Yesterday we hosted seminar with the Singapore Manufacturing Federation (SMF) dedicated to the renewable energy (or downstream) aspect of the Energy Transition. Our SMF energy seminar is an annual event designed to showcase the theme of our Asian Energy Expo series (Malaysia, 3-5 Sept). It attracted around 160 people from across the energy value chain. If you didn’t know, the SMF administers a government scheme that offers up to 50% off the price of an expo stand for Singapore registered businesses. It’s a good deal for anyone based in Singapore.
Many leading institutions such as the World Bank, ING Bank and AXA recently announced plans to divest in “stranded assets” in fossil fuels such as coal, oil and gas, owing to the shift towards renewables and growing carbon consciousness. Green energy finance is gaining traction, particularly in emerging markets setting ambitious targets. In this context it was fitting that our seminar was opened by Wymen Chan, MD Asia and Head, SUSI Asia Energy Transition Fund, Susi Partners AG. SUSI Partners finance renewable energy infrastructure, ultimately enabling the energy transition with institutional capital. Their core areas are Renewable Energy Infrastructure; Energy Efficiency Retrofits on Existing Infrastructure; and Energy Storage Infrastructure and Off-Grid Solutions. Wymen explained that de-risking projects should not be the main focus of developers because there is a limited ability to do so given the inherent project risks and dedicated investors like SUSI Partners are prepared to take on those risks. Developers should instead focus on delivering high quality projects. Good project developers differentiate themselves by bringing value-add to projects via technical know-how, local knowledge, creative solutions which result in higher returns. And while the Vietnam wind and solar markets are currently dominating the headlines, there are opportunities in other renewable sectors and countries in the region that SUSI is currently focused on like energy efficiency projects in Malaysia and Indonesia, hydro in Vietnam and Indonesia; and distributed generation/ C&I in Thailand and Vietnam.
Our next speaker was Valerie Lee, Director, Retail Energy, Singtel. Valerie was a key player within the team who successfully launched Singtel Power through a partnership with YTL PowerSeraya’s new retail energy brand called Geneco. Valerie explained: “Singapore residential customers can choose from a range of electricity plans that offer monthly power bill savings of up to 20% to 30% on current regulated tariffs. Customers who switch from their existing provider will experience a seamless transition with no disruption to their electricity supply. The benefit to Geneco is a major marketing partner in Singtel who can offer power on top of their strong telecommunication offers”. As it stands, Geneco is in the top 4 of energy retailers by market share. Other strong performers in this new market are said to be Keppel Electric, SembCorp and iSwitch. The EMA reported in early February this year that based on the switch rates in the first month of each zone, Zone 2 (currently at 18%) has seen higher early switch rates than for Zone 1 (25%) and the soft launch in Jurong (40%). These switch rates are higher than the single-digit first-year switch rates seen in other countries such as Japan, UK, Australia and New Zealand.
Next up was our first panel dedicated to digital initiatives to support the Energy Transition & Customer Choice. The moderator was Yatin Premchand, MD, Management Consulting, Black & Veatch. He was supported by: William Temple, Co-Founder, Ampotech; Martin Lim, CEO, Electrify, and Robin Li, Director of Global Solution and Services Centre, Envision Digital. Currently natural gas imports account for around 95% of Singapore’s fuel mix. In this regard Singapore’s energy is cleaner than many other ASEAN countries who will require major infrastructure changes to shift out of coal. The panel agreed that digital tools will play a big role in managing the integration of new decentralized energy sources. They also referenced the importance of digital tools in enabling: sustainable mobility; connected buildings; and AI appliances which potentially can buy and sell electricity. The conversation touched on how customers are empowered by new solutions based around solar and storage services, peer to peer services and real time analytics from smart meters. But all agreed that most customers are not generally engaged regarding use rates – unless of course there is a major market reform (as in Singapore), a price spike or outage. Singapore’s over supply of electricity (spare capacity is around 50%) has led to all but one Geneco operating in the red. Martin’s view was that this over capacity was one of the reasons innovation in Singapore’s utility market was slow. He spoke favourably of the new attitude of TNB in Malaysia who works closely with startups to develop new solutions. William said that Singapore was a small market and his firm was also looking outside the region for new opportunities. Robin was more supportive of Singapore as a region for business expansion.
Our final panel concerned the infrastructure development opportunities based in transitioning to an electric economy. The moderator was Yuan-Sheng Yu, General Manager, Lux Research. He was supported by Nicolas Payen, Co-Founder & CEO, Positive Energy; Dr Liu Yang, Senior Research Fellow, Energy Studies Institute, NUS; Zi Sheng Neoh, Managing Consultant, Power & Renewables APAC, Wood Mackenzie; and Milan Koev, CEO, Hexagon Peak. It was noted that energy security is a key driver of the current energy transition for many countries in ASEAN. This means that cost, energy independence, and economic development remain a primary in our region.
Yuan-Sheng noted: “Because of this, especially in Indonesia, options beyond coal remain difficult to gain widespread traction due to political and economic issues. While leapfrogging from coal directly to solar and other forms of renewables is now a strong possibility, countries like Indonesia lack the ability to transition via a middle ground – i.e. natural gas – due to significantly higher prices and reliance on imports”.
The panel generally considered the opportunities were ripe for solar + storage and energy efficiency expansion across the region but agreed that Singapore will not be the fastest growing market in ASEAN for storage.
Yang’s view is that distributed energy assets such as battery and electric vehicle can provide capacity and reserves values to ensure the grid reliability at the high penetration level of renewables: “ the key issue is that the market design must enable the business models to transform the system value into the market value. For many Asian countries, a long-term planning can prevent over-investment in fossil fuel based power supply, which may end up as stranded energy assets due to low capacity utilization factor in a changing competitive environment.”
Nicolas said that solar will become the go to energy in region due to it cost advantage: “It represents a fantastic business opportunity for the ASEAN economies, local SMEs, and private investors. Hopefully Asia will leapfrog and catch up with other geographies when it comes to energy transition. Digital and business innovations like the financing platform for Renewable Energy projects of Positive Energy Ltd can support this acceleration.”
Milan’s view was that the technology advantages of solar were already enough to power the new energy revolution. The other panelists thought that a more supportive regulatory landscape was crucial to support the energy transition – and key to attracting private investments. Policies to focus on include Renewable Portfolio Standards, financial incentives and Public-Private Partnerships, and regulatory sandboxes .
If you would like to learn more about the impact of the Energy Transition across ASEAN, then attend the region’s largest power and energy expo series taking place in Malaysia on 3-5 September. There will be 12,000 participants, 350 stands, and 5 Thought Leadership Summits:
POWERGEN Asia – focused on optimising power plants and large scale renewable power programs
DistribuTECH Asia – focused on implementing Smart Grids with a focus on grid edge integration
Asian Utility Week – focused on Digital Transformation upgrades and Customer Engagement
SolarVision – Focused on promoting deep solar power penetration within Malaysian and ASEAN
Energy Capital Leaders – For Investors and Financiers interested in Energy Transition opportunities