catriona mcleod - ee investments in southeast asia
TRANSCRIPT
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Catriona McLeod, CFAAssociate, ReEx Capital Asia
ASIA CLEAN ENERGY FORUMMANILA, JUNE 20-24 2011
Energy Efficiency Investments in Southeast Asia:Opportunities in the Short Term and in the Long Term
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Outline
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Potential Long-Term Opportunities
Some Energy Efficiency markets are notattractive now, but may be in the future
Barrier #1: Artificially low electricity prices
Barrier #2: Investment risks
Short Term OpportunitiesThere are many attractive Energy Efficiencyinvestments available
High returns
Which sector is best?
Which country is best?
Ways to Invest
Energy Efficiency Investment Strategies
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Energy Efficiency High Returns (1/2)
3**Source: McKinsey
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Which Sector? (1/2)
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INDUSTRIAL SECTOR:EE Potential inProduction Processes, Heating andCooling systems in production facilitiesof industry sectors like Semi-con,Pharmaceuticals, Automotive, F&B etc.
COMMERCIAL SECTOR:EE Potentialin Heating, Cooling, Lighting systemsin Private and Government Offices,Hotels, Malls, Hospitals, DataCenters and Educational institutions
Low Operational RiskHigh Operational Risk
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Which Sector? (2/2)
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0%
10%
20%
30%
40%
50%
60%70%
Yearly Savings/Investment
Industrial Commercial
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Which Country? (1/2)
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0
2
4
6
810
12
14
16
18
20
Electricity Tariff (US cent/kWh)
0
5
10
15
2025
30
35
4045
Investment Returns (%)
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Tax Incentives?
Grants /Subsidies?*
Mature ESCOSector?
100% ForeignOwnership OK?
Grants available through: Thailand: Energy Efficiency Revolving Fund (EERF), ESCO Fund Singapore: GREET scheme
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PHILIPPINES THAILAND SINGAPORE MALAYSIA INDONESIA VIETNAM
Which Country? (2/2)
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Short Term: How Do I Invest?
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Building Owners / Energy Users
Invest directly in Energy
Efficiency measures
Non- Owners / Private Investors
Buy shares in an EnergyServices Company (ESCO)
OR
Invest in an Energy Efficiency
Fund
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Long Term: Even Larger Market
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0
200
400
600
800
1000
1200
1400
1600
Malaysia Indonesia Thailand Singapore Vietnam Philippines
Energy Efficiency Market Size - Investment Potential
(US$ millions)
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Barrier #1: Subsidies (1/2)
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ElectricitySubsidies
MalaysiaIndonesia
Vietnam Thailand
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Barrier #1: Subsidies (2/2)
12
02
4
6
8
10
12
14
16
18
20
Electricity Tariff (US cents / kWh)
0
5
10
15
20
25
30
35
4045
Investment Returns (%)
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Barrier #2: Investment Risks
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Performance Guarantees Supplied by ESCOs Measurement and Verification
Performance Risk
Insurance Products Aggregation of Projects
Credit Risk
Hedging Instruments
Electricity Price Uncertainty
Insurance Products Aggregation of Projects
Energy Usage Uncertainty
Securitization of Savings Cash Flows
Secondary Market
Time Horizon Uncertainty
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Contact us
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Catriona McLeod
ReEx Capital Asia16 Collyer Quay Hitachi Tower #20
Singapore 049318www.reexasia.com
Mobile: +65 9860 7806Tel: +65 6818 [email protected]