ON WITH THE WIND
Olivier Duguet and The Blue Circle are on a mission to give Southeast Asia a big edge in renewable energy.
Seven years ago when Olivier Duguet moved to Southeast Asia to pursue his dream as an energy entrepreneur, things got off to a rocky start. As he explored opportunities in Thailand and Cambodia, the Frenchman faced challenges — some of which are still unresolved — but that didn’t hold him back from establishing a foothold in the renewable energy business in the region.
“In 2011, I looked at Southeast Asia and decided to move here in 2013 to develop wind power. I learned a lot about the situation in Thailand and found that land regulation is very specific. Every country has its own specific rules but here, it was hard,” recalls Mr Duguet.
“I learned that it’s very difficult to build in a watershed area in Thailand or basically at all in the mountains, which is normally where the wind is. That’s impossible,” he tells Asia Focus.
“When you ask for a map of the watershed areas, it’s not public. So how we can apply for something or deal with some regulation that is not public?
“It takes at least one year here to get the map, to know exactly how to do this, and for wind power it takes two to five years to develop. It’s an example of the learning curve we went through in Thailand. It was painful but anyway, we’ve learned how to do it here,” he adds with a smile.
Many people, including authorities in Thailand and Cambodia, seem to share preconceived ideas about wind energy in Mr Duguet’s view.
“In Thailand, people told me, there is no wind here. No wind in Cambodia. No wind in Thailand. Forget about it. That was very interesting,” he says.
“I insisted and asked them to look further. There is probably enough wind to be commercially viable and competitive in Thailand and in Cambodia also.
“We find wind mostly in the Northeast of Thailand where we specialised, and we have a big project in the pipeline for the region. However, we are still in discussions with the government and explaining to them that we can be competitive against gas, oil, coal, or whatever fossil fuels.
“That’s very new for the government for sure but the pre-conceived idea is that wind is too expensive. It’s not. It could be competitive. You have to explain.”
The company Mr Duguet founded and now leads as CEO, The Blue Circle, is a Singapore-based developer of renewable energy with a focus on wind power in Southeast Asia. At present, it operates a 40-megawatt project in Ninh Thuan province in Vietnam, the first foreign-owned and operated wind project in the country and the largest as of last year.
Another 40-MW site is being built in southern Vietnam, and there are more to come. In Thailand, the company has bought land, mostly in the northeastern region, with 700 MW of wind farms in the pipeline.
“There is enough wind there so we have been measuring the wind,” Mr Duguet says. “We have secured the land, paid the farmers, all of our projects have been paid for over the past four to five years to prepare to open.
“There was a preliminary environmental study of course, and grid connection. All 700 Megawatts are are ready to go when the government allows us to use a feed-in tariff, a fixed price for everybody, or bidding for the price.”
Meanwhile, the company is in the final round of discussions with the government of Cambodia for The Blue Circle’s first wind project there.
Why Southeast Asia? Mr Duguet explains that the macroeconomic picture plays a big part. Asean, he says, is going to be the fourth largest economy in the world by 2030, and the region’s high energy demand growth also makes Asean the ideal location for The Blue Circle.
“The macroeconomy is one of the most interesting factors while a huge population are now living in Asean countries,” he notes. “The growth in consumption of energy is one of the highest in the world here. If you look at Vietnam, there has been 11-12% growth of energy consumption per year for a country with 90 million inhabitants. That’s huge growth.
“In less advanced countries such as Myanmar and Cambodia, there has been 16% growth of electricity consumption. It’s enormous. Gigantic. These countries and the whole region have the chance to leapfrog and jump directly to the next generation of renewable technology.
“That is the reason why we have kept on trying here in the region because we believe it is just the beginning.”
SECOND LIFE
Mr Duguet’s educational background is in law and finance — he holds an MBA in finance from France. Before launching his crusade in the energy business, he was a fund manager with one of the largest mutual funds of France. “My first life was in the financial market as an equity fund manager. That was my first job for 10 years.”
His interest in energy began in 1999, “the last century” as he calls it. At the time, wind was not a big business in France but it was a big business in neighbouring Germany and Spain.
“While managing the money of others, I spotted what was happening in the world and realised that the most change was taking place in energy in my lifetime. I definitely think that energy is the main issue of the 21st century,” he says.
“Being based near Paris, I looked at the potential of wind power in France and started my own company right after the feed-in tariff for renewable energy was put in place in 2001 in France.
“Then I quit my company and built my renewable — wind-only company — the No.1 wind energy company in France at the time. And in 2007, we decided to sell the whole company to the No.2 utility company in Italy. After 2007, I looked at other places to do the same and that led me to Asean.”
Energy has now become Mr Duguet’s second life. “I feel it is something I would like to tackle,”
For me, it’s somethi very ersonal. he se wind urbine pinning, it’s a olutely magica t’ majestic. It’s lly fantastic. To me, a in turbin is modernity
The future is for [grid operators] to balance the grid every single minute during the day between different sources that are variable
he says. “Having been in this business since 2000, I would say the fun part of it is that we are doing it not only for the sake of money but for saving the world. We are doing both.
“I think that for all the people who have been working with me and for the sector, some of them are just in it for money or to do something with their days. But most of us, we share the vision. It is a bit more than a regular job. I think somehow, we are going to save the world.
