Ep81 A Roadmap for Financing Clean Energy in Southeast Asia with Dinita Setywati and Alnie Demoral, Ember

IMPORTANT DISCLAIMER: THIS AUTOMATICALLY GENERATED TRANSCRIPT IS PROVIDED FOR CONVENIENCE ONLY AND IS NOT THE OFFICIAL OR COMPLETE RECORD OF THE PROCEEDINGS. THE ORIGINAL AUDIO/VIDEO RECORDING REMAINS THE SOLE AUTHORITATIVE RECORD, AND NO RELIANCE SHOULD BE PLACED ON THIS TRANSCRIPT FOR ANY LEGAL, EVIDENTIARY, OR DECISION-MAKING PURPOSES. Ep81 A Roadmap for Financing Clean Energy in Southeast Asia with Dinita Setywati and Alnie Demoral, Ember Alnie Demoral: In many ways the grid is the backbone of the energy transition in the region.

So it determines how fast renewable energy can be integrated, how resilient the system is, and how effectively the countries can participate in cross-border power chains. So if we're talking about urgency, then strengthening the grid infrastructure is absolutely foundational. Dinita Setywati: Yeah. I also think that, most importantly, grid development needs to keep pace with the development planned.

We see that planned network development in a number of countries, not only in Asia, but Europe too, is out of step with energy ambitions. Narrator: Welcome to Asia Climate Finance, your front-row seat to the policies, investments, and actors shaping climate business and finance across Asia Pacific. Subscribe now so others find this essential guide to Asia's Climate Economy and note the disclaimers at the end. Now over to the host, analyst, investor, and author Joseph Jacobelli.

Joseph Jacobelli: Good morning, good afternoon, or good evening, wherever you may be listening from. Welcome to Asia Climate Finance. By sheer coincidence, last week we discussed a great climate finance-related report by Jo Richardson of the Anthropocene Fixed Income Institute, and today we are discussing another great report. We are exploring the immense challenge of funding Southeast Asia's green transition.

The region needs more than $280 billion every year to meet its goals. That is a staggering amount of capital to mobilise. Joining me to discuss how to bridge this gap are two experts from the global energy think tank Ember. Dr Dinita Setywati and Alnie Demoral use data to spark action among decision-makers across the globe.

Dinita brings a unique perspective from her background in disaster relief, and her extensive research on the Indonesian transition. Alnie offers deep industry insight, having moved from the oil and gas sector to working with electric cooperatives in the Philippines. We discussed the latest report on leveraging global capital as ASEAN prepares for critical upcoming summits. We explore why the power grid is the essential backbone of the energy transition and how it determines the speed of renewable integration.

We also examine the different financing models from China, Japan, and the US, and how ASEAN can manage debt while building resilience. From cross-border power grids to the urgent need for a multidisciplinary approach to education, this episode maps out the roadmap for a cleaner future in Asia. Please do send us your comments or ideas to the email address mentioned at the top of the show notes as always. And please enjoy the show.

Hello Alnie and Dinita. How are you? Dinita, you're in Jakarta, right? Dinita Setywati: Yes, I'm in Jakarta.

It's nice and sunny here in Jakarta, Joseph. Joseph Jacobelli: Oh nice. I can't say the same about Hong Kong. It's been pretty horrible weather.

How about yourself, Alnie? How's Manila? Alnie Demoral: Yeah, similar here. It's been sunny this day.

It's kind of nice. Joseph Jacobelli: Okay. I'm obviously in the wrong place then. I should have come to Jakarta or Manila.

Although Manila is only an hour's flight. Well, listen, first of all allow me to really thank you guys for participating in Asia Climate Finance. It's really great to have you and to have your insights. So thank you so much, Dinita and Alnie.

Dinita Setywati: Yes, you're welcome. The pleasure is all ours. Joseph Jacobelli: So, maybe to start, do you think that each of you could possibly share just a little bit about maybe your background beyond the show notes, because show notes will help your bio, including how you became involved in clean energy. Dinita Setywati: Yes, so I started with working in evacuating tsunami victims in Palu, and I saw that electricity had been cut for several days.

So from here on I wanted to work on energy and purpose solutions; how clean energy can be a better solution than fossils. And so Ember happened, and I've been working with them for the past two years, and I'm very happy to be here. Joseph Jacobelli: Great Alnie. Yeah.

