Commentary

We are in a very dynamic and uncertain period as governments, corporations, and concerned citizens around the world are searching for a way forward on clean energy and climate change issues.

In only a few short years China has emerged as the world’s wind energy power house.

With the deployment of renewable energy technologies exponentially increasing annually, more resources are being allocated to all aspects of the energy sector. A multi-disciplinary approach is needed to identify what the major issues that networks will face over the next few decades in transitioning from fossil fuel based generation to cleaner, primarily renewable generation. The current belief by many is that future smart grids will provide the transmission, distribution and communication networks that will solve all the issues currently being raised by network operators.

The first quarter of 2011 has seen a Y/Y decline in demand for solar PV modules, exposing several privately held Chinese PV manufacturers to potentially massive issues of over-supply. This comes at a time when the PRC has declared an intention to move away from an export-driven to a domestic demand-led economy and access to cheap credit from state-owned banks, something that Chinese renewable companies have enjoyed over the last while, comes to an end. As a result the Chinese government will be looking closely at the Chinese solar industry to ensure it remains a world-leading manufacturer of solar PV and healthy contributor to GDP growth.

That climate change will have a significant impact on the power sector is a given. Whether it is via physical impacts due to climate events (think: flooding in the coal mining districts of Australia, affecting raw material supply to thermal power plants) or regulation around GHG emissions, the industry is facing new threats due to environmental factors. What is less clear – how, when and by how much will these risks impact companies in the power sector.

Understandably with each natural catastrophe, man-made or otherwise, the overwhelming case for renewable energy as a core constituent to our power needs becomes more apparent and more pressing.

Asia’s energy demand is extremely high. In many low- and middle-income countries, access to energy - sustainable or conventional - is seriously lacking. Even in a major emerging economy like India, energy is too scarce and expensive for much of the population. By financing energy projects in the private sector, development banks help provide more people with access to energy, boosting economic development and improving living standards. Energy is, after all, the quintessential engine of economic and social growth.

17 March 1991. Just 20 years ago, I set foot in Asia Pacific for the first time. Since then, major changes have occurred in the landscape of Asia-Pacific power markets. And I and my colleagues at The Lantau Group (TLG) have had the opportunity to witness and shape a lot of these changes and learn a great deal in the process.

In 1997, after 17 years in the UK energy industry, I joined an investment bank, I moved to Hong Kong, and I began to cover the Asian power sector. For anyone involved in the power industry, the insatiable demand for new capacity made Asia the most exciting region in the world. But, as I set about my new role in banking, little did I realize just how exciting this journey would become. And, 14 years later, how that excitement would still burn brightly - but be accompanied by a degree of frustration.



Smart Grid is the modernization of the existing power grid using digital technology in order to derive a number of benefits such as energy efficiency, security and reliability of power supply, and integration of electricity generated from renewable sources. It will be able to co-ordinate the needs and capabilities of all generators, grid operators, end users and electricity market stakeholders in such a way that it can optimize asset utilization and operation and minimize both costs and environmental impacts while maintaining system reliability, resilience and stability.

Affordable, reliable, clean energy is essential to the economic prosperity of all nations – especially to underpin the development of emerging and developing economies. The World Bank estimates that at least 1.4 billion people, mostly in Africa and Asia, lack access to electricity. For hundreds of millions of others, supply is often limited and/or unreliable. About 80% percent of the world’s total commercial energy demand is met by fossil fuels, with about 30% from coal. The U.S. Energy Information Administration (EIA) projects that world energy demand will grow by almost 40% by 2030 compared to 2007. Also, the International Energy Agency (IEA) has indicated that coal use has increased more than any other energy source worldwide over the past decade, mostly from the rapid expansion of coal power generation in Asia, especially in China and India.

Owner‘s and operators of asset-intensive infrastructure understandably look for decades of safe and reliable operation.. History shows clearly how industrial disasters potentially cause immense damage to the environment, the economy and can be deeply harmful to a businesses long-term reputation.

Interconnected electricity grids can be a variety of sizes but they all do the same thing: balance supply and demand at all times.

Competitive markets are usually the most efficient way of organizing economic activity, and power markets are no exception. Competitive operation encourages more capacity and a system which will use the cheapest power generators available to meet demand.

Globally one of the energy topics atop many electric utility executive’s minds is what we are all calling the “Smart Grid.” Of course what constitutes the Smart Grid can mean many different things from new digital meters on someone’s house to advanced Flexible AC Transmission Systems (FACTS) to new sensors on transmission lines and substations. Regardless of the exact deployment for an electric utility, a key consideration – something on my agenda every day – is the security of the Smart Grid deployment.

As I write this in Sydney the Australian body politic fights a continuing battle over whether Australia will or won’t have a carbon tax and, if so, what form will it take and which sectors are to be fully or partly compensated. If it were not for a “hung” parliament, with neither major party having control on its own, there would be no question of such a tax or of a carbon trading scheme for the coming few years.