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  • Renewables
7 December 2018

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  • Myanmar
  • Singapore
Singapore-based solar energy startup SolarHome announced that it has raised $10 million in debt financing from a consortium of investors including Japan-based cross-border crowdfunding platform Crowdcredit and Sweden-based crowdfunding platform Trine, it said in a statement on Wednesday. The investment follows on the $4.2 million raised via convertible notes earlier this year from Trirec, Insitor Impact Asia, Beenext, and a group of Singapore-based family offices. The new capital will enable the startup to accelerate its expansion across Myanmar. Having already installed close to 28,000 solar home systems, the startup aims to reach 100,000 homes with its product packages by end of 2019. “Accessing debt finance on such a scale at this stage in our development has significantly outperformed our expectations. The new funding will enable us to accelerate our growth in 2019 and bring clean energy to hundreds of thousands of off-grid households in Myanmar,” said SolarHome co-founder and CEO Ted Martynov. Launched in 2017 and backed by fintech venture builder FORUM, SolarHome has been expanding its product offerings with an aim to impact the overall livelihoods and financial inclusion of those living off-grid in rural Myanmar. It has been installing its pay-as-you-go (PAYG) solar for off-grid homes at a rate of about 3,000 units each month. The World Bank Group’s Lighting Global Program and the Global Off-Grid Lighting Association (GOGLA) found that between 2012 and 2017, companies using the PAYG model accounted for about 85 per cent of growth in off-grid solar investments. The PAYG model is expected to continue fuelling the growth of solar home systems through 2022.
  • Oil & Gas
7 December 2018

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  • Singapore

SINGAPORE, Dec 5 (Reuters) – Singapore’s refinery margins for making gasoline have fallen to their weakest levels in seven years – so low that churning out this key motor fuel has become a loss-making business.

Seen as a benchmark across Asia, Singapore margins for 92 RON gasoline against Brent crude oil GL92-SIN-CRK hit minus $1.44 a barrel on their last close on Tuesday, the lowest level since November 2011.

That means margins have slumped 112.5 percent from their 2018 peaks, hit in August.

Gasoline, once the preferred fuel of refiners, has come under intense pressure from swelling supply, and despite a one-third plunge in the cost of crude oil – a refinery’s main feedstock – since early October.

“The market should brace itself for more outflows from China with the recent release of additional export quotas,” said Sri Paravaikkarasu, director of Asia Oil at energy consultancy FGE in Singapore.

China’s government has released an additional 2 million tonnes of refined fuel export quotas for this year, mostly gasoline and diesel, taking total quotas for 2018 to about 48 million tonnes.

In South Korea, another Asian refinery hub, gasoline output and inventories are also high, said Nevyn Nah of energy consulting firm Energy Aspects.

Meanwhile, import demand in Vietnam has shrunk because of the start-up of the country’s Nghi Son oil refinery, while output in the Middle East is set to increase, Nah said.

The losses from making gasoline are weighing on overall refining profits, now at their lowest levels since August 2016 at just $2.93 a barrel, data in Refinitiv Eikon showed. DUB-SIN-REF

Adding to the supply overhang are concerns over an economic slowdown that could soon dent fuel consumption.

In an unusual move, China’s state council on Wednesday issued guidance to support employment as the economy slows, saying the country should pay “high attention” to the impact on employment from increasing economic headwinds.

Such as slowdown is also visible in the world’s biggest car market, China, where sales of new automobiles are on track for the first annual fall since at least 1990.

With supplies continuing to outpace demand growth in the coming months, “there is limited scope for any significant recovery in Singapore,” said FGE’s Sri.

  • Bioenergy
7 December 2018

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  • Singapore

A SUBSIDIARY of engineering-services provider Acromec is diversifying into the renewable-energy sector, having inked a letter of intent (LOI) with egg producer Chew’s Agriculture to operate a waste-to-energy power plant that will use chicken manure as feedstock. (see amendment note)

Acropower, an 80:20 joint venture between Acromec and Malaysian alternative energy company Green Energy Resources, will build, own and operate (BOO) the plant, while Chew’s Agriculture, will supply the manure.

Under the LOI, Chew’s Agriculture will purchase electricity from Acropower to power a new farm for a 15-year period, at no more than a 10 per cent discount to the prevailing Energy Market Authority electricity tariff rate. Chew’s Agriculture has committed to purchasing at least 0.5 megawatt hour (MWh), “with scalability, should the new farm ramp up its egg production beyond the level of production of its existing farm”, said Acromec in a filing to the Singapore Exchange.