Alnie Demoral: Yeah. So for me, I actually started my career in the oil and gas industry. So energy has always been my space, but over time, as more research and conversation around climate impacts started emerging, I found myself really wanting to understand what that meant for the sector that I'm in. So I think what really solidified it for me was when I began working with electric cooperatives in the Philippines.

You really see how powerful electricity is; how it enables livelihood. But at the same time, you also have to question where that electricity is coming from. And that's when it clicked for me. If energy is this powerful enabler, then it also has to be sourced somewhere responsibly and in a way that it doesn't further harm the communities it's supposed to uplift, especially the most vulnerable ones.

Joseph Jacobelli: That's a very interesting background. Both of you, Dinita and Alnie. Maybe it would be great if you could possibly very briefly introduce Ember. I mean, we had Ember on before, but just for those who did not listen to that particular episode, maybe just a very quick introduction.

Dinita Setywati: Yes, of course. So Ember is a global energy think tank that uses data to build clean energy narratives and ignite action from decision-makers. And we have teams across Europe, Asia, and Latin America. Joseph Jacobelli: Great.

That's very focused and very brief. Thanks. Now we're chatting today because I found that your report was particularly interesting because we've been pre-preparing a little bit for this. Now I'm referring to "Leveraging Global Capital Towards Clean Energy as ASEAN Races to the Summit".

Can I ask you guys, what was the motivation that led you to write this kind of policy paper on ASEAN's energy financing? Alnie Demoral: Well, first of all thank you for the interest, Joseph. So the motivation really came from the timing and the urgency with most countries having submitted their NDC 3.0 and the applied targets reinforcing higher clean energy ambition for the region.

There is a clear signal that countries really want to move faster in their transition, but the ambition alone doesn't build our plans - our transmission plans, right? It's the financing that does that. And while the investment gap has always been part of the narrative, we felt that the conversation was getting stuck there. Everyone agrees there is a gap.

But the more interesting question actually is how could we be more strategic in mobilising and deploying that external capital available to the region? So with the ASEAN Summit coming up we saw a timely opportunity to contribute something practical to the discussion, not just highlighting the financial need, but proposing ways that the region can be more deliberate and coordinated in leveraging global capital towards clean energy. Joseph Jacobelli: Maybe Alnie you want to clarify for those not as familiar with the Association of Southeast Asian Nations about what the summit is all about?

Alnie Demoral: So the Association of Southeast Asian Nations consists of 11 countries that are located in Southeast Asia, and collectively we have an energy target outlined in our APAEC, which is the ASEAN Plan of Action for Energy Cooperation. And this heightened ambition now requires, and presents the commitment for, those 11 countries to really move forward with the energy transitions and clean energy deployments in the region collectively as an entire cluster. Joseph Jacobelli: And it is an annual meeting of both the leadership and also individual ministries like the various ministries related to energy and ministries related to finance, et cetera.

Yes. Great. Just highlighting that for those not that familiar with this. Now talking about money, because we are talking about financing after all.

Now your report highlights a massive annual investment requirement of over 280 billion dollars in ASEAN by 2035. Again, that's annual. What specific infrastructure categories demand the most urgent capital right now? Alnie Demoral: Yeah, I believe that's an important question to be tackled.

So what we see is that while priorities do vary from country to country across ASEAN, the most urgent capital need right now is the grid infrastructure. Because without a stronger and more modernised grid, it is difficult to scale clean energy or even meet the rapidly growing electricity demand of the country. You can build generation capacity relatively quickly, but if the grid cannot absorb or transmit the power efficiently, then the transition slows down. So in many ways the grid is the backbone of the energy transition in the region.

It determines how fast renewable energy can be integrated, how resilient the system is, and how effectively the countries can participate in cross-border power chains. So if we're talking about urgency, then strengthening the grid infrastructure is absolutely foundational. Dinita Setywati: Yeah. I also think that, most importantly, grid development needs to keep pace with the development planned.

We see that planned network development in a number of countries, not only in Asia, but Europe too, is out of step with energy ambitions. So grid development must be urgently addressed, particularly as this infrastructure would need longer timescales than generation development. Otherwise, there will be an increasing risk that some clean energy projects might become obsolete. Joseph Jacobelli: Right.

