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Renewable energy and environmental finance

A dedicated Renewable Energy and Environmental Finance (REEF) team focuses minds and resources on the environmental challenge we face

REEF

In 2008 the renewable energy market was worth $155 billion, five times its value in 2004. Our core markets were identified as a major growth area for the industry. Indeed, a report by the International Energy Agency, suggests our core markets represent more than 60 per cent of the global solar energy potential and 50 per cent of the global wind energy potential (excluding the US). China and India are currently listed in the top five markets.

Our role as a global player in REEF affords us a significant opportunity to support the development of a low-carbon economy and open up new markets. Our REEF team focuses on our core geographies of Africa, Asia and the Middle East encompassing renewable energy, clean technology and environmental finance, such as energy efficiency, carbon, water and waste management.

To date, we have provided more than $4.2 billion across all segments of the renewable energy market:

  • energy efficient equipment
  • geothermal power
  • run-of-river hydropower
  • solar power
  • water treatment
  • wind power
  • transportation

The REEF team works with our Wholesale Banking businesses, such as Corporate Finance and Principal Finance, to offer our range of Wholesale Banking products to all players in the renewable energy market, including technology developers, equipment manufacturers and sovereign wealth funds.

In 2010, the REEF business will remain focused on the core sectors of solar, wind and water in our key markets. This will ensure that we make the greatest contribution possible towards the creation of a low carbon economy. Our priorities include:

  • China: Wind and biomass power generation, wind and solar component manufacturing, water infrastructure, grid distribution, and waste to energy
  • India: Wind power generation, wind component manufacturing, run-of-the-river hydro power generation, water infrastructure, grid distribution, and nuclear
  • Malaysia and Thailand: Biomass, biofuels, and water infrastructure
  • Indonesia and the Philippines: Geothermal, biomass, biofuels, and water infrastructure
  • Middle East: Solar power generation (photovoltaic and thermal), nuclear, and water
  • Africa: Solar power generation, water and biofuels

Our team is also considering opportunities in waste to energy, hydro, nuclear, biomass and geothermal, which will build upon our track record of high profile deals such as the 24MW SinAn solar project in  Korea, the 250MW Bujagali run-of-river hydro project in Uganda, and the 114MW geothermal plant in Indonesia.

With our footprint in Asia, Africa and the Middle East and our core skills, we are well placed to play a major role in the transition to a low carbon economy.

Principal Finance Equity holdings

We closed a number of private equity investments in the environmental finance sector this year.

We already hold a €50 million investment in Climate Change Capital's carbon fund, as well as stakes in Crystal and Standard Water in China. We further demonstrated our commitment to the water sector with an investment in a Korean water services company.

Standard Chartered Private Equity made a $40 million equity investment in Environmental Facilities Management Corporation (EFMC), a wholly-owned subsidiary of Kolon Group. The investment comprised $32 million to acquire a 40 per cent stake and a further $8 million in funds to expand the company's water treatment business. It will enable EFMC to leverage our global footprint and expand into markets such as China and India.

Our Principal Finance team's strong interest in high quality green investments were clearly illustrated by our investment in 2007 in Meiya Power Company, a leading developer of clean and renewable energy projects in North Asia, which is the largest foreign owned Independent power company in China . Of the company's total 4,697MWs in operation or under construction, 1,277MWs is hydro, 100MWs is wind and 996MWs is gas fired. Our $23.3 million investment in Chinese solar water heater company, Sangle Solar Energy, this year, is a further example of the green investment theme.

These deals will contribute to our Clinton Global Initiative commitment to finance $8 to 10 billion in renewable energy and clean technology projects globally. By the end of 2009, total project value achieved was $4.2 billion on renewable energy and clean technology projects

REEF thought leadership

Given our commitment to sustainability and the particular relevance of climate change and water issues to our footprint markets, which represents 70 per cent of the global population, 60 per cent of projected energy growth and 75 per cent of the growth in CO2-equivalent (through 2030) and are where the majority of water stress is expected to occur, the REEF team plays a fundamental role in leading and participating in various climate change and water policy related initiatives. This year these initiatives include:

The Economics of Climate Adaptation working group: We partnered with organisations including the Global Environment Facility and the European Commission to produce a fact based risk management approach that can be used by national and local decision makers to understand the impact of climate variations on their economies, and identify actions to minimise that impact at the lowest cost of society. The report, Shaping Climate-Resilient Development, was widely distributed to key decision makers ahead of the United Nations Summit on Climate Change in Copenhagen in December.

International Finance Corporation (IFC)-McKinsey's Global Water Project: We are a member of the steering committee for an IFC-McKinsey's project which delivered the Charting our Water Future report. This project established a fact-based tool to help stakeholders make informed investment decisions, and developed a framework of policies enabling the transformation of the water sector.

The World Economic Forum's Green Investing Project: Peter Gutman, Global Head of REEF, serves on the expert committee of the World Economic Forum's Green Investing project, which aims to explore ways in which the world's leading investors can most effectively engage in the global effort to address climate change.

Project Catalyst: Peter Gutman serves on the Carbon Finance working group for Project Catalyst, an initiative sponsored by ClimateWorks Foundation. Launched in May 2008, Project Catalyst brings together leading experts from around the world to provide insightful analytic support to help shape an international climate agreement.

The China Greentech Initiative: We were the only financial institution to sponsor the China Greentech initiative, a collaboration of more than 80 of the world's leading green technology companies, entrepreneurs, investors, NGOs and policy advisers, which aimed to improve understanding of green technology market opportunities and challenges in China.

Equity Investment into Sangle Solar Energy

Standard Chartered Private Equity closed a $22.3 million investment into Sangle Solar Energy Co, a leading manufacturer and distributor of branded solar water heaters in China, this year.

Headquartered in China's Shandong province, Sangle Solar develops, manufactures, markets and distributes solar water heaters for household use. This provides a cost-effective solution to address demand from China's rural population for domestic hot water. Sangle has pioneered digitalising solar water heaters, enabling users to remotely control water uploading and conveniently adjust pressure and temperature. Over the past three years, Sangle extended its nationwide presence, with five production bases supplying a network of more 10,000 distributors across the country.

Joe Stevens, Head of Standard Chartered's Principal Finance, highlighted how the deal supports our approach to sustainable finance.

"This represents our significant equity investments into China's burgeoning renewable energy sector. The investment confirms our commitment to environment protection and energy-saving companies, and we are pleased that we can contribute to reducing the impact of climate change in China through this investment. We look forward to exploring additional investment opportunities in China's low carbon industries."

China's solar water heater sector is poised for aggressive growth over the next few years, supported by favourable regulations and, more importantly, by the low supply of water heaters in rural areas. In helping Sangle expand their domestic market share, Standard Chartered plays a role in meeting the needs of China's rural households and helping these households reduce their reliance on more costly, carbon-emitting water heaters, such as those powered by coal or natural gas.

"This investment into Sangle illustrates how we are well placed to work with our clients to support renewable technologies that will reduce greenhouse gas emissions whilst opening up new opportunities within our core markets."

Report tools

Annual Report and Accounts 2009