Skip to content
  • About us
    • The Board and Committees
    • Investment Management team
    • External advisers
    • How to invest
  • Impact
    • Our triple return
  • Portfolio
  • Investor centre
    • Share price information
    • Publications and financial reports
    • Regulatory news service
    • News and insights
  • Contact us
Menu
  • About us
    • The Board and Committees
    • Investment Management team
    • External advisers
    • How to invest
  • Impact
    • Our triple return
  • Portfolio
  • Investor centre
    • Share price information
    • Publications and financial reports
    • Regulatory news service
    • News and insights
  • Contact us
  • About us
    • The Board and Committees
    • Investment Management team
    • External advisers
    • How to invest
  • Impact
    • Our triple return
  • Portfolio
  • Investor centre
    • Share price information
    • Publications and financial reports
    • Regulatory news service
    • News and insights
  • Contact us

Renewable energy – the investment opportunity in Asia

  • Raviraj Salecha
  • 21 March 2022
  • Insights
  • Download PDF

Over US$530 billion was spent on new energy generation capacity in 2021, and it is expected that renewables will account for 70% of that figure – a significant increase in recent years, establishing renewable energy as an asset class in its own right.

The UN Environment Program's Emission Gap Report has declared India as the only major country to be on track to achieve its targets set out in the Paris climate agreement.

Raviraj Salecha Tweet

Despite such encouraging growth, more needs to be done to help ensure this compelling market reaches its full impact potential. Significant energy investment resulting from sound, enabling policy frameworks is critical to accelerate the global energy transformation and to achieve climate and development targets.

Nowhere is this more pertinent than Asia as the continent’s share of global energy consumption is set to grow from 34% today to over 50%1 in the next twenty years due to population and economic growth. Without drastically increased amounts of capital invested in renewable energy and sustainable infrastructure assets, progress made to date across Asia will quickly become undermined.

The latest UN Intergovernmental Panel on Climate Change (IPCC) report highlights the breadth and depth of climate change impact. The message is clear: the adverse impact on the climate is far more widespread and severe across the world than previously documented, especially for developing regions. It explicitly states that climate change is caused by humans. In fact, the UN Secretary General, Antonio Guterres, has said “fossil fuels are a dead end”.

Crowded streets in Delhi, India

Asia’s share of global energy consumption is set to grow from 34% today to over 50% in the next twenty years due to population and economic growth.

Without drastically increased amounts of capital invested in renewable energy and sustainable infrastructure assets, progress made to date across Asia will quickly become undermined.

Case Study – India

India has witnessed unprecedented growth in the renewable sector over the past decade, rivalling capacity additions anywhere in the world. The growth has been supported by large amounts of both domestic and global capital. The Institute for Energy Economics and Financial Analysis (IEEFA)2, notes critical factors for sustained financing include lenders adapting to the evolving renewable market, a dedicated infrastructure finance bank, careful evaluation and financial structuring of the technological shift towards Indian modules and inverters, and perhaps most importantly – attracting environment-focused investors. India is already nine years ahead of schedule on its COP21 (Paris Summit 2015) commitment to achieve 40% installed electricity capacity from non-fossil sources by 2030. Furthermore, the UN Environment Program’s Emission Gap Report has declared India as the only major country to be on track to achieve its targets set out in the Paris climate agreement.

At COP26, Indian Prime Minister Narendra Modi declared that India will increase its non-fossil energy capacity to 500 GW by 2030 and the country will meet 50% of its energy requirements from renewable energy by 2030. Of this 500 GW, solar installations have the lion’s share of 60% (280 GW) requiring ~25 GW of solar installation per annum for the next nine years.

Renewable energy cost advantages

As well as the overarching environmental incentive, the financial benefits of renewable energy are increasingly clear. It is already significantly cheaper than any new electricity capacity based on fossil fuels, according to a recent report by IRENA3. The research shows that more than half of the renewable capacity added in 2019 achieved significantly lower power costs than the cheapest new coal plants, thanks to new technologies, economies of scale, increasingly competitive supply chains and growing developer experience.

