SUSI ‘only game in town’ to scale up SE Asia microgrid assets

MD Wymen Chan discusses the latest deal from its Asia Energy Transition Fund, set to hit its $250m target by mid-2022.

Swiss fund manager SUSI Partners has closed a deal to invest in microgrids across emerging markets in Southeast Asia through its Asia Energy Transition Fund.

The transaction is the second investment for the fund that reached an $81 million first close in May and will see the firm partner with Singapore-based developer Canopy Power.

According to SUSI Partners managing director Wymen Chan who heads the fund, the new partnership will aim to provide cheap, reliable electricity to underserved areas in the region, still heavily reliant on diesel.

“We’re looking to power communities, businesses and industries on islands [and other underserved areas] that are currently reliant on diesel. It may not be possible to replace diesel 100 percent, but we can replace a significant portion dependent on diesel generation by financing and facilitating sustainable microgrid projects in the region,” Chan told Infrastructure Investor.

“The industry has been trying to implement energy storage systems in the region and cost is an issue. Diesel replacement in off-grid areas is probably one of the few economically viable uses of energy storage at this point, and Canopy is one of the few developers focused on this segment.”

Highlighting the region’s “energy access problem” Canopy Power chief executive Sujay Malve said: “There are over 20,000 islands in the region and, even on the mainland, a lot of places don’t have good electricity coverage.”

Areas of focus for the joint venture will include the Philippines, Indonesia, Vietnam and Thailand. The partnership might also consider microgrid projects in the South Pacific, he said.

According to Malve, Canopy – which focuses on microgrids for commercial and industrial customers – had previously experienced difficulty finding financing for individual projects.

SUSI’s involvement in the new venture would help provide the scale necessary to make such projects more attractive to institutional investors over time, Chan said.

“What we want to do here is have a long-term partnership with Canopy in order to scale up microgrid projects. We will aggregate these assets, and we will scale it up. We are probably the only game in town that’s willing to take a look at the small end of the scale and have that patience to build up and aggregate [projects] into a portfolio that makes sense for an institutional investor [to invest in],” he added.

Chan noted the SAETF, which launched in September 2019, is on track to reach its $250 million target by mid-2022, and may consider a second close towards the end of this year.