Cleantech in Singapore
Posted by: inspir3d in Alternative Energy, Cleantech, tags: Cleantech, private equity, venture capitalThe Cleantech industry is defined as the industry which develops and produces products and services that improve operational performance, productivity, or efficiency while reducing costs, inputs, energy consumption, waste, or pollution. The Cleantech industry is thus has many sub-industries under its umbrella, including renewable energy – wind, solar, biomass/biogas, biofuels, waste-to-energy, geothermal, hydroelectric. Other sub-industries would be energy efficiency technology (buildings, smart grids) and also technology that allows transportation to go green – such as electric cars, trains etc.
Singapore has been making a push into the Cleantech industry. Like many other economic initiatives in Singapore, this push comes mainly from creating a regulatory and economic environment that attracts Cleantech foreign investment. Big names that have invested in Singapore include:
- Vesta, one of the biggest wind turbine makers in the world,
- Neste Oil, which just built one of the world’s largest biodiesel refining plants in Singapore, and
- Renewable Energy Corp, which is setting up one of the largest solar manufacturing plants in the island state.
Unfortunately, Singapore is not strong in entrepreneurship. Hence there are few prominent homegrown companies in the Cleantech business. Perhaps the most prominent is Olivia Lum’s Hyflux, which is a market leader in desalination technology and water treatment technology.
Without strength in entrepreneurship, Singapore thus turns to the next best thing. It is leveraging its strength as a financial center to become a Cleantech financing hub in the region. The country is trying to host Cleantech financing events as well as attract Cleantech private equity and venture capital firms to set up shop. This way, it can finance the entrepreneurs if it doesn’t produce them.
The first ever Asia Forum for Clean Energy Financing was recently held in Singapore, and the AFCEF business plan competition attracted several submissions from around the ASEAN region. I attended the business plan finals and it was a very interesting event, featuring proposals in solar, wind, biomass and electric car technology. There was a wide range of proposals, ranging from business seeking startup capital to build their first prototype, to companies which had already secured project finance bank debt and were looking for equity co-investors to achieve financial close.
In terms of private equity/venture capital firms in Singapore focusing on the Cleantech field, there are several. Here is a list of some of them:
- Asia Cleantech Capital
- PCG Asset Management
- Ant Global Partners Indonesia Cleantech Fund
- JAIC Capital Cleantech
- Middle East and Asia Capital Partners (MEACP)
There are also specialist boutique advisory firms in the Cleantech area such as:
- ReEx Capital Asia
- PPL International
My general observation regarding the development of Cleantech in Asia-Pacific is that, in general, the greatest obstacles lie in the area of political will by governments to promote environmentally friendly infrastructure. In Southeast Asia especially, corruption and a lack of a reliable legal framework hold back many companies from investing in what might be feasible renewable energy projects.
The picture looks better in countries like India & China. These are rapidly developing economies with much clean energy needs and at least there is a clear will to develop alternative energy especially in China. However the legal environment is still developing and one still needs the right connections to succeed in those jurisdictions. Of course the most established areas to invest are the developed economies of Australia, Japan and South Korea where there is transparency and where there already are developed alternative energy industries and cleantech industries. In Australia, for example, there is a clear need for water infrastructure as the country is undergoing severe droughts and water shortages.
Finally, here’s a speech on Cleantech in Singapore by EDB’s head of cleantech, Goh Chee Kiong
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