The plant, which is slated to start operations by March 1, 2020, will be built on the upcoming farm as Chew’s Agriculture relocates to Neo Tiew Road, off Lim Chu Kang.

Lim Say Chin, Acromec’s managing director, said: “This LOI is an important first step in our drive into the renewable-energy business. It has expanded the horizon of our value chain for our controlled-environments engineering business, and will differentiate us from our competitors.”

As it is planning to grow its renewable-energy business in the coming financial year, a separate team has been assigned – together with its partner Green Energy Resources – to see the project through.

Since the deal marks a departure from Acromec’s core businesses, it will convene an extraordinary general meeting to seek its shareholders’ approval for its diversification plans. The Catalist-listed group presently designs and constructs facilities requiring controlled environments, such as laboratories and medical facilities.

In an interview with The Business Times, Mr Lim highlighted that the company’s strategy to diversify into renewable energy will help deliver sustainable revenue and recurring income streams. It has approached banks and financial institutions for funds for the project.

The-joint venture company is expected to receive at least S$1.5 million a year in revenue from the sale of electricity to Chew’s Agriculture.

Once the project is up and running, Acromec is keen to try and replicate the business model with other companies in Singapore, as well as take it beyond Singapore’s borders to markets such as Malaysia, Vietnam and Thailand.

For the financial year ended Sept 30, Acromec reported a net loss of S$2.62 million, narrowing from a loss of S$4.59 million a year ago. Revenue dipped three per cent year on year to S$42.31 million.

Acromec isn’t the only Singapore-based company venturing into the renewable-energy space. Environmental solutions provider ecoWise Holdings has two biomass power plants, one each at Sungei Kadut and at Gardens by the Bay. These use horticultural and wood waste as biomass fuel, which is used to generated electrical power and heat energy.

An attempt by ecoWise to operate a biomass plant in China to turn farm waste into steam and electricity for factories in the Shandong province stalled after the facility was unable to achieve the targets set out under the engineering, procurement and construction contract.

Shares in Acromec were halted at around noon on Tuesday pending the announcement.

Amendment note: An earlier version of this story stated that Chew’s Agriculture is a wholly owned subsidiary of Chew’s Group. Acromec has clarified that Chew’s Agriculture is no longer a subsidiary of Chew’s Group.

  • Oil & Gas
7 December 2018

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  • Philippines

TOKYO: * Tokyo Gas Co has signed a joint development agreement with Philippines’ First Gen Corp to build and operate a liquefied natural gas (LNG) receiving terminal in the Philippines, its first foray into energy infrastructure development in Southeast Asian country

* A Tokyo Gas spokesman declined to comment on the investment amount

* The Philippines in October had short-listed three different groups of companies, including the Tokyo Gas partnership with First Gen, to build and operate its first LNG import terminal

* First Gen, which owns about 60 percent of the gas-fired power plants in the Philippines, is the biggest natural gas user in the country, Tokyo Gas said in a statement

  • Energy Economy
7 December 2018

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  • ASEAN

Much of the growth in Asian green bond issuance is in China, with Southeast Asian countries gaining momentum. What can the finance industry do to boost green investments in developing nations in Southeast Asia?

While the global market for green bonds reached a record of more than US$155 billion last year, there are still only a few banks in developing countries in Southeast Asia that have issued such bonds, which fund projects that have environmental benefits.

The main reason for Southeast Asia’s luke warm reception to green bonds is because foreign investors are “not familiar” with the banks in the region, no matter how high their credit risk ratings are, said Ephyro Luis B. Amatong, commissioner of the Philippines Securities and Exchange Commission (SEC).

Among the developing countries in the region only Indonesia and the Philippines have issued green bonds, while Vietnam, Cambodia, and Laos have nascent or no bond market just yet.

Last month, Thailand issued a US$100 million sustainability bond—which differentiates itself from a green bond by financing projects that not only bring environmental but social-economic benefits as well.

Amatong said that lenders like International Finance Corporation (IFC), the private development arm of the World Bank Group, have to act as “anchor investors” for these banks to spur the growth of green bond markets in developing countries.

