, Singapore

Asian institutional investors eye renewables as shelter from market volatility

About 22% of investors are planning to increase their allocations to the sector by more than 20%.

Asian institutional investors’ interest in the renewable energy sector won’t be waning anytime soon, according to Octopus Investments, which found that 22% of investors are planning to increase their allocations to the sector by more than 20%. Moreover, no one plans to leave the party as according to Hiti Singh, head of institutional funds at Octopus Investments, no one wants to decrease their investment in the sector.

“The key investment drivers for Asian institutions are the opportunity to diversify from volatile financial markets, benefit from long-term yields and to fulfil Environmental, Social and Governance (ESG) criteria,” Singh told Asian Power. “Institutional investors, including pension funds, have long-term liabilities that must be matched and therefore the longevity of renewable assets is particularly attractive.”

In accordance with the Intergovernmental Panel on Climate Change’s (IPCC) warning on rising global temperatures, ESG is becoming increasingly important for pension funds and large institutional investors when evaluating investment opportunities across the globe and across assets, she added. “Emissions are still rising, and institutions are beginning to recognise that environmental sustainability is no longer a box-ticking exercise. This is highlighted by the 78% of Asian respondents who cited ESG as a key investment driver,” Singh said.


Source: Octopus Investments

The most attractive project types according to Asian institutional investors are grid-scale solar power projects, with 45% indicating that they have invested in some. Other investments went to onshore wind power plants (22%), offshore wind power plants (22%), and waste and biomass power plants (11%). Meanwhile, hydropower plants did not seem to be attractive, as zero institutional firms have said they invested in the generation source.

Amongst Asian institutes, 6.1% are planning to invest in the sector, whilst 3.3% already have allocations to renewable energy. They are lagging investors in Europe, the Middle East and Africa (EMEA), however, which have the highest level of current and future allocations, at 5.8% and 8.4%, respectively.

According to Singh, respondents to their survey cited lack of in-house renewable skills and resources within their organisation as a key barrier. “Institutional investors in Asia are most concerned about this, with 40% of respondents listing it as a concern,” she said.


Source: Octopus Investments

Asian institutes also cited inadequate size and scale of organisation (60%), access to investment pipeline (47%) and liquidity issues (40%) as additional challenges. Singh commented, “These challenges point to the requirement for larger specialist managers to facilitate investment into the asset class. Such managers can use their scale and existing pipelines to help provide liquidity whilst leveraging their own in-house team of experts to reduce operational risk and drive improved performance.”

Despite these challenges, two-thirds (67%) of Asian respondents cite diversification as the primary driver into renewable infrastructure. “With the end of the market bull run, investors are looking to alternatives as an opportunity to diversify from short-term uncertainties of the equity markets, due to stable and predictable cash yields generated from these assets. Indeed, Asian renewable energy investors attach particular importance to long-term yields and income, with over three-quarters (78%) citing it as the most important driver,” Singh said. 

Since you're here...

...there are many ways you can work with us to advertise your company and connect to your customers. Our team can help you dight and create an advertising campaign, in print and digital, on this website and in print magazine.

We can also organize a real life or digital event for you and find thought leader speakers as well as industry leaders, who could be your potential partners, to join the event. We also run some awards programmes which give you an opportunity to be recognized for your achievements during the year and you can join this as a participant or a sponsor.

Let us help you drive your business forward with a good partnership!

Get Asian Power in your inbox

Danish energy company Ørsted launches expansion in Vietnam

This comes on the back of Vietnam increasing renewable energy to 30% by 2030

South Korea launches its largest 2 GW solar capacity tender

The country is expected to allocate 4 GW of solar capacity in 2021 across two tenders.

ACWA to build largest wind power plant in Central Asia

The company will construct the 1500 MW wind power project in Uzbekistan.

India’s Tata Power contemplating $473m IPO for renewable energy business

It initially planned to seek a partner to invest in its green assets.

China’s solar capacity installation crashes by 82% QoQ in Q1 2021

But increased by 35% YoY compared to Q1 2020.

India’s JSPL sells coal-fired power business for $400m to Worldone

This move aims to reduce the company’s debt and carbon footprint by almost half.

Japan authorizes operations of three ageing nuclear reactors

This is the first time reactors older than 40 years are approved to restart.

India’s NTPC launches tender for 600MW of wind and solar projects

Developers can compete for at least 50 MW to 600 MW in 10 MW multiples.

Here’s why the last dirty fuel project in Japan was scrapped 

The country recently pledged to cut down greenhouse gas emissions by 46% before 2030.

Singapore's Sunseap eyes expansion in Japan after latest Series E funding

The company earned an undisclosed amount from several new Japanese investors.