a differentiated quota mechanism. Offshore wind power and hydrogen fuel cell projects can obtain higher incentive factors. Especially for projects using Korean self-developed equipment, additional subsidy weights can be obtained. This policy change has directly promoted a new round of investment boom since the end of 2023.
South Korea’s Hydrogen Economic Development Roadmap 2.0 emphasizes the construction of industrial clusters, and Ulsan and South Jeolla Province have been approved to build national-level hydrogen energy demonstration zones. The roadmap specifically sets out the goal of building 1,000 hydrogen refueling stations by 2025, and plans to build hydrogen microgrid demonstration projects in major industrial parks. The government has also launched a hydrogen energy industry standardization strategy and actively promoted the internationalization of Korean standards.
In terms of partner selection, leading Korean companies such as Hyundai and SK have set up specialized external cooperation departments. They pay special attention to foreign-funded enterprises with patented technologies or innovative solutions, and can provide all-round support such as funds and channels. It is recommended that foreign-funded enterprises focus on the innovation incubation platforms affiliated to these large enterprises and enter the market through technical cooperation.
3. Australian market
Australia is implementing the largest renewable energy regional plan in history and has designated six renewable energy zones (REZ). Among them, the New South Wales Hunter-Central Coast REZ plans to invest AU$32 billion, focusing on the development of offshore wind power and large-scale energy storage projects. Victoria plans to build the largest offshore wind power base in the southern hemisphere, with a total installed capacity of 13GW.
In terms of the layout of the green hydrogen export industry chain, Australia has formulated an ambitious development plan. The Asian Renewable Energy Hub project in Western Australia has a total investment of A$30 billion and is planned to produce 5 million tons of green hydrogen per year upon completion. Queensland has also launched a hydrogen export port construction plan, investing 15 billion Australian dollars to upgrade existing port facilities.
In terms of energy storage project opportunities, South Australia plans to deploy 2GW/4GWh of grid-level energy storage facilities by 2025. What is particularly noteworthy is that the government has launched an energy storage capacity market mechanism to provide stable income guarantees for energy storage projects. At the same time, distributed energy storage projects in industrial parks can also enjoy tax benefits such as accelerated depreciation.
In terms of land use rights and environmental impact assessment requirements, Australian state governments have launched a “one-stop” service mechanism. For key projects within the REZ, the land lease period can be extended to 50 years, and the environmental impact assessment approval time can be reduced to less than 6 months. At the same time, in order to protect the rights and interests of indigenous people, the government has established a special coordination mechanism to help investors properly handle related issues.
4. Key markets in Southeast Asia
Vietnam’s new Power Plan (PDP8) has set out a clear roadmap for the development of renewable energy. By 2030, the solar installed capacity target will be increased to 40GW, and the offshore wind power target is set at 6GW. The new policy allows private companies to directly participate in power grid construction and renewable energy direct trading pilots for the first time. At the same time, Vietnam has also launched a new electricity price subsidy mechanism, and offshore wind power projects can receive a 20-year fixed electricity price guarantee.
The development of geothermal resources in Indonesia has ushered in new opportunities. The government plans to open 8 geothermal concession blocks between 2024 and 2025, with a total installed capacity of more than 1GW. The new regulations simplify the environmental impact assessment process and shorten the approval time to six months. Of particular note is that Indonesia allows foreign capital to hold geothermal projects for the first time and provides a geothermal exploration risk sharing mechanism, which significantly reduces early investment risks.
Singapore is accelerating the construction of a regional carbon trading center and the carbon trading volume is expected to reach S$5 billion in 2024. As a regional financial center, Singapore has launched a fast track for green bond issuance and established a S$2 billion green investment fund to focus on supporting innovative clean energy projects. At the same time, Singapore is building Asia’s largest floating photovoltaic power station to provide a demonstration for regional renewable energy development.
The development trend of biomass energy in Malaysia is good, and the biomass energy industrial park plan launched by Sabah is particularly worthy of attention. The project enjoys ten-year tax exemptions and allows 100% foreign ownership. It is expected to process 1 million tons of palm waste annually and generate power of 200MW. In addition, Malaysia has also launched a new feed-in tariff policy for biomass energy, implementing differentiated subsidies based on the type of raw materials, with projects using agricultural and forestry wastes receiving the highest subsidies. The government has also established a dedicated biomass energy technology innovation center to provide investors with technical support and talent training.
