South­east Asia’s abil­ity to de­ploy re­new­ables grow­ing — Capgem­ini

Business World - - THE ECONOMY - Vic­tor V. Saulon

SOUTH­EAST Asia has been mak­ing sub­stan­tial progress in clean and re­new­able en­ergy even in the face of ris­ing de­mand for elec­tric­ity and pres­sures on cost, a new study said.

In its World En­ergy Mar­kets Ob­ser­va­tory, con­sult­ing firm Capgem­ini said gov­ern­ments in the re­gion have been step­ping up ef­forts to ex­pand their re­new­able en­ergy ca­pa­bil­i­ties in the past few years, while boost­ing re­gional co­or­di­na­tion and tech­ni­cal ex­per­tise.

This is among the key find­ings of the an­nual re­port of Capgem­ini, which also pro­vides tech­nol­ogy ser­vices and dig­i­tal trans­for­ma­tion.

It said the Philip­pines is aim­ing to be­come South­east Asia’s liq­ue­fied nat­u­ral gas (LNG) hub given its ge­o­graph­i­cal ad­van­tage in the re­gion. State-owned Philip­pine National Oil Co. (PNOC) has been tasked to put up an LNG ter­mi­nal, which is also pro­posed to have a power plant with a min­i­mum ca­pac­ity of 200 megawatts.

“Although largely con­trolled by mo­nop­o­lies, South­east Asia’s en­ergy mar­kets are now on the cusp of trans­for­ma­tion. Ris­ing en­ergy de­mand is driv­ing in­vest­ment into in­no­va­tive ways to gen­er­ate power in a so­cially, eco­nom­i­cally, and en­vi­ron­men­tally sus­tain­able man­ner,” said Gau­rav Modi, Capgem­ini man­ag­ing di­rec­tor for non-fi­nan­cial ser­vices in South­east Asia and Hong Kong, to in­tro­duce the re­port.

“More must be done in terms of pub­lic-pri­vate part­ner­ships to lever­age and seek new op­por­tu­ni­ties in re­new­able power sources and grid op­ti­miza­tion, pre­dic­tive as­set man­age­ment, and en­hanc­ing business mod­els,” he added.

The re­port said South­east Asia is in an up­hill bat­tle against cli­mate change, with its en­ergy de­mand of­ten out­pac­ing growth in sus­tain­able en­ergy.

It cited a pro­jec­tion made by the International En­ergy Agency that pointed to en­ergy de­mand in the re­gion climb­ing by more than 80% be­tween 2015 and 2040, leav­ing gov­ern­ments with the daunt­ing task of pro­duc­ing enough sus­tain­able en­ergy.

“This is ex­ac­er­bated by prag­matic en­ergy poli­cies fa­vored by many gov­ern­ments, which fa­cil­i­tate the ris­ing de­mand for coal amid its abun­dance and rel­a­tive af­ford­abil­ity,” it said.

An­other key find­ing is that surg­ing en­ergy de­mand and mount­ing in­ter­est in sus­tain­abil­ity across South­east Asia is driv­ing pol­icy mak­ers to re­view their en­ergy mix, turn to dereg­u­la­tion and cross-bor­der col­lab­o­ra­tion.

Capgem­ini said clean en­ergy and cli­mate have be­come a key agenda items for re­gional economies, re­sult­ing in a ris­ing fo­cus on tran­si­tion to low car­bon en­ergy sources.

It said sig­nif­i­cant in­vest­ment is ex­pected in de­vel­op­ing re­new­able en­ergy in the re­gion, with around $4.1 bil­lion spent in 2016 on build­ing ca­pa­bil­i­ties in re­search and de­vel­op­ment, as well as new re­new­able en­ergy and en­ergy man­age­ment tech­nol­ogy.

“Gov­ern­ments in the re­gion are cat­alyz­ing in­vest­ment in the re­gion’s re­new­able en­ergy space,” it said.

In the Philip­pines, for in­stance, the Re­new­able En­ergy Act of­fered re­new­able en­ergy projects in­cen­tives, in­clud­ing ex­emp­tion from pay­ing du­ties, the grant­ing of in­come tax hol­i­day and zero per­cent value-added tax rate.

“South­east Asia coun­tries are also mov­ing to­wards dereg­u­la­tion of the en­ergy mar­ket, trans­form­ing from the tra­di­tional sin­gle-buyer, mono­lithic struc­ture with fixed tar­iffs, to an open mar­ket of­fer­ing modular, con­fig­urable and flex­i­ble billing sys­tems,” it said.

It also cited the Philip­pines’ pas­sage of the Elec­tric Power In­dus­try Re­form Act (EPIRA), which dereg­u­lated the power sec­tor and led to the pri­va­ti­za­tion of the as­sets of the National Power Corp.

“Sim­i­lar to more ma­ture mar­kets like the US and Europe, in­creas­ingly more and more coun­tries are col­lab­o­rat­ing with one an­other to meet en­ergy se­cu­rity needs and ad­dress the chal­lenges of in­di­vid­ual coun­tries. The Sin­ga­pore-Malaysia in­ter­con­nec­tion, for in­stance, has con­nected both coun­tries aimed at emer­gency se­cu­rity and peak de­mand sup­port,” it said.

Capgem­ini said it also found early adopters of dig­i­ti­za­tion and smart tech­nol­ogy, such as the Philip­pines, are lead­ing the dis­rup­tion of the in­dus­try by lever­ag­ing In­ter­net of Things and smart grid trans­for­ma­tions to reap the evolv­ing mar­ket dy­nam­ics.

“The ac­cel­er­ated pace of tech­no­log­i­cal change is dis­rupt­ing the power in­dus­try, es­pe­cially in Sin­ga­pore, the Philip­pines, and Viet­nam. Cloud adop­tion in South­east Asia is ex­pected to con­tinue bring­ing var­i­ous sys­tems to­gether, such as in­fra­struc­ture sup­port­ing modular or dis­trib­uted topol­ogy and as­set man­age­ment, at scale and at an af­ford­able cost,” it said. —

THE PHILIP­PINES is aim­ing to be­come South­east Asia’s liq­ue­fied nat­u­ral gas hub given its ge­o­graph­i­cal ad­van­tage in the re­gion.

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