In the decade from 2010, for example, the cost of producing utility-scale solar PV power has plummeted by 82%. Meanwhile, onshore wind (39%) and offshore wind (29%) technologies have also benefitted from significantly decreased costs.

Whilst the 67 nations collectively grew by 40% over the last 20 years, the 30 countries which together comprise 'Emerging & Developing Asia' expanded by an astonishing 325% more than quadrupling their GDP over the period.

Raviraj Salecha Tweet

The investment opportunity

Asia already has a big role in the renewable energy investment boom – more than US$42 billion has been invested in India’s renewable energy sector since 2014. New investment in clean energy in the country reached US$11.1 billion in 20184. Economic growth and the rapidly increasing urbanised populations across Asian countries have driven a considerable increase in demand for energy and electricity across the region. Figures from the IMF show that whilst the G7 nations collectively grew by 40% over the last 20 years, the 30 countries which together comprise ‘Emerging & Developing Asia’ expanded by an astonishing 325%: more than quadrupling their GDP over the period.

There are significant success stories in the energy transition. As noted, India, has shown the intent and commitment to balance growth and environmental considerations whilst developing a more resilient renewable energy infrastructure. This is not a subsidy-dependent sector, unlike the early development of European renewable energy projects.

Despite strong government backing in many countries however, the development of renewable energy projects elsewhere in the region remains an expensive proposition. Due to their capital-intensive nature, a large funding gap is the main barrier to developing renewable energy projects.

The fact remains that Asia is already a major and growing contributor to global greenhouse gas emissions, and the region’s sustainable and green development pathway is crucial for achieving the Paris Agreement objectives. As the returns and stability that government commitment brings become more recognised globally, we see this as an opportunity.

With surging oil and gas prices across the world, investors also need to find solutions to shelter their portfolios from surging inflation which is where renewable investment trusts can play a leading role. Renewable energy cash flows are usually derived from a combination of long-term fixed-price contracts and index-linked energy prices, which makes them uniquely responsive to inflation. Unlike other assets, this link is relatively direct and transparent, as well as legally-enshrined.

Investors now have an opportunity to commit capital to support emerging market countries embarking on the transition path the world desperately needs, while protecting themselves from the current headwinds traditional equity/bond portfolios are facing today.

  1. WEF - Supercharging public-private efforts in the race to net-zero and climate resilience
  2. IEEFA - Renewable Energy Financing Landscape in India
  3. International Renewable Energy Agency - Renewable Power Generation Costs in 2019
  4. India Brand Equity Foundation - https://www.ibef.org/industry/renewable-energy

Subscribe to stay informed

We’ll keep you updated with all of the latest developments with the Trust, as well as occasional alerts about new content from our investment team.

© 2023 ThomasLloyd Group. All Rights Reserved.

Important information

  • Contact us
  • Terms and conditions
  • Privacy policy
  • Privacy centre
  • Contact us
  • Terms and conditions
  • Privacy policy
  • Privacy centre

Registered office

ThomasLloyd Energy Impact Plc
The Scalpel, 18th Floor
52 Lime Street
London
EC3M 7AF

Email: info@tlenergyimpact.com

Important information

A problem was detected in the following Form. Submitting it could result in errors. Please contact the site administrator.

Due to restrictions under applicable securities laws, access to this website is not permitted in certain jurisdictions.

By selecting a country, you certify that you are an individual resident and located in the country stipulated by you above and that you have read and understood this notice.

The information contained in this website does not constitute an offer to sell or issue, or the solicitation of an offer to purchase, subscribe for or otherwise acquire, any securities of ThomasLloyd Energy Impact Trust plc in any jurisdiction in which, or to any person to whom, such an offer or solicitation would be unlawful.