And I mean, the interesting thing is, when I started as an energy analyst back in 1990, which is a long time ago already, there had been talks about the ASEAN Grid. And I think they'd already been talking for like 20 years, but seemingly in the last 2, 3, 4 years, there seems to be real momentum and some of the connections are really happening. Do you have any views on that or do you want to maybe unbundle that a little bit? Dinita Setywati: I think as the energy issues become increasingly important in the region this past years there have been, I would say, power grid champions with, of course, Singapore and the Philippines at the centre of it, because Singapore would need to import clean energy from other countries, so they would need these interconnections to happen.

And the Philippines being the ASEAN chairmanship for this year is also prioritising the development of subsea cable connections and the ASEAN power grid. So, we also see a lot of financiers are interested in investing into the region, but of course project bankability is still an issue in ASEAN and we need to find ways to make projects profitable, not only for investors, but also for the government. Joseph Jacobelli: Right, right. So that struggle is going to continue for a while.

Annual investment has to actually increase, I believe, something like fourfold from current levels to meet the regional goals. Which ASEAN member states face, do you think, the most significant hurdle in closing this massive financing gap? Alnie Demoral: So as Ember, we usually look at the region as a whole and from what we see from a regional perspective, ASEAN member states currently are at different stages of energy transition. So financing needs and challenges differ in both scale and nature.

Some countries require a large volume of capital because of the size of their energy systems, Indonesia for example, and demand growth, while others may not face the same scale issues but need more targeted support. So rather than focusing on any single country as facing the most significant hurdle, I would frame it as a question of access and alignment. So the emphasis should be on ensuring that all countries have access to broad sets of financing instruments that they can draw on depending on their transitions and the strategies they would want to put in place in the near future.

Joseph Jacobelli: Talking about a few country-specific questions perhaps very quickly. I mean, obviously we can't go through every country around ASEAN and the rest of Asia. But I want to talk a little bit about a couple of things referring to China, Japan and the Philippines specifically. On China, China currently provides the largest volume of energy finance to the region.

How can ASEAN countries best manage the debt sustainability risks associated with these large-scale infrastructure projects? Dinita Setywati: Yes. We also see there are risks associated with the increasing debt by the ASEAN countries. So I think for ASEAN, it's best if the countries recognise the cost of sovereign borrowing , as in fact countries with greater climate ambitions also need to realistically set the economic growth target for this interest rate to understand the impacts of these loans.

So this is where climate risk assessment, energy transition and policy revisiting should be taken into account when assessing debt sustainability. For example, co-financing models with local players or MDBs could reinforce the important role of concessional development finance, reducing debt risk. And we see the impacts of the Just Energy Transition Partnership for Indonesia, setting a pool for energy finance and then allowing smaller local players to participate in the energy transition.

Alnie Demoral: And in addition, we also saw the need for ASEAN countries to prioritise projects with clear and reliable revenue streams, and also to avoid locking in long-term liabilities associated with high-emission assets, which later on could expose countries to stranded asset risk in case of future policy shifts. Joseph Jacobelli: Got it. Moving on to another player around the region, Japan. Japan usually emphasises strategic development and technical capacity building.

And it's been, I believe, very active around the ASEAN region, including Indonesia, of course. How does this approach improve long-term grid resilience compared to simple generation projects? Dinita Setywati: Yeah, so my personal take for Japan is that they are very smart in preparing the workforce to be familiar with their technology, and thus would have Japanese technological preference. Japan has also long been prioritising smart grid applications.

The country is expanding its transmission network by high-voltage direct current lines and upgrading their traditional weak interconnections. So technical capacity building done by Japan is definitely key to ensure long-term grid resilience, and particularly to the Japanese context. Smart grid is closely associated with smart communities, so this could be a narrative for ASEAN too, to emphasise the social effect of transformation and highlighting the need for smart grid applications.

Joseph Jacobelli: Got it. Moving on to the Philippines real quick. The Philippines' 2026 chairmanship, in particular. You view the 2026 ASEAN chairmanship by the Philippines as a critical platform for action.