Technical access requirements and certification guidelines
In terms of equipment certification systems, Asia-Pacific countries show differentiated characteristics. Japan implements the most stringent certification system in the world, and renewable energy equipment must pass JET certification before entering the market. It is worth noting that Japan has updated its certification standards in 2024, especially strengthening the safety requirements for energy storage equipment and hydrogen energy equipment. South Korea, on the other hand, adopts the KC certification system, but provides a fast track for products that have obtained international certifications (such as IEC, UL), which can shorten the certification cycle by an average of 30%. Australia’s CEC certification system focuses more on actual operating performance and requires equipment manufacturers to provide at least 12 months of on-site operating data.
In terms of technical standards, countries are accelerating the integration of local standards with international standards. Japan will release a new version of hydrogen energy technology standards in early 2024, which will be unified with ISO standards in terms of hydrogen storage pressure and hydrogenation interfaces. South Korea plans to complete the update of standards for ten categories of equipment such as photovoltaic modules and wind turbines by 2025, with special emphasis on typhoon resistance performance requirements. At the same time, localization requirements continue to increase. Taking Vietnam as an example, the new policy stipulates that the local manufacturing rate of photovoltaic modules must reach more than 45% to obtain the highest electricity price subsidy.
Intellectual property protection has become a key consideration in technology cooperation. Japan’s “Patent Law” revised in 2024 specifically strengthens the protection of clean energy technologies and increases the upper limit of patent infringement compensation to five times the actual losses. Singapore has launched a fast-track patent application process for clean technologies, promising to complete the review within six months. It is recommended that enterprises complete the patent layout before technology export and clearly agree on trade secret protection measures through contracts. Practice has shown that establishing long-term cooperative relationships with well-known local law firms can help promptly detect and deal with infringements.
In terms of technology transfer, various countries’ policies continue to be optimized. South Korea allows foreign-invested companies to invest in local companies at the price of technology and provides tax credits of up to 30%. Australia’s newly established Clean Technology Development Fund provides technology introduction subsidies of up to AU$5 million. It is worth noting that in the new version of the “Investment Negative List” in 2024, Indonesia allows foreign investment to independently carry out renewable energy technology services through technology licensing for the first time. Enterprises can choose various models such as technology transfer, licensing, and cooperative development according to different national policies.
At the specific operational level, it is recommended that enterprises adopt the following strategies: First, hire a professional organization for certification consultation to understand the testing requirements and procedures in advance, which can effectively save certification time and costs. Secondly, on the basis of meeting technical standards, focus on adaptive improvements of products based on local market characteristics. For example, in Southeast Asia, special consideration must be given to equipment reliability in high-temperature and high-humidity environments. Third, establish a sound intellectual property management system. In addition to patents, we should also focus on trademark registration and design protection. Finally, a staged and conditional transfer method should be adopted when transferring technology to ensure that core technologies are effectively protected.
In order to improve the success rate of technological cooperation, companies also need to pay close attention to the industrial policy trends of various countries. For example, South Korea plans to launch a new generation of energy storage technology standards in 2025, which will significantly increase safety requirements. Japan is revising its renewable energy certification fee system, which is expected to reduce certification costs for small and medium-sized enterprises. Keeping abreast of policy changes in a timely manner is of great significance in guiding the formulation of enterprise technology export strategies.
At the same time, it is recommended that enterprises actively participate in the standard-setting process. At present, countries such as Australia and Singapore welcome foreign-funded enterprises to participate in the formulation and revision of local standards. Through standard cooperation, we can not only ensure the rationality of technical requirements, but also lay out the market in advance and gain first-mover advantages. For example, in the field of hydrogen energy, many foreign-funded companies have successfully opened up the local market by participating in the formulation of standards.
Finally, enterprises should establish a dynamic technical compliance management mechanism. Appoint dedicated personnel to track changes in certification requirements in various countries, regularly assess compliance with technical standards, and adjust technology transfer strategies in a timely manner. It is recommended to strengthen communication with regulatory authorities through localized technical service teams. This will not only help understand policy directions, but also identify and resolve potential compliance risks in a timely manner.
