Unlocking Potential Renewable Energy Finance in Southeast Asia

A clean energy transition in ASEAN will cost at least USD 290 billion, or USD 27 billion annually until 2025. However, compared to projects running on fossil fuels, the lowering cost of wind and solar is less attractive due to their capital-intensive and high-risk nature, which makes it challenging for small businesses to undertake the renewable energy development. In addition, limited financial requirements and available projects are other issues with renewable energy development. The appearance of Energy Transition Mechanism (ETM) and Just Energy Transition Partnership (JETP) in Indonesia are two examples of financial mechanisms that hopefully support the phase-out of fossil fuels and accelerate the deployment of renewables. The dominance of public funding in green infrastructure should be balanced with the role of the private sector in pushing for financing utility-scale projects. Foreign top former investors of coal projects in southeast Asia, China, Japan, and South Korea, which they already announced would no longer invest in new coal projects abroad, are very important to anticipate from the perspective of an economic lens. To accelerate the deployment of renewable energy sources and the transition to green energy, a combination of national and international finance as well as cooperative measures among ASEAN members are now required.

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