Geopolitical risks such as the Iran war accelerate Singapore's investment in renewable energy | Lianhe Zaobao

Recently, the tense situation in the Middle East has driven up energy prices, making renewable energy a focal point once again. Market analysis suggests that this geopolitical shock may accelerate Singapore and the region's energy transition. However, due to limited land resources, fluctuations in sunlight, and financing challenges, it is difficult to see a surge in projects in the short term, and the transition will continue to progress in a moderate and gradual manner. Recently, several investment news items have emerged in the local renewable energy sector. Equator Renewables Asia announced it has raised SGD 50 million to accelerate the development of solar and renewable hydrogen projects in Indonesia; Peak Energy has acquired a 10 MW rooftop solar power project locally for several million dollars. These investments come at a time when oil prices are rising, and companies are increasingly focusing on long-term costs and price stability in their electricity procurement. Gavin Adda, CEO of Peak Energy, pointed out in an interview with Lianhe Zaobao that the company's acquisition is part of a long-term renewable energy strategy and is not driven by short-term oil price fluctuations. However, he also noted that recent geopolitical shocks have indeed strengthened the rationale for companies and governments to advance energy transition. He said, "The volatility in the global energy market highlights the importance of energy diversification and resilience. Singapore has long relied on imported fuels, and the government has been promoting energy structure diversification for decades. Recent geopolitical shocks serve as a reminder once again." Su Kaijun, Executive Director of the sustainable development solutions platform ESGpedia, stated in an interview that recent developments have created opportunities for renewable energy companies, especially those involved in solar energy, energy storage, and regional electricity imports. Companies that can provide stability and long-term clean energy contracts will reap the greatest benefits. "For example, Sembcorp Industries has been expanding its import of low-carbon electricity from Sarawak and increasing its floating solar capacity. Interest in green hydrogen projects is also on the rise. The current environment encourages more companies to lock in clean energy to guard against future price fluctuations." Since the outbreak of the Iran war, local electricity retailers have raised electricity prices, with the highest increase reaching 11.3%. Aida said that the rise in electricity prices will enhance the motivation for businesses and retail users to switch to renewable energy, which has become one of the important factors driving the growth of renewable energy over the past decade. "When fluctuations in the traditional electricity market intensify, most businesses will reassess more predictable procurement models." Renewable Energy Sector Outperforms the Market Amid Energy Crisis Globally, amid concerns over the energy crisis triggered by the Middle East conflict, the renewable energy sector has outperformed the market. The S&P Global Clean Energy Transition Index has risen over 6% year-to-date, while the S&P 500 Index has fallen over 5%. Further Reading Prime Minister Huang: Our country's important supply source for liquefied natural gas, strengthening cooperation with New Australia to ensure smooth energy supply Global renewable energy project growth slows, may struggle to meet expansion targets by 2030 Among them, SolarEdge Technologies' stock price has risen 46% since the outbreak of the war, reaching a nearly two-year high, boosted by a bullish report from investment firm Jefferies. Analysts in the report pointed out that the Iran conflict and soaring energy prices could become potential catalysts for the solar industry. Professor Lu Yaoqun, director of the Institute of Governance and Sustainable Development at the National University of Singapore Business School, said in an interview that high oil prices will bring greater cost advantages to renewable energy. "In addition to being an important pillar for decarbonization, renewable energy will soon become an important part of energy security for many countries." Aida pointed out that in a highly open, trade-oriented economy, whether businesses have the confidence to invest, expand operations, and hire is closely related to the stability of key factors such as energy. For economies that rely on imported fuels, diversifying supply through the development of local new energy is a key measure to reduce the impact of external shocks China's Renewable Energy Faces Many Constraints, Expected Not to Surge Lu Yaoqun agrees that the recent situation may accelerate Singapore's transition to renewable energy, but he points out that due to land constraints, intermittent power generation caused by variations in sunlight intensity, as well as costs and execution risks related to financing, procurement, and grid upgrades, the transition will still be gradual and unlikely to see a surge. Data released by the Ministry of Trade and Industry shows that 95% of the country's electricity supply relies on natural gas, and solar energy is the most viable renewable energy source for the country. However, due to various constraints, it is expected to meet only 10% of electricity demand by 2050. Lu Yaoqun said, "In the short term, it is more likely to buffer price fluctuations and supply shocks through management and hedging of natural gas procurement." Nuclear power is another widely used low-carbon energy source internationally. According to the International Energy Agency's 2024 report, nuclear power accounts for about 16% of global electricity generation, second only to fossil fuels and hydropower, and is more than four times that of solar energy. The country currently has no nuclear power, but in recent years, as energy security and carbon reduction pressures have increased, the government has begun to reassess the possibility of nuclear power. Regarding whether the recent situation will prompt the country to develop nuclear power, Su Kaijun believes that there is little likelihood of direct promotion in the short term. Nuclear energy is a significant long-term commitment and must meet strict safety standards; any related progress will be based on a prudent assessment of long-term energy security risks. However, Su Kaijun also mentioned that this may help promote discussions on energy diversification. "The current situation prompts the country to more deeply assess supply chain vulnerabilities and import dependencies, which may accelerate the exploration of nuclear energy. Similar considerations apply to other clean energy sources, such as geothermal energy, hydrogen energy, advanced solar energy storage solutions, and regional grid interconnections."