Renewable energy projects gained further traction across the Asia-Pacific region in 2022 with groundbreaking and innovative structures highlighting many of the diverse infrastructure financing requirements during the period.
Hybrid renewables projects – a combination of wind, solar and battery energy storage system (BESS) – are increasingly being bid out in several markets such as Australia, India and Japan. The inclusion of BESS in the projects is a game-changer as it helps address the issue of intermittency and bolsters the effectiveness of renewable energy as a reliable source of power needed to sustain economic development and help the region pivot away from fossil fuels.
Leading renewable energy company Vena Energy is among the sponsors embracing hybrid projects on its way to being voted as this year’s Triple A Renewable Energy Sponsor of the Year for Asia-Pacific. The business of the Singapore-headquartered company is organized into three verticals – onshore (wind and solar), offshore wind, and energy storage (storage and transportable storage).
Vena Energy is the sponsor in the Tailem Bend II solar and battery storage hybrid project in South Australia, which has a capacity of 128.5 megawatts derived from the 87MW solar project and the 41.5MW BESS. The solar project is capable of supplying about 35,000 homes with clean energy annually, reducing more than 207,000 tonnes of greenhouse gas (GHG) emissions.
In March this year, the company announced that it has reached financial close on the Gudadur hybrid project, a 176MW solar-wind project in the Indian state of Karnataka. Consisting of 48MW of solar capacity and 128MW of wind capacity, this is Vena Energy’s first green project financing arrangement in India. It is capable of generating enough clean energy to satisfy the electricity requirements of over 500,000 households annually, or the equivalent of reducing around 73,688 tonnes of GHG emissions compared to thermal generation.
In September last year, it announced that it would launch two offshore wind projects in Taiwan, while in May it signed a joint development agreement with Korea Midland Power Company for the development of an offshore wind project in South Korea.
Bolstering capacity, efficiency
Axiata Group of Malaysia is recognized as the Telecom Sponsor of the Year with its Sri Lankan unit Dialog Axiata Telecom undertaking the expansion and improvement of its network capacity through the upgrade of existing sites and the construction of new 4G sites. The company, which secured a US$150 million loan facility from the International Finance Corporation in July 2022, is also increasing its fibre optic network footprint and implementing upgrades to increase both capacities and efficiencies in core network operations.
In June last year, Axiata and its Indonesian subsidiary PT XL Axiata completed the acquisition of the combined 66.03% equity interest in PT Link Net for 2.63 billion ringgit (US$571.70 million), strengthening its position as a regional digital champion in the delivery of converged telecom services.
US private equity KKR is chosen as the Institutional Investor of the Year. The company invested another US$250 million into Indian decarbonization platform Serentica Renewables in April this year after initially investing US$400 million in November 2022. The additional investment will support Serentica’s efforts to achieve 4,000MW of installed renewable energy capacity that will aid clean energy delivery to large-scale industrial customers. KKR also invested in telecom towers in the Philippines through Frontier Tower Associates Philippines, which acquired tower assets from Globe Telecom. It was also a sponsor in X-Elio Energy’s solar power plant in Japan, which will deliver over 19 gigawatt-hours of renewable energy annually.
The Asian Development Bank (ADB) retains the honour as the Multilateral Agency of the Year in Asia-Pacific as it provides financing to privately-held and state-sponsored companies across the region. It raised its objective for climate financing for 2019-2030 from US$80 billion to US$100 billion in line with its commitment to becoming the climate bank in APAC. In Vietnam, it was involved in the US$107 million project financing for BIM Wind Power Joint Stock Company relating to the construction of an 88MW wind farm in Ninh Thuan province. This is the first non-recourse renewable energy project financing closed in Vietnam without requiring a guarantee from the sponsor.
The bank was also involved in the Binh Duong Water US$13 million waste management and energy efficiency project, also in Vietnam, which supports the country’s promotion of waste-to-energy technology and integrated waste management approach to reduce land filling volume while contributing to the reduction in GHG emissions. ADB has supported a number of electric mobility projects in the transport sector, providing financing for an electric battery-powered bus project in India, electric ferries for mass rapid transit in Thailand, and in the manufacturing of electric buses in Vietnam.
The PPP (public-private partnership) Agency of the Year award for APAC is once again given to PT Penjaminan & Infrastruktur Indonesia (PT PII), which was established as part of the government’s efforts to accelerate infrastructure development in the country. It aims to improve the creditworthiness of PPP infrastructure projects by providing guarantees based on appraisal framework and clear risk allocation criteria. The guarantee is expected to improve the bankability of Indonesia’s PPP infrastructure projects while attracting lenders and investors to participate in the financing of projects.
