In February 2022 EDP acquired a 91% stake in Sunseap Group. What was the rationale behind the acquisition and the company’s general appetite for moving into APAC’s renewables space?
EDP prides itself on being a leading entity in the energy transition and has a robust portfolio (renewable energy, grid, client solutions). We operate in 28 markets and have leading positions in the US, LatAm and Europe. In 2021 we came out with a plan to spend over EUR 24 billion CAPEX by 2025 directed at decarbonisation, and decided we had to bring Asia into play. EDPR Sunseap was a very natural first step and good fit for our company – they are a leading entity in the region with over 600 employees, operations across ten countries, and expertise in decentralized energy generation.
You make it all sound very seamless! Nevertheless, how do you integrate such large scale companies into the broader EDP family, and how is this particular joining of forces going?
Firstly, we make sure to choose companies that share our DNA – we have done so successfully across several countries, and we always place trust in local entities. EDPR Sunseap shares our principles of meritocracy, of being transparent, and prioritizes R&D, always looking for what is next in the development of green energy.
A Singapore HQ also carries with it its unique benefits: the whole country is striving for energy security and has cutting-edge solar and storage projects, as well as large corporations that are embracing solar energy. It is also the ideal platform to connect with the rest of Asia. Singapore can also tap on a world-class talent pool, further strengthened by robust legal systems and international institutions. Thus, EDPR Sunseap’s strategic decision to choose Singapore as its regional headquarters enables it to gain access to Asia Pacific markets.
Of course, we also need to manage teams in Vietnam, China, Korea, Japan, and so on. To us, the founders of EDPR Sunseap followed the approach of local leadership and trust. We get to share our best practices of procurement, M&A, risk management and so on as useful tools, but without imposing leadership. I believe this is the formula for successful inorganic expansion.
Delving into concrete projects, which ones are you most excited about in Singapore and the broader APAC?
In Singapore, rooftops are a cornerstone of our growth. Furthermore, there are government tenders led by the Housing and Development Board which manages almost 20,000 buildings across the city-state and has been pushing for multiple phases of solar deployment. We now have more than 1,800 buildings under management and we expect more growth here. We also have several exciting floating solar projects coming up on reservoirs and our completed project on the straits between Singapore and Malaysia. As renewables still have a degree of volatility, all these go hand in hand with storage projects which the government is pursuing and that is an area which we aim to play a role in.
More broadly, there are big energy interconnect projects in the works, to bring power either from Asia such as Malaysia or Indonesia, also creating local jobs - long haul plans, but definite game changers. EDPR Sunseap has a core of decentralized generation, EDPR has its own in utility scale, a match guaranteed to allow us to scale up even further with large solar and wind farms all over the region (immediate high potential countries are Vietnam, China, South Korea and Japan).
What is the demand from the business side for renewable energy at the moment? Are you seeing high interest in PPAs (power purchase agreements)?
The demand in Singapore, Korea and Japan is skyrocketing and it is driven by two different motivations. On the one hand, there is the structural rationale based on their net zero commitments. But much more than that, the Ukraine crisis as well as other disruptions made it even clearer how the stability of a PPA is preferable to being subject to market fluctuations. One of the main challenges in Singapore is that there is currently not enough RES supply to match the demand for green electrons.
What needs to happen in order to streamline projects and ensure a faster project deployment to meet this rising demand?
To enable this, governments could perhaps explore ways to continue to provide incentives for the deployment of renewables and regulatory stability. Authorities could also assist in helping to create an even playing field, fast track permitting and other bureaucratic processes, and simplify procedures for wind and solar plant developers. There should also be regulatory developments to enable corporate PPAs in the different regions. Secondly, and this applies very much to APAC, we need a better interconnection of energy markets which can work in sync. You can get green electrons from one market to the bankable clients of another.
What is your vision for EDPR Sunseap for the coming two to three years?
We will continue playing on each other’s strengths, consolidate the integration and then expand regionally.
By 2025 one of our aims is to manage beyond the 2GW installed capacity mark in APAC. The region needs this growth, and it will come from all renewables technologies, from solar and floating solar, to wind onshore and offshore, to storage, so we will keep developing a diversified suite of products.
We are not doing enough as a global community. The world is hitting record breaking temperatures this year. We are all on the same side, and at EDPR Sunseap we will continue to lead the energy transition.
