Speaker 1: Artificial intelligence and cloud computing is sparking a rush to
Speaker 1: build data centers around the world, and some of the
Speaker 1: biggest areas of growth are in Asia. Earlier this year,
Speaker 1: Ali Baba announced it will spend over fifty billion dollars
Speaker 1: on data centers and other AI infrastructure. That's over the
Speaker 1: next three years. It's creating an insiciable demand for electricity.
Speaker 2: And here in Asia, countries from Japan to Vietnam are
Speaker 2: increasingly deregulating those energy markets, creating opportunities for renewable energy
Speaker 2: like solar and wind. You're listening to Asia Centric from
Speaker 2: Bloomberg Intelligence. I'm John Lee in.
Speaker 1: Hong Kong, and I'm Kadidmitrieva, also in Hong Kong.
Speaker 2: Here to discuss the renewable energy scene in Asia is
Speaker 2: Gavin Adda. He's the CEO of Peak Energy. It's a
Speaker 2: portfolio company under Stone, Peak the infrastructure giant with over
Speaker 2: seventy billion dollars in assets under management. Gavin, Welcome to
Speaker 2: the show.
Speaker 3: Thank you to be here now.
Speaker 1: Gavin, you're joining us from Singapore. One question I had,
Speaker 1: and this is for the lay listener who might not
Speaker 1: know a lot about this industry, but could you tell
Speaker 1: us you know what do you do?
Speaker 4: Yeah, okay, So I develop solar, wind and battery projects
Speaker 4: and sell renewable energy.
Speaker 3: To corporates across Asia.
Speaker 4: So that could either be building a system on top
Speaker 4: of their roof, on their facility or something like that.
Speaker 4: Or I'm taking a large solar farm or wind farm,
Speaker 4: constructing it and then pushing the electricity through the grid
Speaker 4: to large corporates.
Speaker 1: And this isn't sort of your solar panels on the
Speaker 1: roof of your house. Can you tell us about the
Speaker 1: size of these projects, like how big are these projects?
Speaker 5: Who are the players involved?
Speaker 4: So maybe a good example would be someone like Nike, Right,
Speaker 4: So Nike has about two million people working for them
Speaker 4: across Asia. You know, particularly in Indonesia and Vietnam, they
Speaker 4: have these big flat roofs with thousands of people inside.
Speaker 4: And you're taking those big flat roofs and basically covering
Speaker 4: them in solar panels, for example, and pushing that power
Speaker 4: directly into the building. That building is then using that
Speaker 4: electricity for their machines, for their air conditioning, for whatever
Speaker 4: they're using, and then any excess power ideal is being
Speaker 4: sent to a grid and being used by residential customers
Speaker 4: or whatever. But that's kind of the model for on
Speaker 4: site solar projects.
Speaker 2: And govin just how big is this industry? Just give
Speaker 2: us some numbers and tell us how fast it's growing.
Speaker 4: Yes, So if I just deal with the on site side,
Speaker 4: if you look at a mature market, somewhere like the
Speaker 4: US is doing about ten billion dollars a year of
Speaker 4: on site solar projects, and we're starting to see that
Speaker 4: business building up now in Asia. So somewhere like Singapore,
Speaker 4: which is quite frankly, very small land mass, not much rooftop,
Speaker 4: they have a target to do about two billion dollars
Speaker 4: of solar rooftop. And then if you think about somewhere
Speaker 4: like Indonesia or Philippines, they could do many multiples of that,
Speaker 4: but todate have done very little.
Speaker 3: So it's a very new market that's just taking off.
Speaker 2: And I'm assuming that here in Asia it's growing much
Speaker 2: faster than the rest of the world.
Speaker 3: Yeah, I think that's true.
Speaker 4: I mean I think if you look at the forecasts
Speaker 4: for an analysts, they'd say that power demand in Asia
Speaker 4: expected to triple over the next five years, which is
Speaker 4: really an extraordinary growth rate, and at least fifty to
Speaker 4: sixty percent of that to come from renewables, and that
Speaker 4: kind of mirrors what we're seeing all across the world.
Speaker 1: So why renewables in Asia? Like, what is happening here
Speaker 1: that's really driving that demand? We talked about about data
Speaker 1: centers AI is it that? Is it something more?
