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By PSC Consulting
With its diverse country profiles and some of the world’s fastest-growing economies, APAC has ambitious renewable energy goals that require balancing short-term delivery with long-term planning. APAC’s energy transition is a multifaceted arena; opportunities are ramping up more quickly to address the growing, population-driven energy demand.
The energy sector is facing its own unique challenges: integrating renewable energy, modernising the grid, and adapting to changing customer expectations about how they access energy. This industry is expanding rapidly and becoming more attractive as interest and investments in renewable energy generation increase in APAC.
New players entering the energy sector are at a distinct disadvantage given their lack of deep domain knowledge and power systems engineering. There are complexities and features of this industry that many generators, developers, investors, transmission/distribution companies, and others don’t consider—or don’t know to consider.
Engineering solutions within the industry are often demanding, lengthy, and costly, making it imperative to understand the realities needed to see these projects through to fruition. A project’s requirements will dictate the details to be managed, but it’s also important to scrutinise higher-level, preliminary considerations, such as:
• Governmental, geopolitical, and societal policies and trends (like net-zero objectives)
• The reality of the project’s progress (Will it reach implementation or stay in planning?)
• Securing financial backing
• The necessity of pragmatism
• Being able to walk away from the project if the risk is too high (particularly for developers and financiers).
Solutions for utilities and energy companies are not as straightforward as they used to be, where local thermal generation and subsidised fuel met local demand without considering the environmental or social impact. The complexities of the evolving energy ecosystem can create barriers to entry and prove costly from a financial and business perspective. And implementing an energy solution in the APAC region introduces special challenges that utilities, regulators, and governmental bodies must evaluate thoroughly to determine a project’s viability.
The following quick guide lays out some key considerations for emerging participants and advocates for specialised strategic advisory services to help navigate and accelerate the energy transition across APAC.
Quick guide: before starting your energy project
Understand the financial investment
Financing for the physical assets is most likely available through the state or a third-party funding stream, but there is no regulatory mechanism available to pay for the asset base. While there are various models to achieve this, each model would have different impacts on the regulatory structures of the country. It might also be necessary to update primary legislation, licences, and secondary regulation before the project could be achieved. Otherwise, there would be a significant risk to investor confidence if no firm mechanism existed to renumerate the associated investment.
Identify who will build and operate the project
Although there are several models to determine who will build and operate the project, the most likely scenario would be either a third party or the transmission system operator (TSO) engaging an engineering-procurement-construction (EPC) company to deliver the project with an associated handover. However, there may not be licence provisions for a third party or the TSO to be an offshore transmission operator.
Facilitate power infeed to designated APAC countries or regions
Procuring power from somewhere else (also known as “wheeling”) requires multi-lateral agreements between the country of origin’s utility or government, the generator, the cable owner, and the procuring entity within the APAC country. This type of structure currently exists in many geographies, but a deeper assessment is required to determine to what extent the current regulatory structure can support this approach.
Manage technical regulatory updates
Electricity Law formalises a region’s electricity supply to ensure the availability of quality, reasonably priced electricity in sufficient quantities. There might also be a separate regulator law empowering its function to award licences to relevant parties for transmission, distribution, and generation. Grid codes are living, evolving documents and technical standards that govern how users of the electricity system must behave. Proposed changes to the grid codes are suggested by the TSO and relevant stakeholders. The Grid Code Review Panel (and eventually the regulator) facilitates the process and enacts the changes.
Understand other practical operational considerations
Developing energy projects requires foresight, strategic planning, and consideration of all stakeholders involved. For example, are you sure your project has been considered adequately in the planning criteria currently used to ensure the security of supply on the network? If not, there is a risk of infeed loss that may lead to a project not being accepted by the utility or regulatory authority. Lean on an experienced strategic advisor to be sure you’re aware of all the operational issues that, if not handled correctly, increase risk.
These considerations are complicated and require realism, deep thinking, and strategic delivery. For new players, navigating the industry will be less bumpy and more successful with support from a dexterous strategic advisor who uses a phased approach that includes future planning and future-proofing. PSC has extensive experience in all these areas and is actively working with utilities, regulators, governments, and wider stakeholders to ensure the successful delivery of energy endeavours in Singapore, Australia, and other APAC countries. Because PSC has 27 years of global energy experience and expert power systems engineers, we can provide detailed advantages and disadvantages for various options and ultimately recommend a path forward to ensure your energy projects start right and stay on track.
For more information visit PSC Consulting.