Investment models and financing channels
In terms of PPP project operation procedures, countries in the Asia-Pacific region have formed a relatively mature system. Taking Japan as an example, the 2024 revised PPP Operation Guide further simplifies the approval process and shortens the preliminary preparation time to 6 months. What is particularly noteworthy is that Japan allows foreign-funded institutions to be the main investors of PPP projects for the first time, with the upper limit of shareholding ratio raised to 70%. According to the latest data, total investment in PPP projects in Japan’s renewable energy field will reach 1.2 trillion yen in 2023, and is expected to increase by 25% in 2024.
South Korea has introduced a “dual-track” evaluation mechanism in renewable energy PPP projects. In addition to traditional financial feasibility, special attention is paid to the carbon emission reduction benefits of the project. Projects that meet the requirements of “carbon neutrality” can receive government subsidies of up to 40%. At the same time, South Korea also innovatively launched the “community shared income” model, which requires PPP projects to use no less than 5% of the income to support local development. This approach has significantly improved the efficiency of project implementation.
The green bond market is developing rapidly, and various countries have successively introduced supporting policies. The Monetary Authority of Singapore will release a new version of the Green Bond Issuance Guidelines in early 2024, increasing the certification fee subsidy ratio to 80% and shortening the issuance process to 15 working days. Of particular concern is the fact that Singapore has launched a “simplified” green bond issuance mechanism for small and medium-sized enterprises, with the minimum issuance size reduced to S$5 million. As of the first quarter of 2024, the size of Singapore’s green bond market reached S$28 billion, a year-on-year increase of 45%.
In terms of multilateral development bank support, the Asian Development Bank (ADB) released the 2024-2025 Renewable Energy Support Plan, committing to provide US$15 billion in preferential loans. Among them, offshore wind power and green hydrogen projects can receive up to 80% loan support, and the term can be extended to 20 years. The Asian Infrastructure Investment Bank (AIIB) pays special attention to energy storage and smart grid projects and has launched a “Technology Innovation Financing Plan”, which in addition to loans also provides grant support of up to US$3 million.
Countries are actively innovating models for cooperation with local financing institutions. Japan’s three major banks jointly launched the “Green Energy Fund” to specifically support foreign-funded enterprises investing in renewable energy projects in Japan. The fund provides preferential loans with a term of up to 8 years, and the interest rate can be 100 basis points lower than the benchmark interest rate. The Korea Development Bank has launched a “green technology leasing” product, which allows companies to use future income rights as pledges, significantly lowering the financing threshold.
At the specific operational level, it is recommended that enterprises adopt the following strategies:
First of all, when participating in PPP projects, we should make full use of the latest policies of various countries. For example, Australia allows carbon credit benefits to be included in PPP project revenue accounting, which significantly improves project financial feasibility. It is recommended that companies consider carbon benefits during the project planning stage and optimize their business models accordingly. Practice has shown that rationally designing the revenue distribution mechanism and allowing local communities to share project benefits is the key to improving the success rate of the project.
Secondly, in terms of green bond issuance, it is recommended to adopt a step-by-step strategy. You can try it in more mature markets such as Singapore first, and then expand to other markets after accumulating experience. Pay special attention to preparing for green certification in advance and choosing an appropriate third-party certification agency. Data shows that the issuance interest rate of bonds with high-grade green certification can be 20-30 basis points lower on average.
In terms of cooperation with multilateral development banks, attention should be paid to project packaging and application strategies. It is recommended to establish contact with relevant institutions at the early stage of the project to understand the specific requirements. Practice shows that connecting projects with local development plans and highlighting social benefits can often gain more support. For example, projects that combine poverty alleviation, employment and other elements are 30% more likely to successfully receive support.
For cooperation with local financing institutions, it is recommended to establish multi-level financing channels. In addition to traditional loans, innovative models such as financial leasing and pledge of income rights can also be considered. Especially in the Southeast Asian market, cooperation with local banks to develop supply chain financial products can effectively solve the financing problems of small and medium-sized projects. Data shows that for projects that adopt comprehensive financing solutions, the average financing cost can be reduced by 15-20%.
