After assessing which markets exceeded last year’s expectations based on investor insights from across the Asia Pacific, Cleantech Group’s Managing Director for APAC, Summer Bae turned the focus to how capital allocation priorities are likely to evolve through 2026.
Looking ahead:
By the end of 2026, which investment themes in Asia are most likely to gain traction—and which may lose momentum?
Max Han, CEO, Managing Director, Sopoong Ventures
By the end of 2026, the Asian investment landscape will pivot from “Mitigation Hype” to “Execution and Resilience.”
Themes Gaining Traction (The Winners):
- Grid Flexibility and ESS (Energy Storage Systems): As renewable penetration hits critical levels, the problem isn’t “generating” power, but “managing” it. Technologies solving the “duck curve” and grid instability—such as Long-Duration Energy Storage (LDES) and VPPs (Virtual Power Plants)—will see peak demand.
- Local Energy Sovereignty (Decentralized Power): Inspired by the “Sunlight Income Village” models in Korea, we expect a surge in Community-based Distributed Energy. This theme gains traction as large-scale grid construction faces increasing local opposition and cost overruns.
- Climate Adaptation Tech: With 2025 being one of the hottest years on record, “Adaptation” is no longer a secondary concern. Investment will flow into water scarcity solutions, resilient agritech, and AI-driven disaster prediction systems designed for Asia’s unique geography.
Themes Losing Momentum (The Laggards):
- Subsidy-Dependent Models: In the wake of shifting global trade policies (e.g., “Trump 2.0” ripples and IRA uncertainty), climate startups that rely solely on government subsidies rather than Grid Parity or operational efficiency will lose investor confidence.
- Pure “Carbon Accounting” SaaS: The market is now exhausted by software that only “measures” problems. By late 2026, companies that provide measurement without Direct Reduction Technology (deep-tech) will struggle to differentiate themselves as the focus shifts to tangible decarbonization results.
I believe 2026 is the year of “Climate Realism.” The winners will be those who can navigate the tension between “pure green” ideals and the “gritty transition” required by our heavy industries. We are moving beyond the hype of digital dashboards toward the hard-tech reality of energy sovereignty and industrial transformation.
Summer’s take:
I like the “climate realism” lens here—less mitigation hype, more execution.
On grid flexibility: I think LDES will be deployed first where grids are most stressed, and that’s very clearly in Asia, especially in China, India, and parts of Southeast Asia, where demand growth, renewable intermittency, and reliability pressures are converging. We’re already seeing more of this “must-have” demand signal coming out of Asia than almost anywhere else.
I agree on carbon accounting SaaS: measurement alone is getting too crowded—what stands out now is connecting MRV to operational outcomes and execution results that actually move emissions down.
Lastly, I couldn’t agree more on adaptation tech—this is quickly becoming an infrastructure discussion across Asia, especially when 95% of the people affected by weather-related flooding globally live in Asia.
Andrew Wong, Director, TRIREC
By the end of 2026, Southeast Asia’s cleantech narrative is likely to be defined less by moonshot industrial decarbonization and more by bankable energy transition and waste-to-value opportunities. The center of gravity is shifting toward themes that match three constraints: grid stress, policy urgency, and the region’s bias toward capex-light, near-term cash flows.
On the upside, distributed and utility-scale renewables, grid-connected BESS, and flexible gas or LNG “bridge” assets that enable coal-to-clean switches will keep gaining traction, helped by tightening power reliability concerns in Indonesia, Vietnam, and the Philippines. Expect more creative project finance and blended capital stacks as local banks grow comfortable with merchant risk, and as corporates chase RE100-style commitments via DPPAs and cross-border power trade. In parallel, waste-to-value in the forms of biomass, biogas, RDF, and circular plastics will benefit from import substitution logic (displacing fuel and feedstock imports) and the political optics of solving landfill, air quality, and flooding problems in one shot.
Conversely, big-ticket industrial decarbonization in the form of green hydrogen and carbon capture is likely to lose momentum in Southeast Asia’s private markets, barring a handful of policy-backed flagship projects. The region lacks both consistently high carbon prices and deep public support schemes, so many hydrogen and CCS proposals will struggle to clear investment committees once concessional or strategic capital steps back. Investors will still talk about hydrogen hubs and CCS corridors, but capital is more likely to flow into the enabling infrastructure, reliable power, grids, and waste systems, that will be needed long before gigawatt-scale electrolyzers and regional CO₂ pipelines.
Summer’s take:
This feels very APAC-practical—anchored in bankability, grid reliability, and near-term cashflow realities, which is exactly what shapes deal flow across the region. On Southeast Asia specifically, I agree green hydrogen and CCS are likely to attract less private-market attention near-term—partly because green hydrogen is still high-cost, but also because SEA’s current generation mix and relatively lower renewable penetration make it harder to deliver truly “green” molecules or bankable CCS economics without heavy policy support.
The waste-to-value angle is definitely interesting—politically and strategically—but I’d flag that scaling is still the big question mark. Feedstock consistency, project execution, and bankability vary hugely by market, so the winners will likely be the platforms that can prove repeatable unit economics and reliable offtake, not just a strong circular narrative.
Xinle Su, Vice President, Eurazeo
By the end of 2026, bio-based alternatives in Asia are likely to gain traction where they fit into existing industrial systems. Adoption is strongest when bio-based inputs can be blended, substituted, or procured without changing how products are made, distributed, or sold. This is why momentum in Asia is most visible in mandated biofuels, where policy support and incumbent infrastructure translate directly into scale.
