A deeper understanding of the technical and commercial risks underpinning the power sector will boost the financing of power projects across Asia, according to Black & Veatch.
“Power projects are complex to develop financially as well as from an engineering and construction perspective. A more informed view of the factors involved during due diligence can make the difference between money left on or off the table,” said Mitesh Patel, Managing Director of Black & Veatch’s management consulting business in Southeast Asia, India and the Middle East. “Successfully managing the design, performance and financial metrics of a project in the development stage plays out significantly over a power plant’s entire life cycle and can often be underappreciated, especially by new players in Asia’s growing power sector.”
This view was shared as part of Black & Veatch’s ninth annual Strategic Directions: U.S. Electric Industry Report. In videos released today, the company also shared its view on the Indonesia power sector as well as other factors that are shaping Asia’s robust power industry.
Similar to U.S. findings, the role of Independent Power Producers (IPPs) is rising in importance in countries such as Indonesia. An ambitious 35 gigawatts (GW) program is underway, and 30 GW (rising from an initial 25GW) has been set aside by IPPs. This focus on private development could see two systems emerge based on differing user demands and ability to pay.
“Mining and manufacturing companies cannot risk large production interruptions from potential electricity downtime,” said Jim Schnieders, Vice President of Black & Veatch, based in Indonesia. “These users demand high levels of performance and availability, and IPPs can fulfill these more costly and rigorous electricity demand. This move will also help free up other electricity for subsidized and less intense demands of households as well as light industry.”
With Indonesia’s abundant coal supply, the majority of power plants avail of local coal supplies. However, the country has considerable potential for more renewable energy solutions such as hydropower and geothermal as well as more gas-fired facilities.
Prospects for power project financing remain robust throughout Southeast Asia, although local banks could play a greater role. With the exception of the Philippines, there is limited capital raised in local currencies. This exposes the rising number of local developers and sponsors to any global contagion from unforeseen events.
http://bv.com/reports/2015/electric/asia-perspective-risk-management (Asia Growth Raises Power Demand)
http://bv.com/reports/2015/electric/asia-perspective-mining-operators-embracing-renewable-energy (Overcoming Indonesia’s Electricity Challenges)
• The full Black & Veatch report is available for download at no charge via www.bv.com/reports or the iTunes App Store®.
About Black & Veatch
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