Faced with a yawning energy deficit in years ahead and the need to protect against climate change, Asia is looking for fresh ways to finance its shift toward renewables.
"We flipped it over to make it an investment proposition. Rather than focusing on the obvious and important question of climate change here, [we asked] is this a new economic driver? And it turns out that it is," said Dr. Paul Heithersay, deputy chief executive at the South Australian government's Department of State Development. "It's a very high-tech industry."
His state has a target of 10 billion Australian dollars in renewable investment in the next three years, he noted at the DBS Asian Insights Conference last week.
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Asia needs a huge amount of investment to meet the region's growing energy demand. The International Energy Agency estimates Asia will need around $700 billion in energy investment through 2035. Globally, institutional investors likely can provide at most around 25 percent of renewable project equity investment and around half of the debt over the same period, according to a 2013 report from nonprofit researcher Climate Policy Initiative.
But convincing governments to go with renewable projects, instead of sometimes cheaper conventional fossil fuels, requires bringing economic risk and reward to the forefront, Ronald Kapavik, senior director at IHS Energy said at the conference.
Of the 1,500 gigawatts (GW) of renewable energy infrastructure set to be added globally over the next 15 years, around 600GW will likely be in China, he said.
"If this game-changing model is to take place, if there is to be disruption in energy and actually benefit climate change policy, all the players across the value chain - including government, industry and the private sector - will need to be led by the market," Kapavik said.
Some countries are seeking innovative ways to finance those projects, including using disruptive technologies, such as crowdfunding.
"Crowd-funding and community-funding are attractive for smaller scale distributed solar projects in China," advisory firm EY said in a report last year. "Investors can invest small amounts of capital for specific projects. Since financing is provided to individual projects, it provides developers a strong incentive to design and implement quality projects which in turn ensures an efficient use of capital."
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Last year in China, United Photovoltaics successfully used crowdfunding to raise 10 billion yuan (around $1.6 million) from a pool of 100 investors to build a 1 MW off-grid solar farm, a tactic the Hong Kong-based company has said it plans to use again.
It's a method that taps into smaller investors' interest.
"The force of public opinion can't be ignored and the financial markets are dictating it," Australia's Heithersay said.
"In South Australia we have a deep, deep, geothermal resource and a lot of effort has gone into it in recent years," Heithersay said. "When we used to go along to shareholder meetings of the companies that were doing this, it was all the mums and dads that were there. Clearly, [there's]a very strong movement among the general populace that we want to invest in clean energy and they're all there out in force backing these companies that were probably a little bit before their time," he said.
It's not just small investors that are looking at investing in Asia's renewable projects; Institutional investors are also interested.
"I can not count the number of employees we lost in Shell China to private equity firms or JV (joint venture) firms looking to start up renewables business in China," Goh Swee Chin, chairperson at Shell Singapore, told the DBS conference.
—By CNBC.Com's Leslie Shaffer; Follow her on Twitter @LeslieShaffer1
