Wind power in Cambodia is possible, says regional power producer

Wind power in Cambodia is possible, says regional power producer

Wind power in Cambodia is possible, says regional power producer

As the world increasingly opens up to renewable energy, Southeast Asia Globespeaks to Olivier Duguet, CEO and co-founder of the Blue Circle, a renewable independent power producer based in Southeast Asia, to find out more about the region’s future energy path. The company has already begun work on a wind farm in Ninh Thuan province in South Vietnam – one of the largest in the region – and has its sights set on creating a similar farm in Cambodia

You’re going to open your first wind project in Cambodia next year. What are your expectations for this project?
That will only be the very first test phase of a much larger deployment of wind power in Cambodia. We have been working on this for the last four years. We came to an agreement with the government, with the Ministry of Mines and Energy, on sizing a first test phase of 13MW, meaning basically four turbines. So a small first phase mainly to demonstrate to EDC (Electricité du Cambodge) that it’s feasible; that it’s not impacting the grid. So that’s the purpose of this first phase, which we hope of course will lead to much more in the future on the same site. We have much more space with the same wind resource to build 200 to 300MW wind farms.

Regarding the land where the turbines will be situated – which is in Kampot province – have there been any issues or obstacles?
With wind power – different to solar – we are mainly looking at sites far from anybody. Far from any villages, schools, towns or whatever it is. So we have an agreement already with the owner of the land on the site to do these first four test turbines, but there is [also space to add] up to 15 more turbines in the future, so it’s already secured.

Just talking about Cambodia specifically, do you believe there are enough sites where wind can be effectively harnessed?
Definitely yes. We have been collecting data for [four years] so we now know exactly where we can go, how much [each site] will produce, and what are the economics now of the site. So to answer your question, yes. From our understanding of the Cambodian market we think that there’s largely a possibility of 500MW plus of commercial wind power potential in Cambodia.

Renewable energy options such as wind, solar and hydropower have been around for a long time, but it seems like now these are being pushed forward a lot more around the world, and to a certain extent in Southeast Asia. Why now?
Two reasons, I think. The first one is of course climate change – the need to fight climate change and the Paris Agreement – so it’s pushing global conscience and political will. And the second reason why it’s now reaching Southeast Asia is the declining costs of these technologies.

Your website states that “free-enterprise capitalism is the most powerful system for social cooperation and human progress ever conceived.” Do you believe that renewable energy development should be free from political interference?
It’s a more philosophical question, but you’re totally right to mention this. The energy sector [is] highly dependent on state regulation and state decisions. So yes, I think it’s better to leave the private sector to deal with the business decisions, but business decisions come after a political decision. 

Energy, I think, is a special case. It’s is a special sector because it has very long term assets, a long-term vision. You build a grid, you build power stations for fifty years or even more… and most of the time the most effective way to do it is to make long-term planning.

The free enterprise must comply with this long-term planning. That is my vision of it. So yes, we need political will, we need political decisions, and it comes back to the previous point. 

International awareness of [climate change] didn’t come in one day. We had [the Rio Earth Summit] before, we had the Kyoto Protocol, which died in 2012 so we had to renew it. Again, it took a long, long time for the global community to get a grasp on these issues. So it’s becoming more and more evident that we need to do something. That means moving the political decisions behind, because of course political decisions always come after what the general people think.

On a similar topic, how open have the governments and the state utility companies been in Southeast Asia to investing in renewable energy?
I used to joke about it, but each time we speak in the region with utilities or governments dealing with energy they always tell us there are three imperatives we need to comply with if we want to sell our electricity: price, price and price. 

For the moment in most of the cases, nearly all of the cases, the demand is there. The demand is there of course in Cambodia, Vietnam also, less so in Thailand maybe, of course not in Singapore…but with huge growth comes demand. So governments have to plan in advance to try to cope with the demand – and cope with the demand at the lowest price possible. That’s the reason why, unfortunately, Southeast Asia or maybe India, is the last place on Earth where we’re still talking about opening new coal power stations. The rest of the world is shutting them down. Why is it so? Because of price, price, price.

Because [governments] are under huge pressure – it’s a highly political decision. With the price of electricity it has a social impact, so they need to first cope with the demand at the lowest price possible, and then they’ll see if it’s green or not. Again, to come back to your question, the governments are keen to have renewable energy if it’s competitive, and if it’s at a lower price than fossil fuels.