Pay special attention to exchange rate risk management. It is recommended to make full use of financial derivatives and use forward contracts, currency swaps and other methods to avoid risks. At the same time, local issuance of local currency bonds can be considered to achieve natural hedging. Practice shows that a reasonable exchange rate risk management strategy can save 5-8% of the overall cost of the project.
At the project management level, it is recommended to set up a dedicated financial team to be responsible for the overall coordination of multi-channel financing. Regularly evaluate the cost-effectiveness of various financing instruments and adjust the financing structure in a timely manner. At the same time, strengthening communication with rating agencies and continuing to improve project credit levels is of great significance to optimizing financing conditions.
Risk prevention, control and compliance suggestions
In terms of policy risk assessment, countries in the Asia-Pacific region are going through a critical period of energy transition, and the policy environment is showing new characteristics. In the “Energy Basic Plan” revised in 2024, Japan clearly increased the target of renewable energy to 38%, but at the same time strengthened grid access management, and new projects need to meet more stringent grid connection requirements. South Korea will launch an “energy security review system” in early 2024 to implement special reviews of large-scale renewable energy projects controlled by foreign investors, and the average approval period will be extended to 6 months.
Based on the latest practice, it is recommended that enterprises build a three-level policy risk assessment system. The first level is macro policy tracking, focusing on major policy trends such as energy planning and subsidy mechanisms; the second level is industry standard analysis, including technical standards, market access and other specific requirements; the third level is local policy research, especially land use , environmental protection and other implementation-level regulations. Data shows that companies that adopt systematic evaluation methods reduce project delay rates by more than 40%.
Exchange rate risk management has become a key factor in the success or failure of overseas projects. Since 2024, currency fluctuations such as the Indonesian rupiah and the Malaysian ringgit have increased, bringing greater uncertainty to project income. It is recommended that enterprises adopt a portfolio hedging strategy: for investment during the construction period, the exchange rate is mainly locked through forward contracts; for income during the operation period, currency swaps can be used to replace local currency income with US dollars. Practice shows that rational use of financial instruments can control exchange rate losses within 3% of project revenue.
Singapore’s “Green Finance Innovation Plan” launched in 2024 provides preferential exchange rate hedging tools for renewable energy projects, with rates reduced by up to 50%. The Korea Development Bank has launched a “dual-currency loan” product, which allows companies to flexibly choose the repayment currency, effectively reducing exchange rate risks. It is recommended that enterprises actively use these innovative financial tools to build a multi-level exchange rate risk prevention system.
Environmental impact assessment requirements continue to increase, and countries have generally strengthened assessment standards. Australia’s environmental impact assessment guidelines updated in 2024 place special emphasis on the impact on biodiversity, requiring large-scale photovoltaic projects to reserve more than 30% of ecological corridors. Vietnam’s new regulations require wind power projects to conduct a two-year tracking study of the migration paths of migratory birds. For the first time, Japan has included the full life cycle carbon emissions of projects into the scope of environmental assessment.
Based on the latest experience, it is recommended to adopt a “pre-process + process” environmental impact assessment strategy. Carry out a comprehensive assessment during the project planning stage and hire a local qualified environmental assessment agency to ensure the professionalism and authoritativeness of the assessment. Especially in ecologically sensitive areas, longer-term ecological monitoring is recommended. Data shows that adequate preliminary environmental assessment work can reduce 70% of environmental risks and save an average of 20% of rectification costs.
The protection of indigenous rights and interests has become the focus of project social risk management. Australia’s 2024 amendment to the Aboriginal Rights Protection Act requires renewable energy projects to obtain the “free, prior and informed consent” of Aboriginal communities. The project revenue sharing ratio shall not be less than 5%, and a special community development fund must be established. In Indonesia, new regulations require that detailed cultural heritage surveys be completed and protection plans developed before project development.
