2-4 September

09/08/24 03:13 p.m.

Just back a few days ago and to say the least, the first three days have been extremely tiring. I enjoyed my solitude, I was meeting people of different levels and enjoying conversations with diverse people from diverse backgrounds. I think I am slowly discovering different pathways or versions of my future could look like. This is super exciting because I think I am meeting interesting people who would be able to chart that way for me and share with me how that future could look like. 

Key takeaways from my conference:

1. Current investments into LNG and related infrastructure might lead to an impending oversupply of LNG, facing the forecasted fall in demand of LNG in leading Asian countries such as South Korea, Japan. Japan's LNG faltering demand will be driven by an increased focus in nuclear and ammonia co-firing. And South Korea's expected fall in demand is largely driven by the comeback of nuclear energy. Unless the replacement of liquid fuel with LNG (i.e., city gas with LNG or diesel with LNG) in China takes off, demand of LNG will continue to fall in these LNG-heavy developed countries. Given the rise of EVs in China and the precaution required for city gas pipeline networks, effects are expected to be muted. There is an expected high risk of stranded LNG assets and critics are touting that any oversupply of LNG will just be routed to Southeast Asian countries. South Korea's shipbuilding industry is still rolling out LNG carriers and need to start changing their mindset away from short-term growth and prioritize long-term growth of the LNG industry. To read more: link.
2. Indonesia and Thailand are seemingly laggards in renewable energy engagement with corporations and are set to miss out on a huge opportunity, following the "fight" to attract data centres and AI-related and semi-conductor industries onshore. Indonesia is still supportive of corporate-driven renewable energy efforts and there are significant barriers to implement and execute solutions such as onsite solar. Net metering is still not available for corporations. Though there is significant national interest to develop the RE manufacturing capabilities and capacity of the country, there needs to be incentives to support and enable RE growth, which could be enabled by the private sector. Current oversupply of electricity in the country makes it difficult for further renewable energy to be injected to the grid. On the other hand, Thailand's EGAT is finding foot in staying relevant within the changing landscape. While it explores innovative business models via the ERC Sandbox, there needs to be a well-carved out position for EGAT, especially with the current pricing model (fixed price + fuel tariff adjustments). Even with the roll-out of the pilot of 2,000MW for data centres, or Utility Grid Tariff, EGAT has still a huge role to play, i.e., providing usage of the public transmission grid and grid-connecting the RE assets from the ERC RE auctions that were launched. Furthermore, with EGAT having the foresight to take on the role as the national issuer of I-RECs years ago, this already solidifies EGAT's position and interests in the changing national energy landscape. Last, EGAT's focus seems to be on the combo of hydroelectric dam + floating solar farm + BESS (i.e., 24MW floating hydro-solar hybrid project at Ubol Ratana Dam in Khon Kaen province). One of the many projects - part of the 16 floating solar projects with a cumulative capacity of 2,725MW. To read more: link.
3. The Philippines has extremely stronghold in its renewable energy regulations and policies, however execution and implementation seems to be an obstacle that many power players are facing. Grid stability studies, undertaken by the government is taking a long lead time to be conducted and completed, delaying the COD of RE assets. While coal assets are in the midst of phasing out, there are indications that LNG will be more than just a transitory solution for the country. Given that the power industry in Philippines is 100% liberalised, there is zero to no incentive for gencos to be lowering their cost of electricity generation, as all costs would be passed on to the end-consumers eventually (which explains why electricity tariff rates in the Philippines is second to Singapore in ASEAN, and third to Singapore and Japan in the entirety of Asia). But there is a bigger problem for the biodiversity in the seas, i.e., Verde Island Passage in the Philippines. LNG shipping and the risk of spills would threaten the biodiverse coal ecosystem in the country. Back in February 2023, 800,000 litres of industrial oil was spilled due to the sinking of MT Prince Empress, affecting up to 36,000 hectares of coral reefs, mangroves and seagrass. Energy transition is a long marathon, sure, but at what cost? To read more: link. Another interesting topic to look at in the Philippines is ACEN's pilot scheme of transition credits with Genzero and Keppel. This would likely go live on a G2G, bilateral Article 6 transaction level, in which Singapore companies are able to purchase these carbon avoidance credits to offset up to 5% of its carbon tax obligations. Ongoing conversations seem to be very positive, but ultimately, we do have to understand better the offtaker commitments, which hopefully would make the news soon. To read more: link

If anything, one thing to note about the Asia Pacific's market is that things are everchanging and extremely fast-moving. There are still so much uncertainty that I am trying to figure out and obviously I am hoping to be able to plug in all of these knowledge gaps as I go along.

Cheers to more learning!

And as always...

Rookie for life,

Hui