Andrew sat down recently with Joseph Jacobelli at the Asia Climate Finance podcast to discuss progress on financing energy transition – how to replace coal fired power generation with renewables – in Asia.
The potential deal flow is enormous. But in order to make it happen and save the World, major hurdles need to be to overcome:
The easier half of the bargain, building renewables, needs as usual:
- Host governments to set clear legal and regulatory regimes within which the private sector can bring forward individual projects;
- The full cost of renewables to be recognised i.e. include back up / storage capacity, smarten / build out the grid, asset lives are shorter, decommissioning costs are relatively unexplored;
- Structure the risk profile to bring in the huge amounts of dry powder held by the relatively cautious financial institutions.
The more difficult half of the bargain, prematurely retiring coal fired plant, is even more challenging in Asia than in the West. Here is more dependent on coal, assets are younger and host governments are reluctant to lose what little capacity they already have. Forgoing future positive cash flows constitutes an absolute loss and the Big Question is: who will pay for this loss? Developed country Export Credit Agencies and Multilateral Development Banks have a major role to play.
Listen to the podcast to find out how!
As Chris Martin sings (but not in Hong Kong), nobody said it was easy.