Speaker 4: Yeah, there's a lot to unpack in there. So the
Speaker 4: situation is you've got massive increases in the demand side,
Speaker 4: and then you've got certain constraints on the supply side
Speaker 4: that have pushed us towards renewables. So if I start
Speaker 4: on the demand side, you've got your base growth, You've
Speaker 4: got you know, populations become wealthier and moving into cities
Speaker 4: using air conditioning TVs.
Speaker 3: The normal expectation.
Speaker 4: I think the second big driver is the move of
Speaker 4: the world's supply chains from China to Southeast Asia. So
Speaker 4: China is no longer as competitive as it was, and
Speaker 4: so you're seeing people moving into Vietnam and Indonesia and Philippines,
Speaker 4: And that's the second driver. Nike used to be in
Speaker 4: China now in Southeast Asia, and many of these global
Speaker 4: brands as they move out of China are looking for
Speaker 4: inneable energy. They've made commitments to anewable energine, so they're
Speaker 4: looking for which market can I go into and get
Speaker 4: that kind of supply. I think then the third driver
Speaker 4: is data centers and AI that's just starting to come
Speaker 4: online now in most markets as a broad range of
Speaker 4: different maturity. So somewhere like Singapore, seventeen percent of the
Speaker 4: entire country's power is going into data centers and so
Speaker 4: that's driven up grid prices very significantly, and it's starting
Speaker 4: to reach maximum capacity. So that's really on the outside.
Speaker 4: Then on the supply side, the base growth was already
Speaker 4: too much for the utilities. Right, most of these countries
Speaker 4: are having regular brandouse, regular blackouts. If you think about Philippines, Indonesia,
Speaker 4: et cetera, constantly having problems getting enough power in to
Speaker 4: the demand side. And the structure is monolithic, right, if
Speaker 4: you go to Indonesia, there's one company that manages transmission,
Speaker 4: the grid, the generation. They have a very significant monopoly
Speaker 4: on the supply side, and they are regulated markets, so
Speaker 4: the government basically controls the price and it's a sensitive
Speaker 4: voting topic. There are in examples of riots as grid
Speaker 4: prices get increased. So that's made it very very difficult
Speaker 4: for utilities to increase the tariffs, increase the power prices.
Speaker 4: So we're now in a situation where the cost of
Speaker 4: power is actually higher than the revenue that they're getting
Speaker 4: from selling that power.
Speaker 2: So they're loss making.
Speaker 4: So they're loss making, massively loss making, and they've got
Speaker 4: to subsidize that loss. We're taxpayers money. So if you
Speaker 4: look at somewhere again like Indonesia is a good example,
Speaker 4: about five billion dollars a year of taxpayers money is
Speaker 4: going into the utility to keep it alife. This was
Speaker 4: all then exacerbated significantly by the conflict in Ukraine by COVID.
Speaker 3: You've seen commodity prices spike, You've seen.
Speaker 4: LNGG prices go up, and that's made it even more
Speaker 4: difficult for the utilities to survive. And meanwhile, they were
Speaker 4: really not able to invest into their infrastructure, they were
Speaker 4: not able to install renewables, and so that's really been
Speaker 4: the straw that broke the camel's back. And the reaction
Speaker 4: is government's saying, okay, I have to deregulate. Prices are
Speaker 4: going up. I can see that there's a way to
Speaker 4: bring in new power from someone else, from foreign investors.
Speaker 4: So I'm going to deregulate and allow independent power producers
Speaker 4: to come on board. So that's really been the big driver.
Speaker 4: That's been the really exciting thing that we're starting to
Speaker 4: see is all these different markets opening up and allowing
Speaker 4: independent power producers to come in.
Speaker 5: How competitive is it?
Speaker 4: Like?
Speaker 1: Can you paint us an image of what that looks
Speaker 1: like when you as a company go in and you
Speaker 1: want to supply that power? Is there an RFP like
Speaker 1: a bidding process? Are you in there like taking these
Speaker 1: governments out for meetings?
Speaker 5: Maybe like a beer? What does that look like?
