Singapore’s Temasek Holdings aims to invest selectively in renewable energy projects balancing the risks and uncertainty with the market potential even as global investment in climate technologies increases, according to a leading executive at the state investment firm.
“I guess as an investor we have a bit more latitude because we look at the entire value chain and decide on which part of the value chain is ripe for investments,” said Russell Tham, head of strategic development and joint head of enterprise development group at Temasek at the Ecosperity Week 2022 yesterday (June 7).
Temasek is interested in technologies related to the direct generation of electricity such as solar photovoltaic (PV), micro wind turbines, geothermal energy, and fusion – a form of energy generated from nuclear reactions, he told the audience during a panel discussion.
“We look at micro wind turbines that could have micro use cases in the future … and fusion, potentially a major gamechanger. We’ve made investments in that regard,” he said, adding that Temasek has also set aside capital for advanced technologies in the oil and gas industry.
Complementing them are investments in energy storage such as battery technologies for the electric vehicle (EV) industry, including long-duration cells with storage capacity of 100 hours.
Other forms of energy transition technologies that the firm is studying include electrolysers, hydrogen carriers, next-generation gas turbines, and carbon capture technology.
ASSESSING THE RISKS
In assessing the viability of each technology investment, Tham looks at factors such as the risks involved, performance limits, unit costs for deployment, market acceptance, competition, and the potential investee company’s research and development strategy.
The importance of emerging climate technologies such as green hydrogen was also mentioned by Singapore’s senior minister and national security coordinating minister Teo Chee Hean in his opening remarks, in which he called on the private sector to play an active role in sustainability.
Meanwhile, a report by Bain & Co and Temasek, with input from Microsoft, presented at the event found that Southeast Asia is falling short in its decarbonisation efforts and that more climate action investments would be required by the region to reach net-zero goals.
“We remain bullish on the US$1 trillion economic opportunities in Southeast Asia, but we need to step up as a region to strengthen the investable market and increase green capital flows,” said Dale Hardcastle, partner and director of the global sustainability innovation center (GSIC) at Bain & Company.
OUTDATED INFRASTRUCTURE POSES BOTTLENECKS
In Tham’s opinion, there is no shortage of capital for new renewable energy projects generally, but outdated infrastructures such as power grids and the lack of storage capabilities are holding back the progress on decarbonisation.
“There’s a lot of capital going in. I think for the last 18 months, close to US$80 billion has gone into climate tech … a substantial portion has gone into specifically renewable energies,” he said.
However, the current power grids are ill-equipped to cope with the connectivity and transmission demands from the new renewable energy sources - such as solar and wind - thus creating a bottleneck in the system, he said.
He said the average waiting time for a new energy project to be connected to the power grid in the US is about four years.
Grid expansion and energy storage are two sides of the same coin, according to Alfred Wang, co-founder and chief executive of Alpha-ESS, a global energy storage solution and service provider, who spoke at the same panel.
One of the solutions to the twin problem is government regulation and incentives, he said.
“In Europe, there are right now a lot of policy regulations and subsidies to [promote] renewable [energy] and storage,” he said, adding that Germany has laws requiring companies to comply with mandatory energy storage capabilities.