Offshore wind power needs Singapore’s expertise as Asia’s reliance on fossil fuels rises

Opportunities abound for Singapore’s financial hub to play a key role in developing strategic investments and partnerships that are crucial to the region's renewable energy ambitions.

Southeast Asia is at risk of deepening its reliance on fossil fuels as it tries to meet surging electricity demand. On 22 October, during Singapore International Energy Week (SIEW), the International Energy Agency (IEA) warned that the region needs to boost clean energy investments to US$190b, about five times the current level, by 2035 to achieve its climate goals. To hit these targets, urgent action, as well as increasing access to green finance, is needed. 

Significantly, Singapore and offshore wind power, can play an outsized role in supporting Asia’s decarbonisation, energy security, and economic growth. 

With investment in Asia Pacific’s (APAC’s) offshore wind sector potentially hitting hundreds of billions of dollars over the next 25 years, numerous opportunities await investors and Singaporean companies. Indeed, Enterprise Singapore, the Association of Singapore Marine  & Offshore Energy Industries (ASMI), and the GWEC, an international trade association, announced in late September that they are working together to foster more project and innovation opportunities between the city-state and international players in the space.  

Billions of dollars of investment 

Total investment in offshore wind in APAC is projected at US$621 billion by 2050. Markets expecting strong growth include China, Japan, South Korea, India, Vietnam, the Philippines and Australia.  

Moreover, the offshore wind sector uses fleets of installation, construction, and maintenance vessels, meaning another US$72b to US$97b could be required for new ship construction by 2050, according to research from the Institute for Energy  Economics and Financial Analysis. 

This would be a boon to shipbuilders in the region as well as the maritime economies, like  Singapore, that support and maintain such fleets. Over the years, many Singapore offshore and marine companies have pivoted from just servicing the oil and gas industry to also doing business in renewables. Several, including Seatrium, Mooreast, and Cyan Renewables, are already redeploying assets and recalibrating solutions for offshore wind generation. 

Indeed, offshore wind holds the key to the energy transition and net-zero aspira>ons, as it provides large-scale power and generates more consistent energy compared to other forms of renewables. This makes it highly efficient and leads to improved project economics. 

The Singapore opportunity 

Nevertheless, scaling up finance ultimately remains one of the biggest challenges facing the sector in the region. Singapore, with its well-established banking and finance sector, can take the lead to help catalyze green project development with innovative financing solutions and partnerships. 

However, worryingly, as COP29 looms large - where global leaders will gather to negotiate and advance efforts to combat climate change - there remains a lack of alignment on how to revamp the risk perceptions of capital markets to mobilize private investment in renewable energy. This is an opportunity for Singapore to play a key role in regional industrialisation by driving the expansion and modernisation of critical infrastructure while greening regional economies.  

Positively, Enterprise Singapore understands the opportunities to grow the nation’s economy and create good jobs. EnterpriseSG will be leading a delegation of Singaporean companies to the second annual wind energy summit of APAC industry players, civil society groups,  financiers, and government representa>ves in South Korea from 26-28 November 2024 to help accelerate the development of the nascent sector.  

Asia needs low-cost financing to harness offshore wind  

Still, the offshore wind industry urgently needs to lower the risk perceptions among financiers to access more competitive finance. In many countries in the Asia-Pacific,  excluding China, the industry faces high financing costs as it is a relatively new technology.  This poses a challenge because when the cost of capital is 1% higher, total capital spending costs for an offshore wind project increase by around 8%. Thus, a higher cost of capital plays an outsized role in the overall costs of offshore wind. 

Access to green finance is vital 

Whilst the cost competitiveness of renewables -- such as wind and solar -- continues to strengthen compared to fossil fuels, many developing economies in the region remain constrained in financing the buildout of renewables and related grid infrastructure. Improved access to financing is vital for large-scale renewable energy projects, which are characterised by high upfront capital investments and zero fuel costs. 

Remember that offshore wind projects are many years in the design and construction phase.  To have an impact they need to move ahead now. Increased collaboration across the public and private sectors, as well as innovative financing, will be essential for scaling solutions. 

So, let's push boundaries, invest in sustainable innova>ons, and advocate for policies that accelerate adoption. Together we can achieve a sustainable future. Crucially, Singapore can lead the way. But action is urgently needed.

This is why GWEC is calling on experts from renewable energy finance and project development teams, as well as export credit agencies, development finance ins>tu>ons,  commercial banks, financial agencies, policymakers, and civil society groups, to join the  APAC Wind Energy Summit in South Korea in late November. 

The objective is to create a common perspective on how to increase wind project investability and achieve ambitious,  sustainable financing conditions for renewable energy in the region this decade to hit Asia’s decarbonisation, energy security, and economic growth targets. Crucially, Singapore and  Singaporean companies can play an outsized role.