Speaker 4: So? What I like about this is that it's a
Speaker 4: point to point discussion. Right, So it's me talking to
Speaker 4: a company. The company is running a tender. The company
Speaker 4: is then going through a process of evaluating all the
Speaker 4: different suppliers. How much power can you provide? What's your
Speaker 4: price of power? And Asia is really a grid parity market.
Speaker 4: We're not like Europe or the US where there are
Speaker 4: large substy is helping renewables. We need to be cheaper
Speaker 4: than the grid otherwise we struggle to install large volumes.
Speaker 4: What I like as a foreign investor is I'm not
Speaker 4: having to spend as much time with utilities and finding
Speaker 4: ways to.
Speaker 3: Build relationships there.
Speaker 4: It's a pure performance kind of conversation price and volumes.
Speaker 2: So you said you mentioned grid parody. Are you saying
Speaker 2: that if you source your energy or you're from solar
Speaker 2: or wind, it's actually cheaper than traditional sort of fossil fuels.
Speaker 3: Yeah.
Speaker 4: I mean that's been the really exciting point that I
Speaker 4: think is not that well known in the region. So
Speaker 4: if I install a solar system for a customer in Thailand,
Speaker 4: I'm going to be fifty percent cheaper than the grid.
Speaker 5: Wow, fifty five zero.
Speaker 4: Fifty percent, right, So we have customers who are saving
Speaker 4: two million dollars a year by installing solar systems on
Speaker 4: their facilities. And then even in Indonesia, where taxpayers money
Speaker 4: is being used to subsidize the price of the grid
Speaker 4: and keep it low, even there we're thirty percent cheaper
Speaker 4: than the grid. So when you look at that, you think, well,
Speaker 4: hold on a second, why isn't there more renewables coming
Speaker 4: into these markets?
Speaker 3: And that's really been about regulation and deregulation.
Speaker 2: Asia Centric is produced by Bloomberg Intelligence. We're more than
Speaker 2: five hundred experienced analysts and strategists work around the clock
Speaker 2: to bring you timely world class research. Our coverage spans
Speaker 2: too hundred market industries, currencies, commodities, and industries, as well
Speaker 2: as over two thousand equities and credits. To learn more
Speaker 2: about Bloomberg Intelligence, visit b I go on the Bloomberg terminal.
Speaker 2: If you like what you're here, don't forget to subscribe
Speaker 2: and share. Yeavin, I'm going to ask a really stupid
Speaker 2: question here, like how reliable is solar Like, for example,
Speaker 2: if you've got solar panels and it suddenly rains days
Speaker 2: on end. You sometimes see that in Southeast Asia. Does
Speaker 2: that mean that you don't get the solar or is there.
Speaker 4: Just that's the key point, right, So you've got your
Speaker 4: solar system on your roof, you're sending the power into
Speaker 4: that building. You know, you're forecasting what the power is
Speaker 4: going to look like for the next ten or twenty years.
Speaker 4: Retake the risk. And this has been the problem historically
Speaker 4: is you need an investor, an expert who's willing to
Speaker 4: take the risk of that weather. And that has been
Speaker 4: something that has stopped the market from taking off in
Speaker 4: the past. But generally speaking, and I'm sitting in Singapore
Speaker 4: and it's been raining NonStop for three days, non stop
Speaker 4: right day and night, and your solar system gets less sunlight,
Speaker 4: but it gets better performance. It's cleaner, it's cooler, and
Speaker 4: it performs better in that situation. So you might see
Speaker 4: a thirty percent drop in performance or a forty percent
Speaker 4: drop in performance, But the quality of the technology means
Speaker 4: now that there's not that much of a difference.
Speaker 3: I think that's one point.
Speaker 4: Then the second point is you're still connected to the grid,
Speaker 4: so it just means that you take less power from
Speaker 4: the grid than you would from the solar system. And
Speaker 4: then I think the third point is that batteries are
Speaker 4: coming in, and batteries change the complete sort of scheme
Speaker 4: of this because we now install larger solar systems, especially
Speaker 4: if you can do a solar farm, large batteries, and
Speaker 4: then you're able to provide power right the way through
Speaker 4: the night and it's firm.
Speaker 3: It behaves just like a guest clut.
