NEFIN to Energize Sustainable Transition in Asia

In a dialogue with Hemant Bohra, Editor of Carbon Wire, Chong Bor Hung, the Managing Director of NEFIN SEA and Head of Business Development at NEFIN Group, sheds light on the company’s integral role in driving the energy transition in Southeast Asia. From solar power technologies to battery solutions, NEFIN plays an important part in Asian decarbonization efforts.

CW: Can you tell us more about NEFIN?

Bor Hung: NEFIN partners with customers to implement solar power technologies and support their efforts in decarbonization. We handle the project from conception to execution, including project management and financing. What sets us apart is our business model which allows us to remain as the asset owner throughout the project’s lifecycle.

Our services span a wide range, including energy audits and battery solutions, and we also facilitate the acquisition of renewable energy credits for our customers. Although we offer a variety of services, our primary focus and expertise lie in solar power.

In addition to these services, we provide consultancy for the energy transition, which is a significant source of emissions reduction. Our consultancy can help customers cover a portion of their energy needs with solar, to expand that coverage as we grow. We’ve also introduced battery leasing to meet the energy storage demands of our customers.

Our approach is tailored to the specific technological maturity of each location, allowing us to offer effective strategies for our customers to quickly achieve their carbon neutrality goals. We ensure that our customers can obtain renewable energy credits as needed to complement their sustainability efforts.

CW: The world wants to accelerate the energy transition. What are your views given that you are part of that ecosystem?

Bor Hung: To accelerate the energy transition, it’s acknowledged that while it’s necessary to move quickly, the approach must be gradual to accommodate the various societal, technical, environmental, and economic factors. This means that even though there’s a consensus on the need for acceleration, the transition should not be abrupt.

The readiness of companies is also a key factor in this transition. The existence of many technologies that have reached a state of good parity—such as solar and wind—suggests that the cost barriers are decreasing. When renewable energy projects reach good parity, meaning they are as cheap as or cheaper than fossil fuels, it isn’t much of a cost issue anymore. Instead, these projects become positive net present value (NPV) investments, which are financially beneficial over their lifetimes.

However, as renewable technologies become more economically viable without subsidies, companies considering investing in energy transition should also prioritise employing the best strategy that effectively addresses and complements their business to ensure that the transition is sustainable in the long term. NEFIN’s role in the ecosystem is to help businesses devise the most effective strategy for them, to make the energy transition more palatable to all stakeholders involved, that is, an economically favourable solution that also does not disrupt societal and environmental systems.

CW: Are global corporations investing in the energy transition for their suppliers?

Bor Hung: Global corporations, especially those within the Fortune 500, are quite strategic about their role in the energy transition. They’re at the pinnacle of the value chain and have a significant influence on their suppliers and customers in achieving carbon reduction. These companies might not be directly investing in their supply chain’s carbon reduction projects, but they are creating mechanisms that encourage or even compel their suppliers to take action on carbon emissions.

One of the ways they’re doing this is by integrating their financing solutions with carbon reduction initiatives. They’re essentially inviting their suppliers to collaborate on these solutions, enabling them to access services that can help them reduce their own emissions.

For instance, a large corporation might not put money directly into a supplier’s carbon reduction project, but it could set stringent deadlines or rollout plans for suppliers to decarbonize. If suppliers don’t comply with these plans, they could face financial repercussions such as reduced pricing or, in more extreme cases, they might lose their contracts altogether. It’s a bit of a nuanced approach – they’re not directly investing in the supply chains, but they’re ensuring that their supply chains have strong incentives to invest in carbon reduction themselves.

Moreover, if a supplier has high carbon emissions, they might be offered a lower price for their goods or services, effectively making them pay indirectly for their higher carbon footprint. This is a smart way for corporations to pass on the cost of emissions to those who are responsible for them. So, while the investment isn’t direct, the influence and the financial implications are very clear. This reflects a broader trend where businesses are using their financial clout and policy-setting capabilities to drive environmental sustainability in their supply chains.

