· 6 min read
1. A resonant deal in a muffled market
In June 2025, the Worldbank closed a US$ 2.13 billion blended finance package in Indonesia, marking one of the region’s few landmark clean energy financings of the year. It was a rare bright note in an otherwise subdued deal environment—particularly for next-generation infrastructure. While the transaction was public sector-led, its success offers lessons for private-sector-driven projects that could be even more transformative if replicated at scale.
Globally, climate finance flows have reached unprecedented heights, driven by growing investor appetite and mounting political urgency. But in Asia, a dissonance remains. The capital exists. So do the technological instruments for change. Yet crucial segments of the energy transition —offshore wind, battery energy storage systems (BESS), and cross-border grid integration — are still not receiving the financing they need.
Asia’s energy transition today is like a symphony with talented musicians ready to play, but without a full score or a conductor to bring harmony. The instruments are tuned; the audience is waiting. But the piece that will align them remains unwritten.
2. Global climate finance: The score is largely written, but gaps persist
The Climate Policy Initiative’s 2025 Global Landscape of Climate Finance reports that global climate-related financial flows have now surpassed $2 trillion annually, with private finance surpassing public sources for the first time. This shift signals a maturing market in which institutional and corporate actors are increasingly willing to take the stage.
Yet the make-up of these flows often fails to match the risk profiles and financing needs of Asia’s most urgent infrastructure projects. Large-scale, long-horizon investments in BESS, offshore transmission networks, and grid modernization rarely fit into the current deal structures or investment mandates that dominate climate finance portfolios.
Institutional investors, in particular, face familiar hurdles: regulatory inconsistency, insufficient project data, and opaque pipelines. While 68% of institutions surveyed by the Asia Investor Group on Climate Change now integrate climate risk into their portfolios, only a small share is committing capital to early-stage, large-scale infrastructure in emerging Asian markets. Without standardized contracts, predictable revenue models, and balanced risk allocation, these investors are likely to remain on the sidelines.
In Southeast Asia especially, the mismatch is stark. The region needs transformative investments in renewable integration, storage, and transmission. But many of these projects sit on the periphery of deal pipelines, crowded out by more “bankable” renewable generation assets like utility-scale solar and onshore wind. The tempo of global finance may be quickening, but whole sections of Asia’s clean energy orchestra remain quiet.
3. Asia’s infrastructure gaps: Missing the next movement
Asia’s challenge is not a shortage of ambition—or even capital—but of alignment.
BESS remains one of the most technically promising yet financially elusive pieces of the transition puzzle. Storage projects face regulatory gaps, untested revenue models, and high upfront costs, making them difficult to scale without tailored support. While pilot projects have demonstrated feasibility, large-scale commercial deployment remains well advanced in developed markets but is still nascent in most emerging markets.
Offshore wind presents a similar story. Countries like Vietnam and the Philippines boast exceptional wind resources and growing policy interest. But early-stage projects are slowed by environmental impact assessments, complex permitting processes, and the sheer capital intensity required. For many, this is the first venture into large-scale offshore development, meaning that feasibility studies, site mapping, and grid connection planning are still in discovery mode.
Then there is the ASEAN Power Grid—a compelling vision for regional energy security and renewable integration. Early pilots demonstrate its potential, but scaling up remains hindered by financing gaps, regulatory complexity, and the absence of robust cross-border governance structures. Also, the ASEAN Power Grid is just the physical infrastructure; it needs to over time be complemented by a truly integrated energy system that aligns operational, financial, energy market, and institutional systems
across ASEAN member states.
Without these next-movement investments and initiatives, Asia risks locking in a high-carbon economy, making the eventual transition costlier and critically delayed.
4. Blended finance: The quiet workhorse
In this fragmented financing environment, blended finance plays a quiet but vital role. By strategically deploying concessional capital from public and/or philanthropic sources alongside commercial capital, blended structures can de-risk pioneering projects, align diverse stakeholders, and crowd in commercial investors who might otherwise stay away.
According to Convergence’s 2025 State of Blended Finance report, US$18 billion was deployed across 123 transactions last year, with climate-related sectors attracting 62% of that total. Yet within that subset, only a fraction targeted next-generation infrastructure like BESS, offshore wind, or regional grids—the very areas where catalytic de-risking is most needed.
When applied smartly, blended finance can absorb early-stage risks, standardize complicated contract structures, and provide the comfort needed for institutional capital to participate. The challenge is not proving that the model works — it has done so for more than a decade in sectors like off-grid solar and energy efficiency — but rather adapting it to the scale and complexity of Asia’s emerging infrastructure needs.
5. COP29 → COP30: Setting the stage for coherence
Last year’s COP29 in Baku concluded with the agreement on a New Collective Quantified Goal to replace the $100 billion annual climate finance target. While symbolically important, the deal left open the practical question: how will this capital actually reach the infrastructure that needs it most?
For Asia, COP30 in Belém presents an opportunity to move from broad pledges to implementable action. We believe that stakeholders across the region are calling for three priority shifts:
- Deploy targeted de-risking instruments, such as guarantees tailored for storage, offshore wind and other renewable energy technologies, reflecting the specific regulatory and technical hurdles in these sectors.
- Provide enabling signals that give private investors the confidence to commit capital by creating favorable regulatory frameworks, transparent power purchase agreements, and predictable permitting processes.
- Strengthen national and regional project preparation platforms so they can develop, aggregate, and present pipelines of investable projects. These aggregators should be linked with commercial and development financial institutions for technical support, credit enhancement, and co-financing, ensuring that prepared projects meet the standards and scale required for institutional
capital participation.
The message from Asia’s financiers, developers, and policymakers is consistent: more than new promises, the region needs tools and frameworks that enable performance.
6. Conclusion: Playing in time
Asia’s clean energy transition is at a pivotal movement in its score, with the talent, technology, and capital ready to perform. But without stronger coordination, clearer rules, and catalytic finance, progress will remain fragmented. The key is to ensure that the region’s climate finance finally plays in time: with every instrument engaged, every section coordinated, and every note driving toward a shared crescendo—a sustainable, secure, and prosperous energy future for Asia.
Can we collectively rise to this challenge and have the political will to do so? The remainder of 2025 and 2026 will tell.
illuminem Voices is a democratic space presenting the thoughts and opinions of leading Sustainability & Energy writers, their opinions do not necessarily represent those of illuminem.
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