Upgrading and developing sustainable and resilient infrastructure is one of the 17 United Nations Sustainable Development Goals, and increasingly a key consideration for all of infrastructure’s stakeholders in Asia Pacific (APAC) – including governments, private investors, and end users.
The demand for new infrastructure in Asia Pacific is huge. The Asian Development Bank estimates that the region requires US$1.7 trillion per year until 2030 to meet its infrastructure needs, which includes the costs of climate change mitigation and adaptation. This translates into a broad range of projects that cover the entire infrastructure spectrum: from transportation, telecommunications and water treatment to smart cities, as well as power generation and distribution.
Renewable progress across Asia Pacific
Despite the varying maturity in energy transition across the region’s economies, Asia Pacific shows strong potential in the renewables space, with supportive government policies and a favourable climate in many economies for renewable infrastructure. Australia and Japan are aiming for net zero by 2050, which will require replacing existing infrastructure with cleaner alternatives. The region’s largest developing economies, China and India, have net-zero targets for 2060 and 2070, respectively.
The region’s long-term economic growth prospects are likely to result in a corresponding increase in power consumption, highlighting the importance of large-scale transactions that fund landmark renewable projects. The financing for ReNew’s global energy project is a case in point.
This highly successful US$1 billion loan is the largest ever in India’s renewable sector for a single project, and the first round-the-clock renewable deal of the year. Enabled by battery storage, the round-the-clock feature will help address issues associated with the intermittent nature of wind and solar power generation. The project will see 1,300-MW capacity wind and solar farms built across Karnataka, Rajasthan and Maharashtra.
Investments in solar technology are also on the rise. BNP Paribas took a lead role in an NT$9.4 billion refinancing of BlackRock’s 186MW solar portfolio in Taiwan which comprises 42 solar projects of various technologies including ground-mounted, floating and rooftop projects.
“The diverse landscape across Asian economies highlights how sustainability expertise, financing know-how and strong on-the-ground networks, are all part and parcel to bringing complex, market-first sustainable infrastructure projects to fruition,” says Shalen Shivpuri, Co-Head of Loans & Specialised Finance, APAC, and Co-Head of APAC Low Carbon Transition Group.
“As institutional investors look for more attractive sustainability projects that allow for them to deploy capital over a longer timeframe, Asia Pacific will continue to present attractive opportunities that promote decarbonisation against the backdrop of long-term economic growth,” Shivpuri added.
❝ The diverse landscape across Asian economies highlights how sustainability expertise, financing know-how and strong on-the-ground networks, are all part and parcel to bringing complex, market-first sustainable infrastructure projects to fruition. ❞
To help corporates navigate their sustainability journeys, in 2021, BNP Paribas launched the Low Carbon Transition Group (LCTG). This brings together around 200 experts across geographies and business lines and supports clients on targeted sustainability advisory and financing solutions across regions and business lines.
Unlocking Australia’s potential through digitalisation and sustainability
Australia’s infrastructure market is going from strength to strength. In 2022, renewable energy accounted for a record 35% of demand, and the country has a target of 82% by 2030. As a major exporter of commodities, it has also introduced policies to incentivise decarbonisation of the nation’s resources sector.
A standout decarbonisation deal in Australia was the debt financing transaction for Zenith Energy Pty, which has a sizeable portfolio of 511MW in distributed energy assets. All of the company’s existing external debt facilities were refinanced to support growth in capital expenditure largely for new renewable projects, with flexibility added to the A$440 million loan by an accordion structure. The transaction enabled Zenith Energy’s continued growth to provide hybrid off-grid power stations, helping large carbon producers and the resources sector in their decarbonisation journey. BNP Paribas acted as mandated lead arranger on the deal.
“Australia continues to provide outsized investment opportunities around decarbonisation and digitalisation themes, as the country looks to harness its world-leading wind and irradiance resource to meet the significant transition challenge and fund the deployment of 5G and growth in data consumption,” said Chris Ruffa, Head of Capital Markets and Low Carbon Transition Group for Australia and New Zealand at BNP Paribas.