CW: From sharing of emissions data to switching to renewable energy, there seems to be a lot of hesitancy on the part of suppliers which seems like hindering the reduction of Scope 3 emissions of global corporations. What’s your view?

Bor Hung: The hesitancy on the part of suppliers in sharing emissions data and switching to renewable energy is a multifaceted issue that impedes the reduction of Scope 3 emissions for global corporations. There’s a recognition that this hesitancy isn’t just a technical challenge; it’s also political, with countries sometimes unwilling to share emissions data. This is a complex issue because it’s not just about data—it’s about the willingness and regulatory frameworks that either enable or constrain action on climate change.

Some suppliers are indeed willing and want to transit to renewable energy, but they often face systemic barriers. For example, regulatory limitations can restrict the capacity for renewable energy installations, and the presence of monopolistic utility companies can alleviate the urgency to transit to renewable energy sources.

The transition to renewable energy, such as solar or wind farms, is not always straightforward and can be constrained by several factors. There are environmental implications to consider—for instance, the deforestation required to build solar farms. However, if renewable energy projects are strategically located on lands that have reached the end of their agricultural life, they can potentially benefit the environment more than continuing agricultural practices that degrade the soil.

The discussion also touches on the broader societal impacts of a sudden energy transition. The energy industry not only provides stability to the grid but is also a significant employer. A sudden shift could lead to widespread unemployment, emphasizing that transitions must be gradual and considerate of the workforce.

When it comes to Scope 3 emissions, which include all indirect emissions that occur in a company’s value chain, the challenge is particularly tough. While many companies have achieved carbon neutrality for Scope 1 and 2 emissions, Scope 3 emissions are more complex because they involve activities not owned or controlled by the reporting organization. There are industries, such as high-heat manufacturing, where there are currently no viable solutions for decarbonization. New technologies are still in development and need to be commercialized.

While there is a clear desire among many suppliers to move towards renewable energy and reduce emissions, they are faced with a range of challenges from regulatory barriers to the fundamental limitations of current technology. Therefore, while the transition is necessary, it needs to be a well-managed process that takes into account the various stakeholders, societal impacts, and the current state of technology. The path to reducing Scope 3 emissions is not straightforward and requires collaborative efforts, innovation, and a supportive policy environment.

CW: What has been your experience, especially in Asia with regard to forums that work towards the energy transition?

Bor Hung: Forums are necessary, especially in this industry where a collaborative effort from multiple stakeholders and countries is required in order to truly witness a breakthrough in their work towards energy transition. It is indeed heartening to see Asian and Pacific countries coming together at forums such as the Asian and Pacific Energy Forum (APEF) to address some of the concerns and challenges that resulted in the region consuming more than 40 per cent of the current world’s power and generating more than half of the global greenhouse gas emission. Forums allow the multiple stakeholders involved, including ministers, experts, and private organisations like us, to effectively discuss and understand the current challenges and come up with solutions to address the gaps within the industry.

Especially in Asia, work towards energy transition is occurring progressively, but it is still clear that the technology and market readiness are still in the early stages compared to other regions. It’s a complex process with a long road ahead, but the commitment and the progress are visible. These forums then play a crucial role in this transition, providing the necessary platforms for discussion, collaboration, and innovation.

CW: What are your growth plans for NEFIN?

Bor Hung: Our growth plans are focused on leveraging the experience and technological advancements we’ve achieved in mature markets, like China, and translating them to other, earlier-stage markets in Southeast Asia. We’re excited about the potential growth in these regions, as they are at different stages of development and present unique opportunities.

We have a track record of deploying technologies such as battery storage, which has allowed us to store solar energy efficiently. Last year, we successfully deployed two battery projects in China and are aiming to expand this further in China and Southeast Asia this year.

Our business model, which includes time-shifting capabilities to adapt to different time-of-use tariffs, has been commercialized and tested. Now, we’re scaling this model to take advantage of different market dynamics and regulatory environments. This strategic approach allows us to not just enter new markets but to enter them with a competitive edge, optimizing our technology deployment for each specific context.