Asia asset owners eye battery storage amid renewables push
Asset owners in Asia are picking up emerging opportunities in battery energy storage as the world races for renewable energy solutions.
However, securing funding remains a challenge in energy transition, according to Rockefeller Foundation Asia representative Deepali Khanna, who noted that less than a fifth of required funding was in place, and often failed to reach the Global South.
At the United Nations Climate Change Conference last December, popularly known as COP28, 11 countries, including India, Egypt, and other African and Central American countries, joined a battery energy storage systems (BESS) consortium.
These countries set a goal of deploying 5GW of BESS by the end of 2027, as part of a roadmap to ultimately achieve 400GW of renewable energy by 2030.
“This is very exciting. Because as we look at renewables, the battery energy storage piece is so critical,” said Khanna, vice president, Asia at Rockefeller Foundation.
“We know in many cases that the combination of renewable energy and battery energy storage is making it cheaper than fossil fuels,” Khanna said in a panel of the recent Asia Pacific Climate Business Forum in Hong Kong.
The 11 countries of the consortium are expected to receive support from partners that include the African Development Bank, the World Bank, the Asian Development Bank, the Inter-American Development Bank, the Agence Française de Développement (AFD), Africa50 and Masdar.
The partners will help prepare projects, improve the regulatory environment and unlock private and public investment.
BESS are rechargeable batteries that can store energy from different sources. They can be used to provide backup power, improve grid stability and decarbonise the power system.
Recently, Temasek and BlackRock led a $150 million funding in Antora Energy, a US-based manufacturer of thermal batteries that delivers zero-emission industrial energy. US-based Nature Conservancy also joined the funding.
One of China’s largest asset owners, Ping An Insurance Group also identified power storage as a good investment opportunity in China.
Its chief investment officer Benjamin Deng told AsianInvestor in a recent interview that Ping An is adding investments in the localisation of power supply as an alternative to the national grid, including battery storage systems.
CLIMATE FINANCE
Besides the development of battery energy storage, Rockefeller Foundation’s Khanna shared three important milestones of COP28, namely tripling renewable energy capacity by 2030; the strict reduction of unabated carbon emissions; and the agreement among 198 governments to transition away from fossil fuel.
“When you look at these recommendations, what is really needed is climate finance. And that's where we've seen that the climate finance is not necessarily going to the Global South, where the need is really there,” said Khanna.
She noted that only 16% of climate financing requirements had been met, according to a survey jointly released by the Rockefeller Foundation and BCG during COP 28.
According to the International Energy Agency, clean energy investment in developing and emerging economies excluding China must increase seven-fold to $1.9 trillion a year by the early 2030s to keep a 1.5°C limit on warming within reach.
“There's an opportunity for us to work together for our collective futures,” she said.
At COP28, the Rockefeller Foundation, Climate Envoy John Kerry, and Bezos Earth Fund launched an energy transition accelerator to channel private sector investment to accelerate energy transition in developing economies.
“This is an initiative where along with the Rockefeller Foundation, the US government and the Bezos fund have come together to see how we can unlock private capital,” she said.
“(We) are in a position where we can be investing in systems of energy transition, while innovation, jurisdictional scale carbon credits, and ensure that countries are being incentivised, particularly in the Global South, where they reduce carbon emissions,” Khanna said.
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Khanna, based in Bangkok, leads efforts of the Asia regional office to build networks with different institutions, and leverage financing and collaborations among other activities.
The Rockefeller Foundation has deployed resources in Asia for over a century. It typically partners with global financial institutions and other institutional investors looking to deploy capital for impact at scale.