❝ Australia continues to provide outsized investment opportunities around decarbonisation and digitalisation themes, as the country looks to harness its world-leading wind and irradiance resource to meet the significant transition challenge and fund the deployment of 5G and growth in data consumption. ❞
The growing sophistication of ESG investors has seen issuers become more ambitious in driving positive sustainability outcomes and tap the capital markets with innovative instruments. In February 2022, Reliance Rail, a public-private partnership (PPP) that leases electric trains to the New South Wales government and a key player in providing low-carbon transportation in Sydney, closed the first green and sustainability linked loan (GSLL) by a PPP in Asia Pacific. The A$1.8 billion GSLL was certified by the Climate Bond Initiative and paired with ambitious sustainability performance targets. This will incentivise the operator to make improvements in its energy intensity, implementation of solar PV generation and water consumption levels across its operations, maintenance centre and trains. BNP Paribas acted as sustainability coordinator and mandated lead arranger.
As a by-product of the COVID pandemic, Australia has doubled down on digital infrastructure. Crucial to helping businesses adapt and the economy recover, an A$796.5 million Digital Business Plan was put in place by the Australian government back in 2020 and is now poised to see Australia become a digital leader, both socially and economically. The plan includes investments into key initiatives including the roll-out of a 5G network to ensure access across the country, and the adoption of data technology.
Australia Tower Networks’ acquisition of Axicom in 2022 will enable a national footprint, connecting the majority of Australian households and businesses, in support of smarter, more connected communities. With Axicom’s approximately 2,000 telecommunications sites located across the eight Australian territories, it becomes the largest independent tower infrastructure company in Australia. BNP Paribas acted as mandated lead arranger in the financing.
Demand for data centres has seen significant growth, with Ambient Bidco Pty’s (CDC Data Centre) A$3 billion multi-tranche refinancing for its thirteen data centres across Australia and New Zealand. Data centres contribute to energy savings in the economy enabling digitalisation across infrastructure and industry, and operators themselves are increasingly looking to reduce their environmental impact and improve their ESG performance. BNP Paribas acted as mandated lead arranger.
“The country’s sizeable pool of superannuation funds together with OECD focused offshore funds means there is plenty of capital able to be deployed for the right projects,” added Ruffa.
Together with its clients, BNP Paribas was awarded in several categories at The Asset Triple A Sustainable Infrastructure Awards 2023, including Project Finance House of the Year in Australia, Asia-Pacific Deal of the Year and Renewable Energy Deal of the Year.
BNP Paribas is at the forefront of the transition towards a low-carbon economy. At the end of September 2022, financing for the production of low-carbon energy (€28.2 billion, including €24.8 billion in renewable energy) was already close to 20% higher than financing for the production of energy from fossil fuels. The Group aims to achieve a target of €40 billion in financing for the production of low-carbon, primarily renewable energies by 2030.
The Asset Triple A Sustainable Infrastructure Awards 2023
Project Finance House of the Year, Australia
|NAME OF AWARD||DEALS|
|Asia-Pacific Deal of The Year||ReNew Surya Roshini Private Limited US$985 million hybrid round-the-clock battery-enabled project financing|
|Middle East Deal of The Year||Lightning US$3.2 billion construction debt/US$720 million equity bridge for lightning subsea transmission network|
|South America Deal of The Year||Fluxys/EIG Global Energy Partners US$700 million acquisition financing for GNL Quintero regasification terminal|
|Renewable Energy Deal of The Year||SK On Hungary Kft US$2 billion multi-ECA covered green facilities|
|Renewable Energy Refinancing Deal of The Year||Sweihan PV Power Company US$700 million green bond|
|Renewable Energy Portfolio Refinancing Deal of The Year, Taiwan||Zhao Young Company NT$9.4 billion portfolio refinancing|
|Renewable Energy Deal of The Year – Hybrid, India||ReNew Surya Roshini Private Limited US$985 million hybrid round-the-clock battery-enabled project financing|
|Green Loan of The Year, India||Adani Solar Energy Jaisalmer One Private Limited US$288 million green loan facility|
|Decarbonization Deal of The Year, Australia||Zenith Energy Pty Ltd A$440 million syndicated debt facilities|
|PPP Deal of The Year, Australia||Reliance Railway Pty Ltd A$1.8 billion green sustainability-linked loan|
|Transport Deal of The Year – Airport, Australia||Sydney Airport Finance Company A$2.4 billion sustainability-linked loan/A$2 billion back-stop facilities|
|Utilities Deal of The Year, Australia||Network Finance Company Pty Ltd A$920 million sustainability-linked loan|
|Digital Infrastructure Deal of The Year, Australia||Ambient Bidco Pty Ltd A$2.96 billion multi-tranche refinancing of data centres|
|Telecom Deal of the Year, Australia||Australia Tower Network A$3.58 billion financing to acquire Axicom|