Chinese firms step up investments in climate-friendly power projects in Southeast Asia as costs fall, policy shifts

Supported by solar equipment makers, Chinese investors are in a strong position in terms of cost-competitiveness in project tenders

While Chinese investors are paying more attention to renewable energy, they will not stop investing in fossil fuel projects in the region, says WaterRock Energy Economics

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Chinese companies and financiers are stepping up their investments in Southeast Asia’s renewable power sector. Photo: Xinhua

Published: 10:30am, 11 Jan 2021Updated: 11:26pm, 11 Jan 2021

Chinese companies and financiers, the biggest backers of coal power plants globally, are stepping up their investments in Southeast Asia’s renewable power sector, thanks to the falling costs of clean energy and climate-friendly policy in the region, according to project advisers.

“There is an increasing shift in focus since 2018 to invest in renewable projects,” said Singapore-based Kim Hock Ang, a principal in law firm Baker McKenzie Wong & Leow’s finance and projects team. “I see Chinese sponsors setting up subsidiaries focusing solely on [them].”

Supported by China’s solar equipment manufacturers, which have built the biggest supply chain in the world, Chinese investors are in a particularly strong position in terms of cost-competitiveness in project tenders.

“Chinese bidders have had overwhelming success in recent Myanmar solar tenders,” he said. “They have also been active in Vietnam, Cambodia and Laos.”

Vietnam’s policies allowing full foreign ownership of renewable projects also played a role in attracting Chinese companies, he added. Malaysia and the Philippines have foreign ownership restrictions.