Asia 21 Alumni Series: Energy is Everything
by Quintin Pastrana, Asia 21 Young Leader, Class of 2008
Think of energy as a supply chain, a primus interpares of platforms to sustain any advanced or developing economy.
In a highly diversified region that is Asia, let alone Southeast Asia, growth is always good, and very much bandied about. The ADB reports that the region is not the single contributor to global growth at 60%. But there is a dark side to asymmetry: the realities of yawning economic inequality, governance risk, and scattered archipelagos are giving the most seasoned of investors and policy makers quite a fit.
Having worked in both the private and public sectors for two decades -- on both sides of the pond -- and now engaging both through an ambitious and mission-focused renewable energy firm, it is heaven and heartache all at once.
Underyling this, a sense of urgency that is a simply matter of survival.
Add to the mix a trifecta of forces majeures: climate change (30+ storms and typhoons annually), geohazard vulnerability (think circum-Pacific Ring of Fire + the new normal of earthquakes and tsunami), and sea-level rises that threaten many nations states along the Pacific. You now have a perfect storm – no pun intended – of challenges, and opportunities.
And on that note – not to be another Cassandra – unique and critical to this cynosure of socio-economic growth are borderless, creeping externalities like the Great Game unfolding in the West Philippine Sea and broader South China Sea that at the worst, threaten life and limb writ large, and any gains the region has been able to achieve for over seven decades.
At the very least, these looming risks have compelled countries and communities to focus on hedging by improving self-sufficiency, in situ, for water, food, and the energy security that can guarantee both.
Those critical pathways are enabled by a convergence of technology, capital, and regulatory frameworks. And that, in turn, that can help what most enterprises are focusing on right now: last mile delivery and economic empowerment for those left behind in this frenzy of economic resurgence. These synergies will grow what Harvard’s Dr. Michael Porter propounds as Shared Value: where solving society’s pain points sharpens a firm’s competitiveness, and creates sustainable, inclusive development, for all.
Thanks to innovation and adoption around the world, renewable energy is giving conventional and fossil-fuel led sources and firms a run for their money. Political and currency risks are driving commodity prices higher, and these countervailing movements are making clean, indigenous, and increasingly reliable energy sources more competitive and accessible.
By accessible, we mean modular systems can be calibrated to end-users’ needs, be they remote islands or upland villages, or industrial and commercial buildings. From solar PV rooftops, to wind and biomass systems, to even tidal turbines of various sizes in rivers and oceans, to storage technology that is moving towards economic unit parity to compete with current price points: there is a slew of options that can be combined to deliver clean, dependable, and affordable energy on site and even off-grid.
Ours is just one of many ventures that pioneer, develop, and sustain these systems for a growing clientele from conglomerate to community. These days, the downright appeal of renewable and hybrid systems has now been met with robust economics, which can now resonate beyond a loyal tree-hugger and shareholder activist base that have been hitherto unable to bring adoption past the fringes.
With ROIs and IRRs at double-digit level, fiscal incentives from government, and growing access to project finance from aid agencies, to commercial lenders who now realize that green is good and gold, C-suite executives, corporate boards, and capital-rich communities have enough justification to place investments in the sector, and use them to transform their own business models beyond shrinking their carbon footprints. What that does is finally move the needle for clean energy across the spectrum, and in critical regions that need it such as Southeast Asia, where not only is political, climate, and capital risk high but owing to the asymmetries I mentioned earlier --- over 100 million citizens still have no access to energy and the multiplier effects that can come their way once they do.
In the final analysis, it’s all about the stories on the ground. The seaweed farmer who’s incomes will double as 24/7 lighting allows him to thresh twice the harvest daily. The fish traders who plan to invest in cold storage to preserve their catch and command higher margins with larger volumes and quality control. The resort owners who wish to expand accommodations and waste management systems to absorb the leapfrogging tourist arrivals in these remote, unspoilt islands. The banca owner, who is now convincing his fleet cooperative to shift to electric engines we’re happy to offer, to remove the noise and diesel pollution that mars fragile ecosystems across the archipelago. The children who want to learn more about the outside world through internet connections, let alone clean and safe home lighting for them to complete their homework.
These are but a fraction of the possibilities that can empower all stakeholders. While we are close to an inflection point of mass adoption, environmental renaissance, and grassroots, inclusive growth --- much needs to be done. For starters, government needs to create a level playing field for all players, and design and enforce regulations that are responsive to the needs of the most marginalized communities. That means reducing red-tape, evading regulatory capture from special interests, strengthening fiscal incentives and opening access to international and local players to compete and collaborate in this growth sector. Banks and lenders need to align their financing criteria to the realities and unique features of renewable energy technology while reducing intermediation costs and processing times. NGOs and civic groups supporting education campaigns for local governments and communities to see the tangible and long-term benefits of renewable energy. And investors, innovators, and developers taking risks is underserved areas to provide critical resources and responsibly serve as long-term partners beyond the project life of these systems.
It is happening slowly, and with good proof points in key areas across the region. By learning from the pitfalls and promises of these pioneering efforts, we can advance a replicable, viable model through a concerted and deliberate movement, an ecosystem of partners, to make this happen for good. Power to the people.