Episode 75

The Angry Clean Energy Guy on why South East Asia's clean energy future is here already, today: it's all happening, all one needs to see it is to take a quick tour of the behind-the-scenes, massive, renewable energy surge in Singapore, the Philippines, Malaysia, Indonesia, Cambodia and Thailand. 

Transcript

Speaker 1: 0:06

This is a podcast for the people at the back in terms of how Southeast Asia is in embracing a clean energy future. And first things first, it's actually done. The future is here today, it's over. Now the overwhelming majority of people I think don't actually know that, but the direction of travel is crystal clear and it's just going to happen. The only question is, is it gonna happen by 2030 or 2032 or 2035? But it's done Southeast Asia and for that matter, the rest of the world are going to be powered by approximately a hundred percent renewable energy. And it's done. Why is it done? It's done because of fundamental economic reasons. Solar power today is the cheapest form of energy in the history of the world. And guess what? Its cost is gonna go down another 70% by 2030. Same thing with battery storage. It's compelling already, but the cost is going to drop by another 50 to 70% by 2030 . Same thing with wind turbines. And I'm not actually alone, thank God saying this. There are literally hundreds of research papers showing how we're going to reach a hundred percent renewables and why we're on our way there already. And if you would just smell the coffee so to speak, you'd know that it's done. In fact, as of August last year, there were 739 papers, including 666 peer-reviewed articles whose main conclusion was that a hundred percent renewables works. It can power all energy in all regions of the world at low cost and it's going to happen. And now I want to get back to Southeast Asia, but first, welcome to episode 75 of the angry clean energy guy with me, Assad Razu . I am so happy you're here. Thank you . In just the last three months, there were several news stories that are quite indicative of what I'm talking about. First in Singapore, in March, a $37 billion deal was signed for something called Green Corridor in Indonesia's real region. And that was to say that top global suppliers were going to come into Indonesia to generate clean energy for both domestic use and for export while creating tens of thousands of green jobs for Indonesians. And within that project is nine gigawatts of solar power, plus the world's largest battery storage facility to trade electricity between the two countries, Singapore and Indonesia. Then a matter of days later, or maybe just one day, Singapore announced they will import one gigawatt of electricity from Cambodia via a 1000 kilometer subsea cable. And that electricity will be generated from solar energy, hydropower, and maybe even wind power driving billions of dollars of investments into Cambodia. And before I move on to other countries in Southeast Asia , let me just put this news from Singapore into context. Back in 2021, Singapore announced that it plans to import up to four gigawatts of renewable energy by 2035 because it wants 30% of its electricity supply to come from renewable energy. At the moment, Singapore is 95% plus dependent on natural gas for its electricity, and it wants to change that for national security and for cost reasons. National security, because the Ukraine war has starkly shown what dependence on fossil fossil fuels means. And the turmoil in the gas markets has also starkly shown that you can pay an absolute fortune for fuel without having any control whatsoever over how much you have to pay to keep the lights on while you're staring at free sun and wind resources. But Singapore is planned to import up to four gigawatts of renewable energy by 2035 is not wwa, it's not what you see is what you get. And that's because Singapore wants those four gigawatts of renewables to be at a 75% load factor. And what this means is that in effect, they want that renewable energy by the time it lands in Singapore to be as reliable as base load energy, they are eliminating in effect the intermittency issue around renewable energy, which as listeners to this podcast would know is not actually an issue, but they're eliminating it anyway. But what this means in real life, when you say four gigawatts of renewables at a 75% load factor, and you assume that's gonna come from solar power, is that you have to build out something like 30 gigawatts of solar power in neighboring countries. And then on top you have to put an enormous amount of batteries and you have to combine that solar with those batteries to give Singapore at the end four gigawatts of renewable energy at a 75% load factor. And so combined, and without boring you with the details, that means that you have to invest 50 billion in total to get those four gigawatts to Singapore. Now the good news is that electricity is still cheaper than fossil fuel electricity. But putting that aside for a moment, what does that implication that you have to invest 50 billion in neighboring countries mean? And by the way, that 50 billion is just for solar and batteries. You'd have to invest another a hundred billion perhaps for the supply chain around them if you wanted that supply chain to be in neighboring countries as opposed to, for example, bringing solar panels or inverters or batteries from China or elsewhere. So when you cut through this, what that means is that Singapore's announcement is the equivalent of saying that there is a wave of somewhere between 50 billion and 150 billion of foreign direct investment that is coming to Singapore's neighbors because of Singapore's needs. And the elegant thing about this is that the neighbors will be in financial terms, borrowing Singapore's balance sheet, which is aa , the highest possible credit rating to attract those investments into their countries at attractive rates of interest because of Singapore's balance sheet, even though they, the neighboring countries have lower credit ratings. So while Singapore is triple A , for example, Malaysia is A minus, Thailand is triple B plus, Indonesia is triple B , Vietnam is double B plus, and Cambodia is single B. Now without needing to rely on that lingo, what this means is that the cost of money in Singapore is a lot more attractive