“For me, it’s something very personal. When I see a wind turbine spinning, it’s absolutely magical. It’s majestic. It’s really fantastic. To me, a wind turbine is modernity.
“It’s gorgeous. Most of the time, people wonder how it is spinning, is there a battery inside? No it’s just wind. Nothing else and it doesn’t need to be at high speed. Just a low wind, just a breeze, it will start spinning. But for commercial production, it has to be higher.”
And while The Blue Circle aims to one day offer every kind of renewable energy including solar, all of its current projects are wind. “Solar is very interesting, very competitive. The only thing is that for solar, my 12-year-old kid can do it,” he jokes.
“It’s very easy. It’s not technical at all. The resource is the same everywhere. I can do something more difficult. The competition is also the case but there is no real value-add.
“We don’t have enough value added except when we do it where it is difficult. For example,
I think solar is the answer for Myanmar at the moment.
“We have solar projects where there is less competition and it’s more difficult but where it is very easy to do, here (Thailand) for example, in countries which are very open, I don’t have it. So the more challenging, the better.
“Wind is changing enough and it is not what I did before, so I have more credentials for this than something else.”
In Myanmar, The Blue Circle already has an office with a team working there but local laws and regulations are not ready for renewable energy yet.
“Myanmar has been the last frontier for the last 30 years, and Indonesia is the same. Indonesia has been the next big market, the next opportunity for a while but frankly, these two countries have been the big exception,” says Mr Duguet.
“Decisions are very very slow given their level of development. The government has a lot more to deal with power and renewable power. They need power. That’s it and they don’t care for the moment about emissions.
“Myanmar is a great place for electrification for sure, because it has the lowest level of electrification and is a big country with 52 million inhabitants. But the investment policy is still not there. The environment is very difficult for investors to go to Myanmar.”
Cambodia, says Mr Duguet, is more advanced, with an economy that is on the rise and very open. “Myanmar is completely the opposite. It is not friendly to investors at all. All the regulations are 40-50 years old and the land regulations are still from the British era. Nothing has been changed in the last 50 years in that country. It has been fantastic but on the other hand, it remains a big challenge.”
INTERMITTENCY MYTH
When anyone wants to kill renewables, they say the projects are expensive and output is intermittent as the source is nature, says Mr Duguet.
“We have two monsoon seasons and during a monsoon, there are winds. Of course, it is intermittent during the day but you can be sure the wind is there and we are in production,” he explains.
The Electricity Generating Authority of Thailand (Egat) and the Ministry of Energy, he says, always think in terms of “firm power” that can be generated 24 hours a day, but firm power is something of the past.
“Firm power is the past. It’s a 19th century thing. If you want firm power, stay with coal, with oil or gas but the future is not only with firm power,” he argues.
“The future is for (the grid operator) to balance the grid every single minute during the day between different sources that are variable. Variable means that during the day, with the sun, solar power will be there. It peaks at midday and then [output]goes down. So it only produces at full power during one hour of the day.”
Wind, meanwhile, is generally stronger in the evening or at night, while hydroelectric power is at its peak during the wet season. All the countries in the region are already balancing these different combinations, mainly with hydropower, Mr Duguet explains.
“I will say hydro is the incumbent renewable energy developed in the 1960s and 1970s. But hydro is highly intermittent all over the the region. During the monsoon season, it’s producing at full capacity and during the dry season, nothing.
“The region is already coping with intermittent power.
“For Egat, the ideal combination is to balance the production of renewables with its big hydropower base. We all need to explain how this could work more to the public.”
Mr Duguet also cautions that developers of hydropower projects in the region are likely to find it harder to get financing given rising concerns about what is happening to the Mekong River.
“Frankly, the way they are doing it and the way they want to continue with it in Laos has huge environmental impacts,” he warns. “Renewable energy is about restoring the environment. Building dams and flooding an entire valley, it’s not the way. I think they should stop because it is damaging the Mekong.
“I haven’t seen the Mekong that low in my entire life. It’s about all the dams built in China and I think Thailand, Vietnam and Cambodia are suffering from this and it could continue even more in the future. I think finance will be drying up for these projects in the future.”
According to the current 20-year Power Development Plan (PDP), Thailand aims to have 3,000 MW of wind power by 2037. About 1,300 MW are already in operation, making Thailand the leader in wind energy in the region. Vietnam, meanwhile, is moving toward a 6,000-MW target in 2030.
“Vietnam, which is already the leader in solar, will double the size of wind energy in a much shorter period and then be the leader in wind too,” says Mr Duguet.
“There is plenty of space in Thailand and you are a much more advanced country, so banks are ready to finance [wind power]. There is no reason why it couldn’t work here in Thailand. While we are working in Vietnam, we are going to build the first plant in Cambodia soon. There is no reason why Thailand should stop here in terms of wind power.”
Asean, besides its business potential, is attractive for Mr Duguet in terms of culture and travelling with his family. “I’m a great fan of Khmer art as well as Thai art,” he says. “We have been travelling here for a long time. We love living in the tropics but especially in Asia.
“I don’t know Thailand that much so I will keep on exploring. I know only the East and Northeast, which I think are not the fun parts of the country, but there is a lot more to see, I believe.”