It is recommended that companies establish a complete mechanism to protect the rights and interests of indigenous peoples. First of all, indigenous land rights and interests should be fully considered during the project site selection stage to avoid involving disputed areas. Secondly, proactively communicate with indigenous communities to understand their needs and concerns. Practice has shown that adopting a “participatory” development model and allowing indigenous people to participate in project planning and management can significantly improve project recognition. Data shows that projects that establish good community relations have an average approval time shortened by 40%.
At the specific operational level, it is recommended to establish a special risk management committee to regularly evaluate and update risk prevention and control measures. Especially for large projects, consider bringing in a third-party agency to conduct an independent risk assessment. Establish a sound early warning mechanism and emergency plan to ensure rapid response when problems arise. Experience shows that timely risk intervention can control losses within 20% of expectations.
At the same time, attention should be paid to the localization of risk management. It is recommended to develop a risk control team that is familiar with local laws and regulations and maintain good communication with local regulatory agencies. Consider cooperating with local insurance companies to develop targeted risk protection solutions. Data shows that a complete localized risk control system can save 15-20% of project management costs.
It is recommended to establish a dynamic risk assessment system. Regularly review and update the risk list to identify emerging risk points in a timely manner. Especially in a market with changing policies, we must pay close attention to policy trends and prepare for responses in advance. Practice has proven that continuous investment in risk management can bring significant long-term returns, which can increase project profitability by 2-3 percentage points on average.
Analysis of successful cases
Among Chinese enterprises’ overseas investment cases, Longyuan Electric’s offshore wind power project in Fukushima, Japan, is a model. The project will complete the investment decision in 2023, with a total investment of US$1.5 billion, using an innovative “equipment + technology + capital” integration model. What is special about the project is that it successfully solved the problem of market access in Japan: first, it established a joint venture with Mitsubishi Heavy Industries, a leading local company, and obtained a fast track for technical certification; second, it introduced a Japanese policy investment bank to participate in the equity, which not only solved the financing needs, but also reduced the investment cost. Policy risks. The project is expected to be connected to the grid for power generation in 2025 and will become a benchmark for Sino-Japanese renewable energy cooperation.
GCL Group’s photovoltaic manufacturing base in Vietnam demonstrates another successful model. Faced with Vietnam’s increasing localization requirements, GCL has adopted a “progressive” layout strategy. The first phase focuses on module assembly to quickly open up the market; the second phase introduces cell production lines to enhance local manufacturing depth; the third phase plans to build a silicon material factory to realize the layout of the entire industry chain. What is particularly worth learning from is that GCL has cultivated a large number of local technical talents by setting up local training centers, which not only met production needs, but also won support from the local government. As of 2024, the project has created 3,000 jobs and has an annual output value of more than US$500 million.
In terms of the transformation of local enterprises, the case of South Korea’s Hyundai Heavy Industries is the most inspiring. As a traditional shipbuilding giant, Hyundai Heavy Industries will begin a comprehensive transformation of offshore wind power equipment manufacturing in 2023. The key points of its success are: firstly, investing a lot of R&D resources to develop floating wind turbine technology with independent intellectual property rights; secondly, making full use of the original shipbuilding technology and supply chain advantages to successfully transform 40% of parts suppliers into wind power supporting enterprises; thirdly The third is to establish a full-cycle service system covering design, manufacturing, installation, operation and maintenance. Hyundai Heavy Industries has received more than US$2 billion in offshore wind power orders from Japan and Taiwan in 2024.
Among the typical models of cross-border cooperation, the green hydrogen project between Australia’s Origin Energy and Singapore’s Temasek Holdings is the most representative. This is the first cross-border green hydrogen project to adopt the “joint investment between supply and demand” model. The project has a total investment of AUD 2.8 billion to build an electrolysis water hydrogen production plant in Australia and transport it to Singapore via a special ship. The innovation lies in the construction of a complete industrial ecosystem: renewable energy developers are introduced in the upstream, equipment manufacturers participate in the midstream, and Singaporean industrial users are locked in the downstream. Especially in the design of the risk-sharing mechanism, the pricing model of “fixed price + floating income” is adopted, which not only guarantees basic income, but also shares the market upside space.
