Few would disagree that Asia looks to be the boom region for power projects both now and in the future.
At the POWER-GEN Asia conference and trade show in Bangkok last month, speakers were bullish on the growth opportunities for almost every kind of power generation.
Colin Tam, executive chairman of Hong Kong's Crystal Vision Energy, said that clean coal technology was "slowly and quietly coming" in Asia, and this would herald a "new era" for coal power generation in the region.
Peter Littlewood of Hong Kong company CLP said China would soon "master the design and manufacturing of third generation nuclear reactors", and when that time comes it will be able to "do nuclear cheaper than anyone else in the world."
Arun Sen, chief executive of Lanco Power International, said that Asia is "not power hungry, but power starved". He added that the rising middle classes of Asia "have risen and they have said, 'we want power and we want it now'."
And this, he added, means "there has never been a better time to be a power developer in the region". If companies "do it conservatively and do it well", they would never be out of business, he said.
We took the opportunity at POWER-GEN Asia to conduct a live vote with a selection of the delegates attending the conference. We asked more than 60 power professionals to answer, using hand-held voting machines, a series of questions about their views on the electric power sector in Asia and how it will evolve over the coming years. Here are their responses.
|Talking point: 90 per cent of respondents said Asia would remain the fastest growing global power market|
Will Asia remain the world's fastest growing market for power infrastructure over the next five years?
The response was almost unanimous, with 90 per cent of respondents expecting the region to continue to be the fastest growing power infrastructure market globally. In its World Energy Outlook 2011, the International Energy Agency predicts that investment in new power plants in non-OECD countries, particularly China, will outstrip that in OECD countries. Its adds that China will add "more new generating capacity powered by coal, gas, nuclear, hydropower, biomass, wind and solar than any other country".
How would you characterise your thoughts about your business opportunities in Southeast Asia in the next three years?
Based on the response to the previous question it is unsurprising that 85.8 per cent of those polled were either 'very optimistic' or 'moderately optimistic' about their business opportunities in the region over the next three years. But there was also an indecisive 7.1 per cent, who described themselves as 'neither optimistic not pessimistic' and a very small 4.8 per cent of respondents who typified themselves as 'somewhat pessimistic'. Thankfully, no one said that they felt 'very pessimistic'.
|Bangkok: POWER-GEN Asia will return to the city in 2013 following this year's success
What trend do you see in the financing of Asian power generation investments?
Fifty per cent of respondents expect the existing financing sources to remain 'largely unchanged', followed by 38.1 per cent, who believe that financing will become generally 'more difficult'. Only 9.5 per cent think that European-based banks will retreat from the sector.
In the coming 12 months, how do you foresee mergers and acquisitions (M&A) activity among power producers and equipment manufacturers, including renewables?
There was a relatively equal split in respondents between those who expect M&A activity to 'increase' and those that believe the current level of activity will 'remain unchanged' next year (42.2 per cent vs 44.4 per cent). Only 13.3 per cent of respondents expected the level of M&A activity to fall over the next 12 months. Analysts at PwC (Pricewaterhouse Coopers) each year conduct a survey of global merger and acquisition activity in the power sector, and in 2011 deals in Asia for the first time surpassed those of any other region. "In the past, Europe and the US were the dominant influence on deal activity," says PwC. "Now the involvement of very active Asia-Pacific investors are coming right to the fore."
Is more power market reform, deregulation and competition required to accelerate growth in the electricity sector?
With a 64 per cent 'Yes' response, there was overwhelming support for greater market reform, including deregulation and liberalisation across Asia. Interestingly there were a cautious 25 per cent of the respondents, who thought it was 'too early to say'.
|Seen and heard: delegates at conferences at POWER-GEN Asia in Bangkok last month|
How do you feel about electricity pricing generally in Asia?
Almost half (45 per cent) of respondents felt that electricity prices in general were 'far too low compared with the economic value'. However, this was juxtaposed by 37.5 per cent of respondents who believe that prices are 'as high as can reasonably be imposed on consumers'. Just over 17 per cent (17.5 per cent) think that the low price for electricity should be maintained in order for Asia to remain competitive.
|How do you foresee M&A activity among power producers and equipment manufacturers in the next 12 months?|
Few can disagree that Asian power manufacturers are becoming more competitive in producing quality equipment. How do you see this developing in the coming decade?
The majority of those polled expect the market share of Asia-based power equipment manufacturers to increase over the next ten years – a whopping 67.4 per cent. Only a relatively small percentage felt that either 'US and European manufacturers will continue to dominate' (18.6 per cent) or that Asia's equipment suppliers 'will dominate' (14 per cent).
|How do you feel about electricity pricing generally in Asia?|
Although coal is king in much of Asia, new scenarios such a global agreement on a high carbon price or radical advances in solar technology could jeopardise investment in coal fired power plants. How significantly is coal's dominance at risk?
Approaching 45 per cent (44.7 per cent) of respondents said that the risk was not of immediate concern. And, somewhat surprisingly, the remaining vote was split relatively equally between the polar opposites of 'very significant' and 'no real risk' (23.7 per cent and 28.9 per cent respectively).
What do you think the prospects are for commercial carbon capture and storage (CCS) implementation in Asia?
The resounding answer was that CCS technology will remain 'too expensive' to implement commercially in the two decades (56.5 per cent). There was relatively little difference between the number of respondents who thought that CCS projects will become widespread as soon as the US and, arguably more pertinently, China implement the technology on a commercial-scale, and those that do not foresee CCS as ever being an 'economic option' in Asia – 21.7 per cent and 19.6 per cent, respectively.
|To what extent do you believe renewable energy will be part of the electricity mix across Asia by 2020?|
The ratio of gas to coal price is vital for long-term planning in Asia. How do you foresee this shifting in the coming decade?
It is interesting to see 43.6 per cent expect a closer convergence between the price of coal and gas. There was an equal split between those who expect gas to become more expensive than coal and those who expect an 'unchanged' ratio (28.2 per cent).
|Nigel Blackaby, POWER-GEN Asia's conference director, moderated the live vote|
To what extent do you believe renewables will be part of Asia's electricity mix by 2020?
Almost half of the respondents (48 per cent) believe renewables will provide 10–15 per cent of the electricity mix across Asia by 2020. But there was an equal split of 26 per cent between those that thought renewables would comprise 15–20 per cent and those who forecast a lower contribution of only 5–10 per cent. In its 2011 Global Status Report, REN 21 stated that "manufacturing leadership" was shifting from Europe to Asia as China and South Korea "increase their commitments to renewable energy". It also reported that in 2010, China was the top global installer of wind turbines and solar thermal systems.