THIS WEBSITE IS NOT INTENDED TO OFFER OR TO PROMOTE THE OFFER OR SALE OF THE SHARES (THE “SHARES”) OF THOMASLLOYD ENERGY IMPACT TRUST PLC (THE “COMPANY”) TO US PERSONS OR IN THE UNITED STATES OR IN ANY OTHER JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, TO DO SO WOULD CONSTITUTE A VIOLATION OF APPLICABLE LAW OR REGULATION.

THE MATERIALS CONTAINED HEREIN ARE NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, TO US PERSONS OR INTO OR WITHIN THE UNITED STATES, AUSTRALIA, CANADA, SOUTH AFRICA, JAPAN OR ANY OTHER JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, TO DO SO WOULD CONSTITUTE A VIOLATION OF APPLICABLE LAW OR REGULATION.

The information contained herein and on the pages that follow does not constitute or form a part of any offer to sell or issue, or the solicitation of any offer to purchase, subscribe for or otherwise acquire, any securities in the United States or in any jurisdiction in which such an offer or solicitation would be unlawful. The Company has not been and will not be registered under the United States Investment Company Act of 1940, as amended (the “Investment Company Act”) and, as such, holders of the Shares are not and will not be entitled to the benefits of the Investment Company Act. The Shares have not been and will not be registered under the United States Securities Act of 1933, as amended (the “Securities Act”), or with any securities regulatory authority of any state or other jurisdiction of the United States, and may not be offered, sold, resold, pledged, transferred or delivered, directly or indirectly, into or within the United States or to, or for the account or benefit of, “U.S. persons” as defined in Regulation S under the Securities Act ("US Persons"), except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and in compliance with any applicable securities laws of any state or other jurisdiction of the United States and in a manner which would not require the Company to register under the Investment Company Act. There has been and will be no public offer of the Shares in the United States. The Shares have not been and will not be registered under the applicable securities laws of Australia, Canada, South Africa or Japan. Potential users of the information contained herein and on the pages that follow are requested to inform themselves about and to observe any applicable restrictions.

The information contained herein and on the pages that follow may contain forward-looking statements. Any statement other than a statement of historical fact is a forward-looking statement. Actual results may differ materially from those expressed or implied by any forward-looking statement. The Company does not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. You should not place undue reliance on any forward-looking statement, which speaks only as of the date of its issuance.

Nothing on the pages that follow constitutes investment advice and any recommendations that may be contained herein have not been based upon a consideration of the investment objectives, financial situation or particular needs of any specific recipient.

Potential investors should be aware that any investment in the Company is speculative, involves a high degree of risk, and could result in the loss of all or substantially all of their investment. Results can be positively or negatively affected by market conditions beyond the control of the Company or any other person. The target return set out on the pages that follow is a target only. There is no guarantee that the target return set out on the pages that follow can be achieved or can be continued if achieved. There may be other additional risks, uncertainties and factors that could cause the returns generated by the Company to be materially lower than the target return set out on the pages that follow.

Past performance of similar instruments is not a reliable indicator of future results of the Company.

YOUR CAPITAL IS AT RISK. THE VALUE OF YOUR INVESTMENT CAN GO DOWN AS WELL AS UP, SO YOU COULD GET BACK LESS THAN YOU INVESTED.

The Company may change these terms and conditions from time to time and any such changes will be posted on this website. Your access to this website is governed by the version of these terms and conditions then in force.

By clicking “I understand and agree” below, you represent, warrant and agree that you (1) have read, understood and agree to be bound by the terms and conditions and other information set out above, (2) are permitted under applicable laws and regulations to receive the information contained herein and on the pages that follow, (3) are located outside the United States and are not a US Person and (4) agree that you will not transmit or otherwise send any information contained in this website to any persons in the United States or who are US Persons or to any publications with a general circulation in the United States. If you cannot so represent, warrant and agree, you must not tick to accept the terms and you must exit this website.