“What we would appreciate is for IFC to introduce these banks to a wider investor base so that when investors see that the quality of the issued bond is investment grade, they might buy it at a premium,” Amatong told Eco-Business on the sidelines of a corporate governance forum in Pasay City, Philippines in October.

Amatong cited the fund IFC set up with Amundi, Europe’s biggest listed asset manager, as an example of how the agency can further increase the number of investors for banks in developing countries that issue green bonds. The fund, which closed in March, raised US$1.42 billion, of which IFC contributed US$256 million, and is expected to encourage more financial institutions in emerging markets to issue green bonds.

The inclusion of IFC as a major investor in a bank’s green bond serves as a “signaling mechanism” to foreign investors that the bank is credible, added Amatong.

IFC has the international expertise that will ensure that the investment goes to climate-financed projects, as it co-developed the global framework for issuing green as well as social and sustainable bonds, he said.

“What we would appreciate is for IFC to introduce these banks to a wider investor base so that when investors see the quality of the issued bond is investment grade, they might buy it at a premium.”

Ephyro Luis B. Amatong, commissioner, Philippines Securities and Exchange Commission (SEC)

Aileen Ruiz Zarate, a senior investment officer of IFC’s financial institutions group, clarified that it is also IFC’s goal to help banks widen their investor base in funding green projects, but it is still the issuing bank’s decision if they want to do so.

The issuance of US$150 million in green bonds by the Philippines’ seventh largest bank Chinabank last October was made directly to IFC, rather than offered to the public. Before that, IFC also invested in the first green bond issued by the country’s largest bank, BDO Unibank Inc., in December last year.

“BDO and Chinabank’s bond issuances were private placements. It was their choice to have it that way for their first [green bond] issuances,” Zarate told Eco-Business. “If we were to do the next one with the same banks, we would rather have it made public.”

The emerging green opportunity

Although the uptake of green bonds has started slowly in developing countries in this part of Asia, East Asian cities could attract up to US$17.5 trillion in climate-related investments over the next decade, IFC said in a report on Thursday.

The study said that green bonds could be used to narrow the financing gap for climate-smart projects like green buildings, electric vehicles, and climate-smart water, which is water resources and infrastructure that is resilient to the stresses of climate change.

The report stated: “Debt financing instruments such as green bonds have great potential to drive climate-smart investment by allowing cities to acquire long-term debt at stable prices.”

Source: International Finance Corporation

In a table detailing the region’s green investment potential, the report showed that the bulk of the opportunity will be in green buildings with US$16 trillion in investment. Southeast Asia’s second largest’s city, Jakarta, has US$16 billion of investment potential in green buildings, which is expected to save energy, costs and reduce emmissions.

Indonesia’s capital aims to build at least 1,000 low-cost residential towers by 2020 to house people who have been relocated from informal settlements in the low-lying, flood-prone riverbank area, according to the report.

IFC’s study also pointed to the priority given to water by cities in the region for communities and new businesses that rely on the resource for their operations, as reflected by the US$461 billion opportunity in climate-smart water.

The report found that climate-smart water and wastewater management projects had the biggest investment potential for Jakarta after green buildings. Heavily criticised for not providing residents with access to clean water, the government requires an estimated US$3 billion investment to secure piped water instead of extracting water from the ground.

The report also detailed a US$569 billion potential for investment in electric vehicles in the region. IFC estimated that Jakarta will have an investment opportunity of US$660 million in public transport and almost US$7 billion in electric vehicles by 2030 for the city to achieve its plans to create a sustainable transport system.

  • Renewables
7 December 2018

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  • Myanmar

Background

Hydropower is the foundation of the Chinese transition from fossil fuels to renewable energy sources. In the past two decades it has added more than 300GW of hydroelectricity to its grid. China sees itself as a global leader in the development of hydropower and is willing to help finance and build hydropower projects abroad. Those projects are often controversial, however, as regional actors are unsure of Beijing’s true intentions

Comment

Indian security analysts are concerned about China’s reasons for damming Tibetan rivers. They believe that dams could allow China to assert control over disputed regions (such as Arunachal Pradesh) and reduce water flows to India.

India is also competing with China for influence in Nepal. In November 2017, the previous Nepalese Government cancelled a Chinese loan for the construction of the Budhi Gandaki hydropower project; a decision that was reversed by Prime Minister Khadga Prasad Sharma Oli in September. His government is likely to continue to attempt to play off the two Asian powers against one another, to derive benefits for Nepal.

