Energizing change: The new playbook for talent and rewards in Asia’s renewable energy sector 

The global push towards sustainability and the energy transition is reshaping industries worldwide, with Asia playing a pivotal role in the renewable energy landscape. In 2022, Asia accounted for nearly 60% of the global increase in renewable energy generating capacity, which has only grown with China leading the pack. This rapid growth brings both opportunities and challenges, particularly in talent acquisition, talent retention and rewarding talent. Through discussions with industry leaders and insights from Mercer’s extensive data, we have uncovered the key trends in the evolving rewards landscape for the renewable energy sector in Asia.

Here are five trends we believe will shape the talent and rewards landscape for the industry in Asia in the coming years:

A primary concern for the relatively new but rapidly expanding renewable energy industry in Asia, as it is globally, is the difficulty in finding and retaining the talent with the right skill sets. The overlap of skills between renewables and other industries, such as oil and gas (34%), manufacturing (22%) and engineering (12%), means that the talent pool is limited and highly sought after. The demand for specialized and new skills in renewables far outpaces supply, which has led to substantial cost escalations. With the energy sector in Asia paying an industry premium of close to 25% on average, talent costs for renewables companies have gone up considerably. Aging populations in key markets like Japan, China and Korea exacerbate these challenges. According to consolidated Mercer research, hiring external talent can lead to cost increases of 15% to 25%, while average pay rises across Asia hover at around 5%. This imbalance contributes to higher attrition rates in the renewables sector compared to other industries, further complicating the talent equation.

It is a talent-demand economy

The rewards landscape for renewables in Asia is as diverse as the region itself. Mercer’s consolidated renewable energy surveys data reveals that base pay in the renewable energy sector often exceeds all other industry averages, particularly in markets like India, Malaysia, Korea and Taiwan. Malaysia, in particular, stands out on fixed pay premiums in the renewables industry: these have been fueled by talent demand generated from the raft of green technology incentives that have been introduced by the Malaysian government in recent years to support its ambitious target under the Malaysia Renewable Energy Roadmap. 

Fixed pay levels are only one part of the story — the other is the speed of the catch-up and outpacing of fixed pay compared to all other industries in Asia. Salary increases vary widely across the region. India's renewable energy sector saw salary increases in line with all industries last year but projections for this year indicate a higher budget for renewables. Conversely, in China, the renewable energy sector lagged behind other industries last year but is expected to outpace them in the coming year. 

Performance bonuses add another layer of complexity. In China, for example, while base pay in the green energy sector may align with other industries, the addition of performance bonuses places renewable energy companies at a competitive advantage. According to consolidated Mercer research, the performance pay leverage in the sector could be around 20% of fixed pay, compared to 15% that is the norm in Asia for all industries put together. 

One of the stark differences between traditional energy and renewable energy rewards is the approach to talent acquisition. Mercer research found nearly 80% of renewable energy companies in Asia reported not hiring fresh graduates, instead opting to “buy” talent with experience in the industry. This strategy has led to a reliance on long-term incentives, retention bonuses and skill premiums, with around 60% of renewable energy companies using these tools to attract and retain talent. Interestingly, these strategies mirror those the tech sector has been successfully deploying for decades, highlighting the cross-industry competition for specialized skills. 

On the other hand, pay positioning remains conservative, with 90% of renewables companies in Asia benchmarking at the median (P50). Only a few markets, such as China, Malaysia, Taiwan and Indonesia, report a minority of companies positioning between P50 and P75, reflecting a cautious approach to compensation, according to Mercer’s 2023 APAC Renewables Survey.

Some of this can be attributed to the fact that a considerable proportion of the current crop of renewables talent is coming from the oil and gas sector in Asia, which continues to define the ‘roof’ of industry pay premiums across many markets in Asia.

One of the ongoing challenges for companies that straddle both legacy oil and gas and renewables is managing the pay disparity between these sectors. Historically, oil and gas roles commanded a premium of 30% to 40% over other industries in Asia — the good news is that this has been decreasing steadily over the last few years. A majority of organizations in the renewables sector (55%) are responding by differentiating pay within their business lines to attract and retain the relatively more scarce and pricier talent, according to consolidated Mercer research. Moreover, a combination of median pay positioning and higher performance pay leverage allows these companies to align payroll budgets more closely with profit margins, ensuring financial sustainability while remaining competitive in the talent market.

Necessity has been the mother of invention given the lack of ready and trained talent with the tailored skillsets needed for the rapid business growth. The renewables sector has been able to bring down the barriers of talent movement into the sector through extensive skill-mapping of roles in renewables to those in other adjacent industries rather than relying on similar previous experience (hardly any existed). This has set off a domino effect in the energy sector in Asia, which is now focused on mapping skills and upskilling the workforce in order to prepare for the energy transition. 

Upskilling, succession planning and localization of jobs are key talent themes emerging from the renewables energy sector. This is particularly the case in markets like Malaysia and Thailand, where there is a concerted effort to reduce reliance on expatriate talent, which has had the lion’s share of the key roles in the energy industry. 

 

Companies with significant investments in green energy are finding that they need to ‘unlearn and relearn’ the rules of talent acquisition and employee motivation, as these drivers differ significantly from those in conventional energy businesses. This shift underscores the dynamic and evolving nature of the energy sector in Asia. 

As Asia continues to lead in the global energy transition, the renewables sector faces unique challenges in talent acquisition, talent retention and rewarding talent. The region's diversity means that rewards strategies must be tailored to specific markets, balancing competitive compensation with financial sustainability. Companies that navigate this complex landscape successfully are well positioned to capitalize on the opportunities presented by the shift towards green energy.