Page 17 - AsiaElec Week 46 2021

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RMB 3.3bn ($517mn). capabilities,” said Alex Tan, CEO China, Indonesian President Joko Widodo signed
Located in energy demand centers Hebei, Sembcorp Industries. the regulation before the recent COP26
Henan, and Shandong provinces, the assets Sembcorp has invested in the China climate change conference. The text of the
are contracted and are eligible for fixed feed- market for over 20 years. It has a total regulation has not been made public.
in tariffs under the China renewable energy operational capacity of 725 MW of wind The regulation requires an exchange to be
policy. power projects across Hebei and Inner set up to facilitate the trading.
“The acquisition of this renewables Mongolia. Renewables and climate change expert
growth platform in China is an important Sembcorp has an energy portfolio of over John Yeap of Pinsent Masons, the law firm
step towards our target to have 10 GW of 13 GW, with more than 3.5 GW of renewable behind Out-Law, said: “With the focus on
gross installed renewables capacity by 2025. energy capacity comprising solar, wind, and carbon trading at COP26, we are likely to see
We are focused on the execution of our energy storage globally. wider adoption of such mechanisms across
growth strategy across our markets to achieve Sembcorp Industries had raised S$675mn the region. However, as we have seen with
our brown to green transformation,” said ($496.1mn) by launching a sustainability- similar markets elsewhere, including most
Wong Kim Yin, Group President, and CEO, linked bond in Singapore. The proceeds will recently the adoption of a trading mechanism
Sembcorp Industries. be used to finance renewable energy or other in China, implementation will not be easy.
The consideration for the transaction was sustainable projects. Issues ranging from a fair allocation of caps
determined on a willing-buyer willing-seller In June 2021, Sembcorp Industries across sectors through to pricing and ensuring
basis, considering the operational quality, announced the successful pricing of its sensible outcomes from the trading, will need
financials, and cash flow generation of the inaugural S$400mn ($301.9mn) green bond to be considered.”
assets via customary valuation techniques. offering to support its growing renewables “Furthermore, an issue for Indonesia to
The final consideration would be portfolio. consider is the implication of pricing carbon
adjusted based on the audited financials SEMBCORP in an electricity supply sector that is highly
after the transaction. Sembcorp’s investment subsidised. Where consumers do not pay a
will be funded through a mix of internal cost reflective price for power, the implication
cash resources and external borrowings. CARBON TRADING of a price for carbon will likely be greater tariff
Completion of the acquisition is expected in subsidy, which may not influence consumer
the first half of 2022. Indonesia introduces behaviour. The ability of a carbon pricing
“China is the world’s largest renewables mechanism to deliver the desired outcomes
market and a priority growth market for carbon trading policy will therefore need to be considered,” he said.
Sembcorp. With this acquisition, our PINSENT MASONS
renewables portfolio in China will double in Indonesia has introduced new rules on
gross capacity from 725 MW to 1,400 MW of carbon trading, providing for a cap-and-trade
wind and solar assets. This scalable platform mechanism between businesses, a carbon
will boost our growth in China and support offset scheme and results-based payments,
the building of our operational and technical Reuters repored.

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