Speaker 1: And you said you're willing to take the risk because
Speaker 1: there's not a lot of companies, the investors who would
Speaker 1: be willing to take that risk. Why are you guys able.
Speaker 4: To do that? I think that we have the engineering team,
Speaker 4: we have the data sources, so we basically are connecting
Speaker 4: into people like NASA and downloading multiple decades of data
Speaker 4: to know exactly how well a solar system is going
Speaker 4: to perform in any given scenario. So rather than trusting someone,
Speaker 4: we have our own ground up, you know, prime research
Speaker 4: that we're doing to understand exactly what a solar system
Speaker 4: is going to do. First part, and then the second
Speaker 4: part is the team and I have run billions of
Speaker 4: dollars of solar plants in Asia, so we would be
Speaker 4: one of the more experienced. So we're quite comfortable that
Speaker 4: we know how to operate and maintain that system. So
Speaker 4: can we get out there clean it? Can we make
Speaker 4: sure the cabling is working?
Speaker 3: Okay?
Speaker 4: Do we see the problem before it happens. These kind
Speaker 4: of things are really important in terms of actually running. It's
Speaker 4: a very simple system, but it's still a.
Speaker 3: Power plant and you need somebody who knows what they're doing.
Speaker 2: So Gavin Asia is pretty diverse. You know, what are
Speaker 2: the most hottest areas in your world? In Asia? Which
Speaker 2: countries are they?
Speaker 4: Yeah, that's a good question. The challenges that it changes
Speaker 4: year to year, and I would like to say that
Speaker 4: I'm able to forecast what's going to happen next year.
Speaker 4: But the one thing I've learned in the last twenty
Speaker 4: years in Asia, you can't, so I would say, you know,
Speaker 4: we've added maybe half a billion dollars worth of projects
Speaker 4: in Korea. There's a huge amount of demand there. There's
Speaker 4: a lot of manufacturing, a lot of export, and so
Speaker 4: a lot of the corporates there are looking to buy
Speaker 4: renewable energy in order to be able to fulfill some
Speaker 4: of the sustainability requirements that you get from Europe.
Speaker 3: So that's really sustainability driven at the moment.
Speaker 4: I'd say a lot is happening in Japan, so we're
Speaker 4: seeing a similar model, and Japan is very aggressively deregulating
Speaker 4: to encourage more foreign investors into their market. Then go
Speaker 4: across to Malaysia, and Malaysia is exploded. It's come from
Speaker 4: a very monolithic, very monopolized market where it was really
Speaker 4: difficult to get into even on the rooftop side, and
Speaker 4: now with the spillover of data center is from Singapore,
Speaker 4: you're seeing very significant demand and we're looking at sort
Speaker 4: of multi hundred million dollars solar farms in Malaysia.
Speaker 3: But it moves all the time.
Speaker 4: If you'd ask me last year I think Philippines would
Speaker 4: have been probably the most interesting market last year.
Speaker 3: Yeah, oh wow.
Speaker 5: So it really does change year t year.
Speaker 4: It changes year to year so very rapid because what's
Speaker 4: happening is the governments are all fighting against each other
Speaker 4: deregulating to try and make their country more attractive for
Speaker 4: the investment, not just for people to come in on
Speaker 4: the infrastructure side, but then on the customer side. So
Speaker 4: you've seen very interesting sort of geopolitical wrangling. Singapore is
Speaker 4: a good example because you've got the data center sort
Speaker 4: of explosion. Now seventeen percent of the country's energy supply
Speaker 4: going into data centers. It's getting to the stage where
Speaker 4: its difficult to see that being sustainble on the long term.
Speaker 3: Singapore was then trying.
Speaker 4: To pull in renewable energy for its neighbors, and you
Speaker 4: saw Malaysia and Indonesia basically come out and say we
Speaker 4: are flat out banning any supply of renewable energy to Singapore.
Speaker 4: And I was in meetings with senior officials in those
Speaker 4: countries and saying, then why don't you sell power from
Speaker 4: your country to Singapore at a higher price.
Speaker 3: You're going to make a lot of money.
Speaker 4: And the response was we know that those data centers
Speaker 4: manufacturers are in Singapore. We want to bring them to
Speaker 4: our country and we will do whatever we can to
Speaker 4: get the jobs and the investments of those manufacturing sites here.