This dynamic is clear in biofuels, where success depends on alignment with existing agricultural and refining ecosystems. In India, sugarcane-based ethanol scales because it plugs into a mature sugar industry, allowing higher blending mandates to be met using established mills, logistics, and farmer networks. In Indonesia, palm oil-based biodiesel has expanded for similar reasons: abundant domestic feedstock, integrated refining capacity, and a policy framework that redirects existing production into fuel use. In both cases, scale comes from system fit rather than technological novelty.
What differentiates the current wave from earlier waves is how these pathways are being industrialized and financed. Instead of building capital-intensive greenfield plants to compete in commodity markets, companies are increasingly scaling through co-location with existing assets, contract manufacturing, or modular deployment. This reduces upfront risk and allows businesses to secure offtake before committing heavy capital.
Overall, the bio-based companies most likely to succeed in Asia by the end of 2026 will be those that supply practical inputs to existing industries, creatively scale through capital-light and partnership-driven models, and are anchored in close proximity to abundant feedstock—rather than standalone climate projects that sit outside incumbent industrial value chains.
Summer’s take:
This complements Andrew’s waste-to-value point nicely. The bio-based winners will be the ones that fit into existing industrial systems rather than trying to rebuild value chains from scratch.
The India and Indonesia examples are a great reminder that in Asia, scale often comes from incumbent alignment—feedstock proximity, established logistics, and policy-backed demand—more than pure technological novelty.
The financing angle is critical as well: co-location, modular deployment, and contract manufacturing are increasingly the scaling playbook for bio-based solutions that want to grow without taking on full greenfield capex risk.
Dr. Eric Wang, Managing Partner, GRC SinoGreen
With the upcoming release of China’s 15th Five Year Plan, AI will be a central factor for the nation’s future economic growth. As AI reasoning expands, compute demand is growing at an unprecedented rate, triggering investment into data centers, network, connectivity, and power infrastructure. With China’s 2030 peak emissions target, the government is encouraging investment in ultra-energy-efficient technologies to reduce energy consumption. Investors have also recognized the potential of physical AI for China’s manufacturing and data center ecosystems, with focus shifting to proprietary models and digital twins software that optimize energy usage within manufacturing and AI infrastructure itself.
In contrast, CCUS is facing a reality check globally. In the case of China, the key CCUS technology stakeholders are primarily state-owned enterprises capable of supporting large-scale, integrated demonstration projects. Whereas the cost of CCUS implementation for startups is a pure expense. Carbon prices are insufficient to cover capture costs, while utilization remains unscalable and storage generates no direct revenue. While some large-scale projects can produce returns, most applications rely heavily on subsidies to succeed. Therefore, startups are searching for niche, high-value entry points such as CO₂ conversion into chemicals or CO₂ combined with industrial waste for construction materials. However, most approaches have not been validated at scale.
Additionally, opportunities in China-dominated supply chains such as EVs, solar, and Li-ion batteries are slowing. As these sectors have matured and overcapacity has taken hold, government support and VC funding have dried up. With a significant industry consolidation expected on the horizon, VCs are opting for fresh, early-stage deals, particularly in AI startups.
Summer’s take:
Summer’s take: China’s AI push is no longer a software story—it’s an infrastructure and efficiency story. As the 15th Five-Year Plan takes shape, capital is shifting toward system-level optimization, while CCUS remains largely a state-led play. For start-ups, scale comes later; efficiency and niche value come first.
Fariz Ali, Managing Partner, Twin Towers Ventures
For 2026, we expect thematic investments into AI and its enabling stack, including data centers, advanced semiconductors, and quantum computing, as focus shifts from experimentation to scaled deployment. Renewables and mobility would also remain as durable investment themes driven by energy-security priorities and continuing shift towards EVs and AVs. In contrast, whilst hydrogen remains as a strategic and important theme towards decarbonization, we think near term momentum may soften due to cost, infrastructure, and maturity hurdles.
Summer’s take:
AI in Southeast Asia is moving from experimentation to deployment. The opportunity isn’t hype—it’s in the enabling stack: power, infrastructure, and integration. Clean energy and mobility remain durable, while hydrogen stays strategic but commercially constrained in the near term.
Louis Murayama, Partner, Antares Ventures
While 2025 was the year of AI optimism, 2026 will be the year of AI realism.
In Malaysia, AI is already projected to account for 70-90% of new energy demand growth through 2030. The strain is so acute that the state of Johor has already halted approvals for new water-intensive data centers. The system simply cannot support the demand.
Consequently, the winners in 2026 won’t be those driving more consumption, but those alleviating the pain. We expect capital to flow into technologies that improve energy intensity, grid stability, and power quality, specifically solutions that can be deployed immediately to unlock capacity.
Crucially, this will not always be clean. A utility executive recently confided that he is actively seeking solutions to reactivate decommissioned coal plants. These plants are labor-intensive to run, so to make them economical, he plans to use AI to operate them. It is almost poetic: using AI to burn coal to power the AI.
I think in general, infrastructure investment will become more holistic. For example, merging power generation directly with compute. The era of the “simple” data center build-out is over; the market is slowing down to digest the complexity of powering it.
Summer’s take:
2026 is the year AI meets physical limits. I mean actual limit. Power, water, and grid constraints are now shaping investment decisions. The winners won’t be those driving more demand, but those easing system stress—even when the solutions are pragmatic rather than perfectly clean.