In terms of risk avoidance experience, the photovoltaic project of Malaysia Genting Group provides a good reference. Faced with the complex issue of indigenous rights and interests, Genting has adopted a “joint development” strategy. First, sign a detailed land use agreement with indigenous tribes to clarify the compensation standards and methods; second, set up a special community development fund, with indigenous representatives participating in management; third, give priority to hiring indigenous employees and provide vocational training. This approach not only avoids land disputes but also achieves harmonious coexistence with the community. As of 2024, the project will create 500 local jobs, with an average annual community investment of 2 million ringgit.
In terms of exchange rate risk management, South Korea’s SK Group’s geothermal project in Indonesia deserves attention. Faced with the high volatility of the Indonesian rupiah, SK adopted a “multi-level” hedging strategy: during the construction period, the exchange rate risk was transferred to the contractor through the EPC general contracting method; during the operation period, the revenue used the “USD + Indonesian rupiah” dual-currency settlement mechanism; At the same time, swap transactions are conducted through local banks to lock in key costs. This combination strategy controls the return impact caused by exchange rate fluctuations within 5%.
In terms of technical risk control, Japan’s SoftBank’s energy storage project in Australia has demonstrated rigorous management methods. The project adopts a “batched, small-scale” pilot strategy, with only 100MWh being put into operation in the first phase, and the scale will be expanded after the system has been operating stably for one year. At the same time, a complete performance monitoring system has been established to track battery degradation in real time and optimize operating strategies based on data. Although this cautious approach requires a large initial investment, it has significantly reduced technical risks, and no major failures have occurred in the two years since the project has been running.
In terms of environmental risk prevention, Contact Energy’s geothermal project in New Zealand has set a new standard. In the early stage of the project, a two-year environmental baseline survey was conducted and a detailed ecological database was established. During construction and operation, a real-time monitoring system is used to track key indicators such as groundwater levels and surface displacements. Especially when environmental abnormalities are discovered, a rapid response mechanism is established to ensure that assessment and response are completed within 24 hours. Although this strict environmental management system increased operating costs by 10%, it won social recognition and government support for the project.
The common features of these cases are: focusing on pre-risk management, establishing a complete management system, and paying attention to communication and coordination with stakeholders. Especially in the rapidly changing market environment, flexible adjustment of strategies and timely response to new challenges are the keys to project success. It is recommended that when enterprises invest overseas, they can selectively learn from these successful experiences according to their own circumstances and build a development model that suits them.
Practical Guide to Investment
Project feasibility studies are the cornerstone of investment decisions. Based on the latest practices in 2024, it is recommended to focus on the following aspects. The first is policy feasibility, which requires a systematic review of the target market’s industrial policies, power market rules and subsidy mechanisms. Taking Vietnam as an example, the new version of the power development plan to be implemented in 2024 puts forward stricter grid connection requirements for renewable energy projects, and it is recommended to hire local power grid experts to conduct special assessments. In terms of technical feasibility, in addition to conventional resource assessment, special attention needs to be paid to equipment adaptability. For example, in hot and rainy areas such as Indonesia, photovoltaic modules require special anti-corrosion treatment, which will increase equipment costs by 15-20%.
Financial feasibility analysis requires a more rigorous approach. It is recommended to use a “three-scenario” analysis model: the base scenario uses conservative power generation forecasts and current electricity prices; the optimistic scenario can consider new income such as carbon trading; the pessimistic scenario needs to consider adverse factors such as extreme weather. According to the latest data, the capital internal rate of return (IRR) of renewable energy projects in the Asia-Pacific region is generally between 8-12%, and it is recommended to use this as a reference benchmark for investment decisions. Special attention should be paid to including equipment upgrading and renovation funds into cash flow forecasts. This part of the expenditure is usually 15-20% of the total project investment.
Business negotiation is a key link to the success of the project and requires the development of detailed negotiation strategies. The first is the selection of partners. It is recommended to give priority to companies with successful experience in the target market. For example, in the Japanese market, cooperation with large local trading companies can significantly improve the efficiency of project approval. Secondly, the equity structure design must balance control rights and interest distribution. Practice has shown that holding 51% of the shares in the Southeast Asian market is a relatively ideal ratio, which not only ensures control but also mobilizes the enthusiasm of partners.