Up until February 2023, PT PII had guaranteed 32 PPP projects with over 287 trillion rupiah (US$19.12 billion) of total project value in such sectors as electricity, drinking water, information and communication technologies, toll and non-toll roads, and other transport projects.
Sustainable financing deals
Among the banks, Société Générale is voted as the ESG Project Finance House of the Year for APAC as it helped arrange a series of sustainable infrastructure financing transactions across the region. It was a mandated lead arranger in the innovative round-the-clock battery-enabled US$985 million project financing for ReNew Surya Roshini Private Limited in India. The hybrid project, described as a game-changer for India’s renewable energy sector, comprises of wind capacity (900MW), solar photovoltaic capacity (400MW), and battery storage capacity (100MWh), which addresses the intermittent nature of renewable energy by providing a stable base load power. Also in India, it was a mandated lead arranger and bookrunner in the US$288 million green loan facility for Adani Solar Energy Jaisalmer One Private Limited. The proceeds were used to finance the construction of a 450MW solar-wind hybrid renewable power project in the state of Rajasthan, which secured a 25-year power purchase agreement from Solar Energy Corporation of India.
Over in Australia, Société Générale was a mandated lead arranger in the A$2.4 billion (US$1.57 billion) sustainability-linked loan and A$2 billion back-up facilities for Sydney Airport Finance Company. This is one of the largest loan market transactions in the infrastructure space in Australia. The facilities incorporate an ESG margin adjustment link based on ESG risk rating targets, which the airport is already delivering. In New Zealand, the bank acted as the financial adviser for the NZ$245.3 million (US$148.67 million) sustainability loan refinancing for the New Zealand Schools 1 and 3 PPP, supporting the future expansion of the country’s public schools. The projects were delivered using the public-private partnership structure and the facilities were accredited as sustainability loans aimed at achieving UN Sustainability Development Goals in accordance with Green and Social Loan Principles.
The Project Finance House of the Year award for APAC goes to Sumitomo Mitsui Banking Corporation (SMBC), with its participation in several landmark and significant transactions in the region in The Triple A Sustainable Infrastructure Awards 2023. The bank was a green loan coordinator and mandated lead arranger in the US$985 million hybrid round-the-clock project financing for Renew Surya Roshini Private Limited, and a mandated lead arranger in the Ishikari integrated offshore wind power and battery storage project financing, which was described as a global first for the energy industry. The 112MW project is Japan’s largest combined offshore wind and power storage facility – a key milestone for the country’s energy transition.
In other infrastructure financing transactions, the bank was a mandated lead arranger in the 99MW Jeonnam fixed-bottom offshore wind project, the first project finance transaction for a South Korean offshore wind farm funded by domestic and international banks. It was also involved in the acquisition of a controlling interest in a concession to operate the registration and licensing, as well as the custom plates business, of the Victorian State Department of Roads – believed to be the first-ever private sector financing for a motor vehicles registry globally.
Singapore lender DBS remains at the forefront in project advisory with 17 financial advisory mandates in 2022 as it retains the award as the Project Finance Advisory House of the Year. The mandates span across six geographies and in such industries as renewable energy, oil and gas, power (gas-fired), metals and mining, water utilities, and transportation.
The bank closed a total of 23 deals (including lending transactions) in 2022. Its project finance footprint covers growth markets in the region, including India, Bangladesh, Vietnam, Taiwan, Australia and Indonesia.
K-Sure is the ECA (export credit agency) of the Year with its participation in the US$2 billion loans for SK On’s battery gigafactory in Hungary, US$711 million term loan facility for Hyundai Motor Group and LG Energy Solution’s greenfield electric battery manufacturing facility in Indonesia, and the US$1 billion facility for LG Display to partly finance the expansion of its existing OLED (organic light-emitting diode) module manufacturing facility in Vietnam.
HSBC is selected as the ECA Coordinator Bank of the Year for executing such role in the deals for LG Display and SK On, as well as in the Acciona Energia’s A$1.10 billion green loan facility for MacIntyre wind farm in Australia, which was covered by the Spanish ECA CESCE. The bank also acted as the sole coordinator, mandated lead arranger, lender and facility agent for general corporate loan for Hengyi Petrochemical of China. The Italian ECA SACE push facility for this deal is untied and is not linked to any Italian export contracts or Italian procurements.
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