What specific policy should the Philippines prioritise to align regional capital flows? Alnie Demoral: Yes indeed, we view the Philippines' chairmanship as a critical platform for action. The 2026 ASEAN summit theme is "Navigating Our Future Together", and we see it as a good opportunity to put regional coordination and clean energy front and centre. As supply chains and infrastructure become more regional, the Philippines can use its chairmanship to facilitate technical exchanges and encourage practical cooperation, such as improving regional data transparency on project pipelines, advancing interoperable certifications and standards for clean technologies and components, and exploring mechanisms to aggregate the demand for clean technologies.

We believe that even incremental coordination can reduce the transaction cost and enhance investor confidence, particularly in markets where early-stage risk remains high. Joseph Jacobelli: Great. One last top-down question and specifically about the grid, which we already referred to. So the ASEAN power grid, in a financing initiative, aims to enable cross-border integration.

What is the biggest non-financial barrier to completing a truly integrated regional grid? Dinita Setywati: Yes. Thank you Joseph. So ASEAN Power Grid goals are amazing, if they can be realised in the next 5, 10, or 15 years.

Joseph Jacobelli: Absolutely agree. Dinita Setywati: Yes. But the largest non-financial barrier would probably be policy adjustment from national to local level. So the ASEAN grid interconnection plan might be announced at the regional level, however, its implementation might need policy adjustment at the national and local level and harmonisation with various ministries and institutions.

So if we can use an example, the interconnection plan between Indonesia and Singapore requires the project to be formally categorised. For instance, as a national priority for Indonesia, it must also obtain approvals from the Ministry of Maritime Affairs for the submarine power cable , the Ministry of Public Works and relevant local government agencies. So there's a whole breadth of complexities in the government agencies and institutions that need to support this interconnection plan.

Joseph Jacobelli: Right. Got it. Now moving on to the capital flows mechanics, et cetera. And I've got a question about the US blended finance approach.

So the US focuses on de-risking projects to mobilise private capital. What happens for regional project pipelines if US multilateral funding continues to shrink - and the likelihood that it's going to shrink in the very short term is very high? Alnie Demoral: Yes. In our assessment, US multilateral funding typically comes in the form of grants and guarantees that help de-risk early-stage development.

So if this support shrinks, then definitely it could reduce the bankability of clean energy projects in emerging economies. It slows down the flow of private capital towards those projects and ultimately delays project implementation and transitions across the region. Joseph Jacobelli: Yeah, I don't think that particular outlook is extremely bright. But it could create more opportunities.

I mean, when there are challenges, there are always opportunities. Looking at something else you warn in the report against ASEAN getting locked into the low-value end of the clean energy supply chain. What specific high-value activities should the region be targeting to ensure long-term economic gains? Dinita Setywati: So, Indonesia is rich in mineral resources and the government has been putting in a policy to ban raw nickel-material exports in the past years.

So, I think that ASEAN could invest into high-value activities; for example, battery storage manufacturers are increasingly investing in the regions, so the region could establish local production lines for solar parts plus batteries. And other countries have also attracted European and Chinese companies; however, we need to develop more local talent. We need to nurture a clean energy startup ecosystem and provide seed funding. This would enable homegrown industries to compete with established global players and have customer-ready products.

Joseph Jacobelli: And Dinita, just to follow up, are there any countries as far as you know, in ASEAN that are actually setting that up a little bit more aggressively than others? I mean, I know that, for example, the Philippines Department of Energy has been working very closely with a whole bunch of entities including UN ESCAP, of course, ADB, et cetera, to do this kind of capacity building. But are there any one country or more that you think really stands out or is really something that is in the work-in-progress stage?

Dinita Setywati: Do you mean the talent nurturing? Joseph Jacobelli: Yes. In the region? Yes.

The capacity building, the education, the teaching, yes. Dinita Setywati: Yeah, so actually a lot of development partners in the region have been focusing on TVET education and there are some workshops dedicated for early-career energy researchers, workshops on energy modelling, but I think a structural change needs to be made in our academic curriculum in terms that it needs to be aligned with what the world needs. It needs to embed more energy transition stories, more energy skills and energy modelling.