Price negotiations should fully consider regional differences. Taking the EPC contract as an example, the general contracting price in the Indian market is generally 30% lower than that in China, but the quality risk is higher; although the price in the Japanese market is 40% higher, the quality is more guaranteed. It is recommended to find a balance between price and quality based on the specific circumstances of the project. Especially in the design of contract terms, risk factors such as force majeure must be fully considered and the boundaries of responsibilities of each party must be clarified.
Recruiting local talents has become an important guarantee for the success of overseas projects. It is recommended to adopt the strategy of “core talents + localization”. Core management and technical positions can be recruited through headhunting companies, and salary levels must be benchmarked against industry-leading companies. For example, in the Singapore market, the annual salary of a project general manager usually needs to reach SGD 250,000-300,000 to be competitive. For general positions, they can be solved through local recruitment websites or vocational school cooperation channels.
Talent localization must be planned, and it is recommended to develop a progressive plan for 3-5 years. You can start with financial, administrative and other support positions in the first year; expand to engineering and technical positions in the second year; and start cultivating management talents in the third year. South Korea’s SK Group’s experience in Indonesia shows that implementing mentorship systems, regular job rotations and other measures can accelerate the growth of local talents. In particular, it should be noted that in addition to professional abilities, cross-cultural communication skills are also important selection criteria.
Supply chain localization is an effective way to reduce operating costs and risks. It is recommended to adopt a “classified management” strategy. For core equipment with high technical requirements, you can continue to use original suppliers; for general components and materials, local suppliers are preferred. For example, in the Indian market, supporting equipment such as photovoltaic brackets and cables can be fully localized, which can reduce procurement costs by 20-30%.
A scientific evaluation system must be established for supplier selection. The first is a qualification review to confirm that the supplier has the necessary production license and quality certification; the second is an on-site inspection, focusing on production capacity and quality management levels; the third is a small batch trial to verify product performance and supply stability. The experience of Malaysia’s Genting Energy shows that implementing a “preferred supplier” system for key suppliers and signing long-term framework agreements can ensure supply quality and price stability.
Inventory management should take into account local characteristics. In areas where logistics are not well developed, safety stock levels may need to be increased. For example, in remote areas of Indonesia, spare parts inventory usually lasts for 3-6 months. At the same time, it is necessary to establish a complete inventory early warning mechanism and set minimum inventory lines and replenishment points to avoid the risk of out of stock. The experience of Japan’s Mitsubishi Electric shows that the use of intelligent warehousing systems can increase the inventory turnover rate by 30% and reduce warehousing costs.
It is recommended to establish a supply chain risk assessment mechanism. Regularly evaluate the operating conditions of suppliers and pay attention to their financial stability. For key supplies, it is recommended to cultivate 2-3 alternative suppliers. At the same time, we must pay close attention to changes in trade policies and adjust procurement strategies when necessary. The case of Singapore’s Sembcorp Energy shows that perfect supply chain risk management can control procurement cost fluctuations within 5%.
In specific operations, it is recommended to form a dedicated localization promotion team and formulate detailed implementation plans and assessment indicators. Communication and cooperation with suppliers can be strengthened by holding regular supplier meetings and establishing a procurement information platform. Experience shows that good supplier relationship management can not only reduce procurement costs, but also promote technological innovation and service improvement.
Future Prospects and Suggestions
From the perspective of policy trends, the renewable energy market in the Asia-Pacific region will usher in an important turning point between 2025 and 2030. Japan has made it clear that it will cancel fixed electricity price subsidies in 2025 and shift to a bidding grid mechanism; South Korea plans to launch a green power trading market in 2026; Singapore will implement new carbon tax standards in 2027. These policy changes will profoundly affect the project revenue model. It is recommended that enterprises focus on the following three aspects: first, they need to deploy energy storage supporting facilities in advance to cope with the risk of electricity price fluctuations; second, they need to strengthen carbon asset management capabilities to prepare for future carbon trading; third, they should cultivate a power spot trading team , adapt to market trends.