There is also growing speculation that China wishes to restart the Myitsone Dam project in Myanmar. The project was suspended by the Thein Sein administration after months of protests in 2011. The Chinese State Power Investment Corporation is reportedly ‘ramping up efforts to lobby residents’ to overcome objections to the project. Myanmar has recently resurfaced as a piece of the Chinese influence building strategy in the Indian Ocean region, with the negotiation of an agreement for the development of a deep-water port at Kyaukphyu. As the Myitsone Dam project remains unpopular in Myanmar, however, any attempt to restart it is likely to lead to an increase in protests.

It is not only geostrategic concerns that call Chinese hydropower projects into question. The International Energy Agency and the Intergovernmental Panel on Climate Change continue to see hydropower as a vital component of the transition away from fossil fuels, but others see it as a costly and inefficient source of renewable energy. While hydropower development continues to increase globally, the rate of growth has declined to its lowest level in more than a decade. That suggests that there is a growing global uncertainty about the long-term utility of the technology.

Advances in solar and wind power, and energy storage technologies, mean that hydropower is not always the most appropriate renewable energy source. Furthermore, there are often delays and cost overruns in the construction of hydropower projects, as well as large environmental and social costs once they are built. While hydropower remains a contentious energy option, there are studies that suggest that, in most cases, ‘large hydropower dams will be too costly in absolute terms and take too long to build to deliver a positive risk-adjusted return’. Increased competition for water and declining river flows, caused in part by climate change, are also likely to weaken the power generating potential of hydropower projects.

Chinese hydropower projects are likely to continue to be controversial in Asia. Due to uncertainty about Beijing’s real intentions and the continuing development of alternative renewable sources of energy, it is questionable whether they will actually be built.

  • Electricity/Power Grid
7 December 2018

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  • Vietnam

Officials cited factors such as lower supply for hydropower plants and gas fields.

The Ministry of Industry and Trade (MOIT), as well as Vietnam Electricity (EVN), indicated that some factors that could raise the prices of power in Vietnam are growing, local newspaper VnExpress reported.

MOIT’s Electricity Regulatory Authority (ERA) is developing a power supply plan for 2019, which includes four different scenarios based on the predicted growth rates of electrical load as well as the predicted amount of water to be received by power plants.

According to ERA head Nguyen Anh Tuan, all the scenarios point to an increase in electricity prices as the total electricity generated by coal-powered thermal power plants would rise by 116 million kWh and place pressure on EVN. EVN general director Dinh Quang Tri said that EVN is considering four to five different options for electricity prices next year.

ERA expects hydropower plant reservoirs to receive less water and gas field supply to decline. It asked EVN coal suppliers to consider imports in calculating the amount of fuel they can supply.

Total hydropower output is expected to drop by 4 billion kWh, so EVN would have to raise the output of thermal power plants powered by coal and oil.

The 5% increase to coal prices would also come into effect in December and could affect coal prices as well, Tuan said. “Coal accounts for a significant proportion of electricity production cost so this exerts a huge pressure on the electricity industry. When developing a scenario for electricity prices we have to take all these costs into account.”

Higher demand is another factor that could raise the price of electricity which, VnExpress reports, is still above 10% and is “skyrocketing” in some areas. EVN proposed to promote household installations of rooftop solar to curb the pricing challenge next year.

  • Renewables
7 December 2018

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  • Indonesia

December 5 (Renewables Now) – Finnish consulting and engineering firm Poyry Plc (HEL:POY1V) said on Monday it has entered into a three-year framework agreement for the development of various renewable energy projects in Indonesia, including hybrid schemes.

The contract was awarded by PT Indonesia Power, a unit of state-owned power distributor PT PLN, and covers wind, solar photovoltaic (PV) and battery storage projects, as well as hybrid combinations with diesel or gas engines. The deal calls for starting with four renewable energy projects. It contains about 40 different combinations of different types of studies including wind campaigns, according to the announcement.

Poyry noted that its customer is looking to become a green power generation company, while it currently has over 10 GW of coal-fired power plants, hydroelectric facilities, combined cycle power stations and geothermal plants.

The two parties already teamed up once in 2016, when they worked together on conventional thermal power projects. This is a continuation of that deal, Poyry said.

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