Joseph Jacobelli: I not only a hundred percent agree, but 300% agree with what you said. I think we need to all adopt. I think few people understand that the energy transition is really like learning a brand-new language and you need a multidisciplinary approach. Now, those of us who are in the ecosystem, so to speak, we know that you need to be - I mean, I'm a financial analyst by background - but I've got to understand engineering a tiny bit.

I mean, the engineering behind clean energy, for example. I don't have to build it myself, but I've got to understand the mechanics because it's different. I need to look at the legal context in different countries; I need to look at the policies. So even if I was just a financial analyst, I need to look at all these other disciplines, and you need a multidisciplinary approach.

And that takes a kind of new mindset with education, whether it's at university or workshops. And now the other thing that I get very concerned and sometimes frustrated about is this silo approach. You can do a course on carbon, you can do a course on climate bonds, you can do a course on... but there isn't like a fundamental course that gives you the basics on how to learn the language and how to speak the language.

Dinita Setywati: Yeah, I agree. And I also think that because of this lack of awareness among the educators, there's a lot of sleeping talent lying in Southeast Asia, but also in other Asian countries, right? That would not be able to understand what energy transition is except if they've been exposed to the practice and to the work that they need to be doing. Joseph Jacobelli: Yes, absolutely.

I think we could have - well, two points. One is the mission of Asia Climate Finance is exactly this, to raise awareness and to educate on climate business and climate finance issues. And the other thing is that I personally know it's like my mission to raise this awareness from a multidisciplinary approach. But we could definitely have one or more podcasts just on the subject of education.

Moving back to your report, which is the focus today, one more question on the financial side of things, and it's about risk allocation and private capital. So private finance currently flows only where revenue structures are established. How can governments better allocate risks to attract more institutional investors into early-stage projects? Alnie Demoral: Well, first and foremost, I think you and Dinita have highlighted the important aspect of making sure that there are clear policy signals and stable regulatory guidelines.

Since policy uncertainty is one of the biggest barriers for investors, especially in early-stage projects in emerging economies. But after that, we saw that governments can better allocate risk by absorbing or mitigating those risks that private sectors are least equipped to manage. This can include providing guarantees to reduce counterparty risk, like the Philippines has their guarantees right now provided by PhilGuarantee; offering strong project preparation support to reduce development and construction risk; and ensuring transparent and predictable cost recovery mechanisms to address revenue risk.

One thing that we keep on hearing from private utility companies is enabling long-term PPAs to provide a stable cash flow, something that Vietnam is already incorporating in their DPPA financing structure. Joseph Jacobelli: Understood. Just one last question before we get into the outlook side of things. You mentioned in the report that harmonised standards for batteries and solar components could reduce friction.

Why has regional standardisation proven so difficult to achieve in the past? And I appreciate that we're talking about 11 sovereign governments, 11 ways of doing things, et cetera. But here we're really talking about a basic of basics, which is harmonising standards for batteries and solar components. Dinita Setywati: So in the past there have been heavy national protectionist measures.

For example, Indonesia has local component requirements for solar and wind projects of minimum about 20%, 15%, or some even attempt to put it at 40%. This high threshold may increase cost, delay projects and code development if the supply chain is limited. And also it is difficult to harmonise the regional standard with these local content requirements. Alnie Demoral: I must add that even though it's difficult, ASEAN has proved that it is possible on different components.

For example, we had the mutual recognition arrangement for electrical and electronic products that allowed products that are tested and certified in one country to be accepted in other countries. Alnie Demoral: So this reduced the compliance costs and made product circulation easier in the region. So we saw that this approach could also be applied to solar and battery components as well. This could be a precursor to that.

Joseph Jacobelli: Understood. Talking about the outlook and a couple of forward-looking questions: ASEAN must strategically balance speed, scale, and sustainability, and many ASEAN countries have high dependence on fossil fuels. What are the decarbonisation paths? And also, if I can ask, what final advice would you give regional policymakers looking to combine Chinese, Japanese and US financing models?

Dinita Setywati: I can start with the decarbonisation path. I think ASEAN countries could benefit from diversification of energy sources and most realistically they need to have a whole system change because most countries have a heavy reliance on fossil fuels. They have a centralised power system, so decentralising some of this system and adding more distributed energy generators, rooftop solar, adding storage, and a smart grid could really help countries to achieve these decarbonisation goals.