Is Southeast Asia capable of producing good amounts of commercial wind?
If you look at wind power in the region the two main countries ahead of the other ones are Thailand and the Philippines for the moment. Vietnam is catching up very quickly, but the rest of the region has nothing. There is only one first project in Indonesia, which we jumped into this year, but otherwise nothing in the rest of Indonesia. Malaysia has nothing. Myanmar, nothing. In some cases it’s because of a lack of resources, for example in Malaysia there’s no wind, it’s not commercial wind I’d say. Indonesia, very difficult also, very low-resource. But Indochina, yes, there are definitely resources.

We are here for the long term, with a long-term view. We want to be a part of the future of the energy mix, and will stick with the projects. Down the road, we are convinced that the world will run on renewable energy.

http://sea-globe.com/the-blue-circle-wind-energy-possible-cambodia-southeast-asia-renewable-energy/

Dam Nai Wind Project Construction

Dam Nai Wind Project Construction

Wind Energy – From Wind Turbines to Grid Integration

Wind Energy – From Wind Turbines to Grid Integration

Online course Wind Energy from Alison.com  

From Wind Turbines to Grid Integration learn all about wind energy, from the different types of modern wind turbines and their use around the world, to the integration of wind-generated electricity into the main electrical grid system. The course begins by teaching you about the types of turbines that are commonly used, as well as some less commonly used turbines. You will gain an understanding of the way that turbines function, how much of the wind’s power can be harnessed and how it can generate electricity. The course will introduce you to the physical basics of wind turbine construction and functions.

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A higher FIT price is not the answer to bolster wind power

A higher FIT price is not the answer to bolster wind power

Vietnam Investment review – Investor speaks column

By Olivier Duguet

With 6,000 MW as the target for installed wind power by 2030, Vietnam is positionning itself as potentially the largest wind energy market of Southeast Asia, doubling the 3,000 MW target set by Thailand for 2036 and largely passing the 2,345 MW set by the Philippines for 2030. A Feed-in-Tarriff (FiT) is in place since 2011 at 7.8 US cents per kilowatt-hour but only 129 MW have been built so far. A lot of commentators have blamed the FiT for being too low to make wind projects viable.

Given our experience of developing, financing, building and operating wind projects in Europe, Australia or South Africa, a higher FiT would not accelerate much wind power projects construction in Vietnam. The issue is not in the level of the FiT which is very comparable to European ones (8.2 Euros cents / kWh for France with average wind speed at 6.5 meters per second, 11 Euros / kWh for Germany with average wind speed at 6 meters per second) but much more the lack of long term project financing in Vietnam today.

As Vietnamese banks are not familiar with long term financing, the maximum tenure for debt financing projects is around 10 years, to be compared with a 20 years Power Purchase agreement (PPA) the project will sign with EVN. In Europe, typically debt financing would be 17 to 18 years if the PPA is signed for 20 years. The shorter the tenure, the higher the pressure on short term project cash flow to cover debt service and the higher the chances to default if a bad wind year is coming.

The best way to ease the pressure on project cash flow and to lower the long term risk of wind power projects financing in Vietnam would be to allow the indexation of the PPA price on inflation. As the operating costs of wind projects are requesting manpower and debt financing available is mostly at floating rates, balancing the potential rise in salaries and interest rates with an indexation on the Consumer Price Index would cover this risk for the debt provider and ease long term financing. Introducing indexation of the FiT would not change its price today and would not put pressure on EVN to buy renewable power from wind at a higher price than the 7.8 US cents per kilowatt-hour offered today. Instead, it might foster Vietnamese Bank’s willingness to finance more wind power with longer debt tenure.

As long term project debt financing availablity is the key to wind projects being built in Vietnam, we can foresee that at least 2,000 MW would be immediately financially viable with such a PPA indexation and would contribute to Vietnam’s energy independence as well as to the long term national target of 6,000 MW installed by 2030. The Blue Circle is ready and committed to play a major role in Vietnam future wind power growth.

 

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Background

Olivier Duguet is the Chief Executive Officer of The Blue Circle, a Singapore-based company which focuses on developing wind energy projects in Southeast Asia.

With twenty years’ experience in the renewable energy sector in Europe and Asia, Mr Duguet set up his company in 2013 to bridge the gap in project development in the Mekong Region, by bringing international project development experience, financial expertise and capabilities, together with local market understanding.

www.thebluecircle.sg

For further information, please contact:

Olivier Duguet             Tel:  +65 62594921         olivier.duguet@thebluecircle.sg