POWER October 2013 - 58

POWER ASEAN
Global Business Reports
www.gbreports.com
Evolving Strategies
to Fuel Growth
As investors look towards Southeast Asia
because of its immense growth potential,
the question beckons, will investment come
quickly enough to meet needs and what will
it look like in three markets that are largely
subsidized and dominated by state-owned
gen-cos? According to a study from the Boston
Consulting Group (BCG), ASEAN's power
sector will need around $500 billion of investment
as regional demand increases from
656 TWh in 2010 to 2,414 TWh by 2030. " It
[investment] is unlikely to come fast enough;
the sheer size of investment required means
IPPs will have a larger role as state-owned
utilities do not have the all the resources, "
comments Klaus Langner, partner and managing
director at BCG's Singapore office.
In previous decades, Thailand, Indonesia
and Malaysia, were able to rely on ample
gas export revenues to help offset subsidies
for their domestic markets. However, as domestic
demand increases and their own gas
reserves decline, these countries are faced
with the decision of either continuing
fossil fuel subsidization,
at great cost to the
government, or phasing
out subsidies, to the
chagrin of the average
consumer. As
governments ponder
this conundrum,
Malaysia and Indonesia
have both faced
widespread backlashes
when cutting back fuel
subsidies were
discussed
earlier this year and generators
are turning increasingly towards coal to diversify
away from gas and keep costs under
control. According to an analysis by BCG, by
2030 50% of Southeast Asia's power generation
will come from coal, compared to 30%
in 2010.
According to Dr. Bart Lucarelli of Roleva Energy,
Thailand needs to turn towards cheaper
and more accessible coal in order to make
up for the increasing limitations of gas resources:
" [Thailand] is now in the unenviable
position of relying on natural gas-fired, comDr.
Sanjay C.
Kuttan, regional
manager SEA /
managing
director, DNV
Kema Clean
Technology
Centre
bined cycle gas turbine (CCGT)
plants, to provide 70% of its
electricity needs at a time
when gas reserves in
the Gulf of Thailand are
rapidly depleting and
Myanmar is starting
to focus on using its
energy resources
domestically. "
The Philippines has
been ahead of the curve
in offloading state-owned
generation and introducing
regulatory reforms to the industry.
With recent strong GDP growth figures
at hand, President Benigno Aquino, has the
opportunity to leverage this into attracting
needed infrastructure investment. Gavin Barfield,
director of energy consulting at Pöyry,
sees policies that need to be improved upon
in the often bureaucratically inefficient Philippines:
" To promote further investment the
Philippines should focus on lowering the
barriers for creating new generation such as
access the long-term Power Purchase Agreements
(PPA's) with creditworthy off-takers
2 Glbl Bi R // POWER ASEAN
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POWER October 2013

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