Alnie Demoral: And diversification, not just in energy, but it also applies in financing, actually is also key. So, we saw that each model, whether it's from China or Japan, or the US or other bilateral partners, they bring distinct advantages and trade-offs as well, as we outlined in the report. So, we saw that policymakers should also avoid over-reliance on one single source and instead design frameworks that can integrate multiple financing approaches in a complementary way.

That has been the huge highlight of the report. Alnie Demoral: So bilateral and multilateral finance can play a catalytic role, particularly in early-stage or higher-risk projects. However, the long-term objective should be to strengthen our domestic regulatory frameworks, to deepen our capital markets and create a bankable pipeline so that we can crowd in private capital to finance more clean energy transitions at a larger scale. Joseph Jacobelli: That's great.

And again the report titled, "Leveraging Global Capital Towards Clean Energy as ASEAN Races to the Summit", we will have a link in the show notes for that report, which will take you to the Ember website which has an enormous amount of information, research and data. Well, Alnie and Dinita, thank you so much for answering all of my questions and talking about the report. Just one final thing, which we started a few episodes ago, and that's just recommendations. So I'm not sure if you have any recommendations for listeners.

I mean, it can be books, reports, studies, films, documentaries, events or anything else. Maybe start with Dinita. Do you have any recommendations? Dinita Setywati: Yes, I have several recommendations.

So Ember just published a report on AI in the Power System, which is authored by my amazing colleague, Lam. And then I have another recommendation of a documentary called Sexy Killers. It's about how coal and investment have been very heavy in Indonesia. And the last recommendation would be a book on Indonesia called State of the Art Indonesia Transition, and it's actually the one that I authored myself.

Joseph Jacobelli: Oh, okay. Well, it must be very good then, and we'll have links to all of these recommendations from Dinita as well in the show notes. Alnie. Alnie Demoral: Yes.

I think right now I've been watching with the evolving conflict of the US and Iran. I've actually been watching documentaries on US-Iran relations. There is one, and there's actually two that I just watched from YouTube. This is by TRT World and the other one is a Frontline PBS series.

So it just gives a really clear sense of the historical context which I think is essential for everyone trying to follow what is happening today and how it would impact us in the coming years, especially us in the region. Actually, we were planning to develop a paper on this topic, right Dinita? So we also encourage your viewers to keep a lookout on our social media for any future updates. Joseph Jacobelli: Great.

And we'll also have links to these two YouTube documentaries in the show notes. And I'll make sure, actually, now that I think about it, I get your book Dinita, so I can read it and we can exchange book commentaries. You can comment on my book and I'll comment on yours or discuss it. Maybe that, again, is another idea for another podcast.

So, Dinita and Alnie, really thank you very much for taking some time out of your day to talk to us at the Asia Climate Finance Podcast. It's been a really great conversation, and thank you so much for answering all of my silly questions about your report. Dinita Setywati: Thank you very much, Joseph. Yes, we're very happy to be here.

Thank you. Alnie Demoral: Thank you. Narrator: Please note that the Asia Climate Finance Podcast is provided for educational purposes only and does not constitute investment advice. Any information discussed should not be relied upon for making investment decisions.

Listeners should always seek advice from a suitably qualified and authorised investment professional. The views and opinions expressed by guests are their own and do not necessarily reflect the views of their current or former employers or of the podcast host or producers. RECOMMENDATIONS: · From AI to emissions: Aligning ASEAN’s digital growth with energy transition goals . A report by Ember on how AI can support power system operation and renewables integration.

· Sexy Killers . An Indonesian documentary examining the environmental, social, and political impacts of coal mining and coal power investment in Indonesia [Note YouTube erroneously flags the documentary as having inappropriate content]. · Dr Dinita Setyawati, State-of-the-Art Indonesia Energy Transition: Empirical Analysis of Energy Programs Acceptance (Springer 2023). A book on Indonesia’s energy and societal transition.

· Trump & Iran: Strategy or Instability? - Inside America. A TRT World documentary exploring recent US - Iran tensions and their geopolitical implications. · Bitter Rivals: Iran and Saudi Arabia, Part One - FRONTLINE .

A Frontline PBS documentary series on the history and evolution of US - Iran relations, providing context for current conflicts.