Speaker 4: If that means strangling renewable supply for Singapore, that's what
Speaker 4: we're going to do. So you've definitely seen those kind
Speaker 4: of geopolitical battles going on.
Speaker 2: Oh well, and that's quite interesting.
Speaker 4: You know.
Speaker 2: I know that energy security is a big issue in Europe,
Speaker 2: especially with the Russia Ukraine war, but it sounds like
Speaker 2: energy security and geopolitics is becoming a big factor in
Speaker 2: Southeast Asia as well.
Speaker 3: Yeah.
Speaker 4: Absolutely, I think that the last few years of commodity
Speaker 4: spikes has rocked a lot of the region. Like Philippines
Speaker 4: is an energy importer, Indonesia's becoming more and more of
Speaker 4: an energy importer. So you have no choice but to
Speaker 4: take your energy or energy from whoever's supplying and solar
Speaker 4: and wing the batteries. It's pretty exciting because once you've
Speaker 4: installed your system, it just sits there. It's more expensive
Speaker 4: to turn a solar system off than to have it
Speaker 4: just running. The costs of solar systems are reducing so
Speaker 4: fast that you've now got to a stage where you know,
Speaker 4: like for like there as I say, for fifty percent cheaper.
Speaker 4: And I think that where you had some resistance from
Speaker 4: the incumbent utilities historically, the governments are now cutting through
Speaker 4: that because the costs of subsized utilities is too much.
Speaker 4: So a lot of these countries are thinking, I build
Speaker 4: large solar farms or wind farms or whatever resource you've got,
Speaker 4: and I reduce and I hedged my exposure to the
Speaker 4: global commodity markets.
Speaker 2: And you mentioned earlier that there's a lot of global companies.
Speaker 2: I think you mentioned Nike, but maybe it's like companies
Speaker 2: like Samsung that are moving out of mainland China to
Speaker 2: Southeast Asia. How influential are these companies in driving the
Speaker 2: agenda for renewable energy.
Speaker 4: Yeah, that's definitely a huge, huge topic, and it's much
Speaker 4: more driven by them than by the developers. So you know,
Speaker 4: I've again had those meetings with regulators, et cetera, where
Speaker 4: they're complaining and saying, please get these Western American or European.
Speaker 3: Companies out of my office.
Speaker 4: They're in every day saying I'm going to leave your
Speaker 4: country if I don't get renewable energy.
Speaker 3: You have a regulated market.
Speaker 4: You know, there's no way for independent power producers to
Speaker 4: come in, and your local utility is not giving me
Speaker 4: the renewables I need. So there's huge influence. I mean,
Speaker 4: Samsung is twenty percent of Vietnam's.
Speaker 3: Energy production.
Speaker 4: One fifth, yes, yes, and Samsung has moved a lot
Speaker 4: of their sensitive technology out of China into Vietnam, specifically
Speaker 4: to reduce the potential exposure.
Speaker 3: On technology transfer. So it's a huge factor.
Speaker 4: And the amount of money that's going in around data centers,
Speaker 4: and then some of the regulations whereby countries are requiring
Speaker 4: their data to be kept in their country, it means
Speaker 4: that you then have to spread of data centers into
Speaker 4: markets like Indonesia, et cetera. So there's a lot of
Speaker 4: influence that they have.
Speaker 1: Well, it seems like a long term trend, like as
Speaker 1: you see more companies pulling out of China, I don't
Speaker 1: think it's going to change anytime in the next four years,
Speaker 1: at least with tariffs, but it does kind of leave
Speaker 1: you with the question of what happens if these companies leave, right,
Speaker 1: Like all these companies that have moved to Malaysia, Vietnam,
Speaker 1: Thailand to diversify or do a China plus one strategy.
Speaker 1: There are reciprocal tariffs that are in the books, and
Speaker 1: we know that President Trump is looking to target a
Speaker 1: lot more countries than just China. So is there like,
Speaker 1: how do you think about the risk of these companies
Speaker 1: who are driving the agenda right now kind of pulling
Speaker 1: back or pulling out.