than the cost of money in these countries. So it's least attractive in Cambodia, followed by Vietnam, Indonesia, Thailand, Malaysia, and then Singapore. And so when you borrow Singapore's balance sheet to affect these foreign direct investments, you're attracting a lot of money on attractive terms because of that, Singapore ask to import four gigawatts of renewable energy. And so what you have is you have a major driver for a renewable energy build out in this region, which is going to be hard and fast over the next few years. Now remember, I'm still only at announcements in Southeast Asia over the past three months. So after these two announcements in Singapore, Thailand also in March announced a new 3.66 gigawatt solar and wind auction. And Thailand made that announcement following its ongoing auction for another 5.2 gigawatts of clean energy. So Thailand, in a very short period of time is asking for nine gigawatts more of renewable energy, which is three times its current installed solar capacity. And this just happened out of the blue because Thailand had not really done any renewable energy since something like 2012. And then suddenly boom, a massive amount of renewable energy is coming to Thailand. And then also in March the Philippines made two very significant announcements. The first one is it said, we wanna do an auction for 11 gigawatts of solar and wind power, which by the way is more than the country's entire installed renewables capacity. And the Philippines said, oh, we wanna do all that in one auction and we want all this capacity to come online in the next two to three years. And then the Philippines also moved to create an administrative framework for offshore wind development. So the Filipino government identified 178 gigawatts. I mean that's enormous worth of technical potential capacity for offshore wind. And now it's getting organized to get some of that built over the next few years. And I want to emphasize that these are just some examples from the region and only from the last three months to make the point that I made earlier. Below the surface for most people, there is an enormous renewable energy build out , which is already underway where the economics are only going to get better because of these declining cost curves for solar power, for batteries and for wind power, it's really game over already. And all you have to do is just find and put together these data points to see the very same picture that I'm describing. Everything I've just talked about is really a first salvo you can expect over the next few years to hear a lot more announcements similar to those that happened in the last few months. And as a matter of fact, in many cases there won't be even any announcements. Solar, wind and battery storage projects will just get done. The industry no longer needs government auctions to get on with it. It is getting on with it and it is getting on with it at scale. As I stated earlier, the only question today is whether the world is gonna be powered by a hundred percent renewables or almost a hundred percent renewables in 20 30, 20 32 or 2035. It's no longer weather. It's going to be powered by a hundred percent renewables. And this is going to have massive implications because we had a fossil fuel economy, which in the case of the electricity system was built on infrastructure that was sized to give you electricity at peak times. So you had to have enough coal fired power plants and gas fired power plants to give you electricity at the time that you needed the most electricity. But then once you had built that, you were basically done. So you then just added a gigawatt of electricity, say when you had population growth or energy demand growth. And you did that by building a few coal-fired power plants or gas fired power plants or even just one in a renewable energy system. However, because the sun doesn't always shine and the wind doesn't always blow, what you're going to do is you are going to build a combination of solar and wind and batteries for the trough, which means you're gonna build enough solar, wind and battery storage for that one week a year say, when you have hardly any sun or hardly any wind or hardly any combination of both. And to do that, you therefore are going to have to build four or five times the amount of solar power and wind power installations that you will need on every other week of the year. Just think back to that Singapore example that I gave you. The four gigawatts that they want at a 75% load factor means you have to build 30 gigawatts plus enormous batteries. But the implications of this are actually beautiful because they mean that we're going to have an overabundance of energy, we're gonna have all the energy in the world that we need and then more. And we're gonna create new business models that will take advantage of the availability of all this enormous amount of effectively free energy because the marginal cost of all that excess energy is gonna be pretty close to zero. And you can then just imagine the possibilities. Technological disruption is not linear. Information technology, as we all now know, created in almost infinite abundance of binary digits or bits. And these replaced and complemented finite physical products and analog products, think newspapers or vinyl LPs or cassette tapes or CDs or VHS videos. And along the way, this created entirely new models at a much larger scale, think Netflix and then compare that to Blockbuster. And Netflix operates on entirely different principles than Blockbuster. And this disruption created by those bids is a preview of what I am talking about. This is what electrons are currently in the process of doing. Once increasingly massive amounts of excess energy are made available at near zero marginal cost entirely new business models and applications will pop up. And you can already see the beginning of this electron abundance age in the increasing electrification of, for example, cars or scooters or buses. But this is going to extend across multiple sectors, think water treatment or green cement or green steel or waste processing. And as I said, we are already there, so get on with it. Thank you so much for listening to this episode, 75 of the Angry Clean Energy Guy podcast with me, Assad Ook , and have a great couple of weeks.