Technology development shows an obvious trend of “efficiency, intelligence, and integration”. In the field of photovoltaics, N-type battery technology is accelerating its popularization, and the conversion efficiency is expected to exceed 27% by 2026; in the field of wind power, 16-18MW offshore units will become the mainstream, and floating basic technology will also be applied on a large scale. Of particular concern is the accelerating application of artificial intelligence in the energy sector. For example, predictive maintenance technology can reduce equipment failure rates by 40% and reduce operation and maintenance costs by 25%. It is recommended that enterprises should be forward-looking when selecting technology routes and maintain technological leadership through industry-university-research cooperation and other methods.
However, technological upgrades also bring new risks. The reliability and life data of new technologies are not sufficient and there may be hidden risks. It is recommended to adopt a “steady advancement” strategy: the proportion of new technology application should be controlled within 30%, and performance monitoring and risk reserve accrual should be done at the same time. The experience of Japan’s Marubeni Trading Co., Ltd. shows that a technical risk reserve of 500,000 to 800,000 yen should be reserved for each MW of installed capacity.
In terms of business model innovation, “integrated energy services” will become the main development direction. The traditional single power generation model is gradually transforming into a comprehensive service model of “power generation + energy storage + charging + heating”. For example, South Korea’s LG Energy is developing an “Industrial Park Comprehensive Energy Management” model, which can save users 15-20% of energy costs through energy dispatch optimization. It is recommended that enterprises reserve space for comprehensive service upgrades when planning new projects to create conditions for future business expansion.
The investment layout suggestions are divided into three levels. In the short term (1-2 years), focus on markets with high policy certainty and mature electricity price mechanisms, such as distributed photovoltaic projects in central Japan and offshore wind power projects on the west coast of South Korea. In the medium term (3-5 years), emerging markets with growth potential can be deployed, such as offshore wind power in central Vietnam and geothermal projects in Indonesia. In the long term (more than 5 years), it is necessary to proactively deploy cutting-edge technologies, such as green hydrogen preparation, ocean energy development and other fields.
In terms of specific market selection, it is recommended to adopt the “scoring system” decision-making model. The model includes factors such as policy support (25%), power grid access conditions (20%), resource endowment (20%), market demand (15%), and business environment (20%). According to the latest evaluation, regions such as the Kanto region of Japan, Jeollanam Province of South Korea, and Binh Thuan Province of Vietnam have higher scores and are suitable for priority investment.
Three new trends require special attention in risk management and control. The first is supply chain risk. Geopolitical factors may lead to disruptions in the supply of critical equipment. It is recommended to deal with this through supplier diversification and inventory optimization. Secondly, there are network security risks. As the level of intelligence increases, the threat of hacker attacks increases, and network security investment needs to be strengthened. The budget should account for 3-5% of the total project investment. The third is environmental and social risks, especially the increasingly stringent requirements for biodiversity protection. It is recommended to conduct an environmental baseline survey in advance and reserve sufficient investment in environmental protection.
Financing strategies also need innovation. The traditional project financing model is being challenged by tightening liquidity, and it is recommended to explore new financing channels. For example, green bonds are becoming an important option, and the scale of green bond issuance in the Asia-Pacific region is expected to reach US$150 billion in 2024. It is recommended that companies prepare for green certification in advance and establish an ESG reporting system to obtain more favorable financing conditions.
Talent reserves should focus on future needs. In addition to traditional engineering and technical talents, it is also necessary to strengthen the cultivation of new talents, especially professionals in the fields of digital operations, carbon asset management, and cross-cultural management. It is recommended to establish a targeted training mechanism with universities and improve the capabilities of existing teams through internal training. The experience of Temasek in Singapore shows that establishing a complete talent training system can control the brain drain rate within 8%.
Finally, it is recommended that enterprises establish a market dynamics tracking mechanism, regularly evaluate changes in the investment environment, and adjust investment strategies in a timely manner. An overseas investment advisory committee can be established to bring together industry experts, legal advisors, financial experts and other forces to provide professional support for investment decisions. Practice has shown that scientific decision-making mechanisms can reduce investment risks by more than 30%.
In the next five years, the Asia-Pacific renewable energy market will see both opportunities and challenges. Enterprises need to make adequate risk plans and adopt sound investment strategies while seizing opportunities, so as to occupy a favorable position in market competition.
