These APAC VC players have been actively investing in start-ups that develop renewable energy sources
These APAC VC players have been actively investing in start-ups that develop renewable energy sources
Last year, ahead of COP26, APAC governments set ambitious targets to achieve carbon neutrality. China pledged to achieve carbon neutrality by 2060, Japan by 2050, South Korea by 2050, and India by 2070. There was a sense of commitment to develop renewable energy sources and technologies that can replace fossil fuels and natural gas, which are major contributors to carbon emissions. Governments set up funds to boost investment in renewable energy, while private capital players increasingly began to incorporate ESG considerations into their investment decisions.
Fast forward to now. The war in Ukraine, supply chain disruptions, and global inflation have made it challenging for private capital industry players to place the same level of focus on ESG when profits are under threat. However, the bright side is that governments, sovereign wealth funds, and conglomerates in APAC have continued to invest in innovative solutions focused on clean, renewable energy.
Venture capital deals in APAC’s renewable energy sector have almost reached a value of $2.6bn in 2022 YTD – 8% higher than in 2021, despite a lower number of deals. This figure is also 2.6x that of 2020’s $978mn (Fig. 1). The increase contrasts with a 50% drop in overall VC deal value in APAC this year compared to 2021. In this article, we look at five prominent VC players in APAC that have backed renewable energy deals recently.
1. Temasek Holdings
Singapore sovereign wealth fund Temasek Holdings has been actively committing venture capital to back renewable energy start-ups around the world. In November 2021, it participated in the $1.8bn Series B financing round of US-based Commonwealth Fusion Systems, a start-up that aims to build a compact fusion power plant. The funding will go towards constructing, commissioning, and operating the world’s first commercially relevant net energy fusion machine. Other investors include venture firm Tiger Global Management, superannuation fund HostPlus, as well as individuals such as Bill Gates. The technology has potential to produce net zero energy and therefore help cut carbon emissions.
Closer to home, Temasek Holdings has also invested in Sunseap, a solar energy solutions provider in Singapore. Along with Bangkok Bank and energy company Banpu Company Limited, it participated in Sunseap’s 2020 Series D round, which raised $148mn.
2. Horizon Ventures
Hong Kong-based venture firm Horizons Ventures is the VC arm of the Li Ka Shing Foundation. It commits venture capital to disruptive and technology-focused start-ups. In January, it co-led a $75mn Series B funding round with Temasek Holdings for Israel-based hydrogen power provider H2PRO. The funding will be used to construct a manufacturing plant for supplying green hydrogen, which is produced via a special technology called E-TAC. The technology splits water into hydrogen and oxygen in a more affordable way and consumes less power. Hydrogen has the potential to replace natural gas.
Horizons Ventures has also invested in various financing rounds of British-American aircraft developer ZeroAvia, a firm that aims to produce the world’s first zero-emission aviation powertrain powered by hydrogen. According to ZeroAvia, hydrogen-electric powertrains produce 90% less life-cycle emissions compared to traditional turbines, which can help to reduce aviation’s share of climate impact – currently projected to reach between 25% and 50% by 2050.
3. IDG Capital
Beijing-based investment firm IDG Capital invests in early-stage to expansion or late-stage companies with a focus on high-tech-related sectors, including clean technology and new energy. In April, IDG Capital invested in the $251mn Series A round of Gokin Solar, a start-up based in Zhuhai that focuses on R&D and manufacturing of high-efficiency large-size photovoltaic silicon wafers. IDG Capital counts many other renewable energy firms in its portfolio, including EV storage battery manufacturer Sunwoda.
4. Grok Ventures
Grok Ventures, headquartered in Sydney, focuses on tech companies in Australia, usually participating in early- to late-stage funding rounds. It’s participated in both the Series A and Series B financing rounds of Sun Cable, a Singapore-based firm that provides solar energy infrastructure networks that are competitively priced and dispatchable. Sun Cable is also developing an Australia-Asia Power Link, which will harness and store solar energy in Darwin, Australia and transmit it to Singapore via a high-voltage cable. It has the potential to supply up to 15% of Singapore’s total electricity needs.
5. SK Group
South Korean conglomerate and corporate investor SK Group invested in three different start-ups this year in the renewable energy sector. First, it invested in the $150mn unspecified round of California-based Lunar Energy, which provides home battery systems that manage the storage of solar power, in March.
Second, it participated in the $46mn Series A round of Amogy Inc, together with Saudi Aramco Energy Ventures, AP Ventures, and Amazon. The company will use the funding to commercialize its carbon-free, ammonia-to-power technology to power heavy-duty transportation.
Lastly, SK Group invested $20mn into California-based biomass energy firm Fulcrum BioEnergy, which aims to convert solid waste into clean renewable transportation fuel.
Having reliable and diverse sources of renewable energy – solar, wind, hydrogen, fusion, and ammonia – will be crucial in reducing carbon dioxide emissions. It will also enable the global push for electric vehicles, another sector that has received tremendous venture capital backing. APAC’s venture capital players will continue to play a significant role in the development of emerging technologies and innovations in renewable energy, in line with broader government policy roadmaps toward carbon neutrality.
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