Speaker 4: Yeah, it's something that I'm watching very closely. And we
Speaker 4: definitely needed sustainability support to get the business, to get
Speaker 4: the industry going. When I first started developing solar projects
Speaker 4: in Asia, I was previously developing projects in the US
Speaker 4: and Europe sort of twenty years ago, and you could
Speaker 4: see even back then that with the cost curve on
Speaker 4: solar so twenty percent per year reducing over the last
Speaker 4: twenty five years and very significant drops every now and then.
Speaker 4: So we had a fifty percent drop in the last
Speaker 4: twelve months, you could see that it was going to
Speaker 4: come under the grid. I meanwhile, the grid is going up.
Speaker 4: So for me, the important part is we as an
Speaker 4: industry need to behave like mature energy players, not always
Speaker 4: looking for the subsidy. So and sustainability is I think
Speaker 4: going to get hit. We've also seen CSRD regulations in Europe.
Speaker 4: So the regulations around how you report who needs to
Speaker 4: report on their sustainability and carbon footprint reduced very significantly
Speaker 4: in the last two three weeks. So I'm watching it
Speaker 4: very closely. But I believe and I'm driving the team
Speaker 4: to focus on cost as the main driver, and that's
Speaker 4: perfectly viable.
Speaker 3: We do need some more regulation reduction in orders for
Speaker 3: us to do that.
Speaker 2: You brought up some interesting points, so it's more cost
Speaker 2: focus rather than sustainability goals. Cat did mention President Trump.
Speaker 2: Now since he's become the president, there's been a big
Speaker 2: backlash against ESG. Trump has got a really famous policy
Speaker 2: like you know, drill, baby drill. How is this change as.
Speaker 1: Opposed to sun baby son or wind baby wind?
Speaker 2: This is changing at ordinarrative for renewable energy.
Speaker 3: I don't see it yet.
Speaker 4: So what I'm seeing at the moment is is if
Speaker 4: you think about Amazon, it's very interesting. So Amazon was
Speaker 4: one of the first people that went into sustainability. It
Speaker 4: was primarily driven by the employees, right. The employees pushed,
Speaker 4: consumers have pushed, and that has pushed the regulation right,
Speaker 4: and so that that fundamental driver.
Speaker 3: I don't think it changed.
Speaker 4: So We're definitely going to see fluctuations towards and away
Speaker 4: from sustainability. That's been the case for the last twenty years.
Speaker 4: This is a particularly relevant one, but I think that
Speaker 4: we just need to stay the course, focus on the
Speaker 4: cost differences, and quite frankly, I don't see any change
Speaker 4: from our customers right so Amazon or Microsoft or Google
Speaker 4: or Nike or Samsung, they're all very actively looking for
Speaker 4: renewable procurement from us. So I haven't seen any of
Speaker 4: that kind of But you know, no, right a year
Speaker 4: down the line, you want to watch Abe Kefley.
Speaker 1: So no pullback yet, is what you're saying. It hasn't
Speaker 1: been like the past couple months you're suddenly getting a
Speaker 1: drop in demand.
Speaker 3: Definitely not, Definitely not, Gavin.
Speaker 2: I love to talk about renewables as an asset class.
Speaker 2: So can you tell us who are the big investors
Speaker 2: in renewable energy from your point of view?
Speaker 4: Yes, So I've started two companies. One I sold to
Speaker 4: Shell and Keppel and the second one I sold to Total.
Speaker 4: So the oil and gas companies for the last five
Speaker 4: ten years have been very hungry, and I think about
Speaker 4: the investor bases. Really, strategics are strategic large companies and
Speaker 4: then financial investors. The strategics think about this as a
Speaker 4: new business model that is going to be inevitably growing
Speaker 4: over the next ten, twenty thirty years, and so they
Speaker 4: are looking for how do I take my employee base
Speaker 4: move them into that, what are the different business models
Speaker 4: that I can drive, how can I drive returns, et cetera.
Speaker 4: And the financial investors are more focused on the results.
Speaker 4: I think that it's like a golden goose and golden eggs. Generally,
Speaker 4: financial investors like the golden eggs. These are long days
Speaker 4: did very stable infrastructure returns. We have twenty year contracts
Speaker 4: or twenty five year contracts. As long as the sun
Speaker 4: comes up, it's going to generate. That's very stable. Sometimes
Speaker 4: their inflation linkedins, and so you've seen a lot of
Speaker 4: interest from pension funds, softign wealth funds, infrastructure funds. There's
Speaker 4: definitely been a pendulum shift from the strategics more towards
Speaker 4: the financial investors in the last year or so. I
Speaker 4: think that's good because there was a bit of distortion
Speaker 4: before where some of the investors that were coming in
Speaker 4: weren't coming in for necessarily the returns. They were coming
Speaker 4: in for other aspects, and that distorted the market. That
Speaker 4: meant they were willing to take risk return profiles that
Speaker 4: might not make a lot of sense in order to
Speaker 4: gain volume, whereas the financial investors are a bit more stable,
Speaker 4: a bit more return focused.
Speaker 1: You mentioned inflation linked assets. There does a federal reserve
Speaker 1: and the pace of inflation price growth does that impact
Speaker 1: the business at all.
Speaker 4: So a renewable project, generally speaking, will be twenty to
Speaker 4: thirty percent equity, twenty to thirty percent my cash going
Speaker 4: into a project, and seventy to eighty percent debt that
Speaker 4: I'm going to be taking from a big, regional or
Speaker 4: local bank. And so the interest rates are a big factor.
Speaker 4: So what is the interest rate on that debt has
Speaker 4: a big impact on the weighted average cost of capital
Speaker 4: of that project, So I track it very closely. The
Speaker 4: reason that relatively constable is usually an increase in interest
Speaker 4: rates is going to increase is going to have an
Speaker 4: inflationary impact, and so you're going to see grid prices
Speaker 4: go up, which makes it easier for me to then
Speaker 4: put in a price that everybody is happy with as
Speaker 4: a discount to that grid price.
Speaker 2: Gavin, before I let you go, I wanted to ask
Speaker 2: a question like I saw your LinkedIn page, and you've
Speaker 2: got a lot of experiences in a lot of different countries.
Speaker 2: I think I saw obviously the UK, the US, Korea, Singapore, India,
Speaker 2: maybe Finland. But like, tell us your background. How did
Speaker 2: you get into this space?
Speaker 3: Oh? Wow, okay?
Speaker 4: So I was originally doing it tech so twenty or
Speaker 4: thireny years ago and thought, well, you know, Asia is
Speaker 4: the exciting part of the world.
Speaker 3: I want to come over to Asia and be part
Speaker 3: of that growth.
Speaker 4: And did an MBA and join Samsung and had the
Speaker 4: chance to run various different businesses for Samsung. We did
Speaker 4: about a billion dollars of investments in the US and
Speaker 4: you could see then that renewable energy was taking off.
Speaker 4: So that really very run the numbers and you could
Speaker 4: see that if if it's making sense in the US,
Speaker 4: I should be able to replicate that business in Asia
Speaker 4: and build a viable business without necessarily relying on subsidies.
Speaker 1: There is I think a podcast that referred to as
Speaker 1: the Indiana Jones.
Speaker 3: Oh God, what was.
Speaker 2: That about Indiana Jones A renewable investing.
Speaker 3: Yeah, that doesn't come up very often.
Speaker 4: I have to admit, No, I did an archaeology and
Speaker 4: a topology degree in Cambridge at some point allegedly and
Speaker 4: so apparently that has some connection with renewable ERI, but
Speaker 4: I have not worked out what the connection is yet.
Speaker 1: All Right, we'll think of a segue. We'll think of
Speaker 1: a yeah between those two. Thanks so much for joining
Speaker 1: us today.
Speaker 3: Thank you for your time.
Speaker 2: Thank you, Kevin, really good fun.
Speaker 1: You've been listening to asia Centric from Blueberg Intelligence. My
Speaker 1: name is Katy Dmitrieva. I'm here in Hong Kong.
Speaker 2: And I'm John Lee, also in Hong Kong.
Speaker 1: You can find other episodes of asia Centric on Apple Podcasts, Spotify,
Speaker 1: or wherever you listen.
Speaker 2: And this podcast was produced and edited by Clara Chen
Speaker 2: And thanks for listening.
Speaker 5: I'll see you next time.