Asia's Power Markets Mega-trends: Determined Reforms, Fuel Mix … · 2017-09-15 · China:...

Asia's Power Markets

Mega-trends: Determined

Reforms, Fuel Mix Shifts

Joseph Jacobelli

Senior Analyst - Asia Utilities &

Infrastructure and Asia Energy /

Materials Research Team Leader

Bloomberg Intelligence

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What is Bloomberg Intelligence BI<GO>?

Asia's Power Markets Mega-trends: Determined Reforms, Fuel

Mix Shifts

– Reform Suddenly Hitting Major Power Markets like China and

Japan. Risks For Incumbents? Opportunities For New

Entrants?

– Future of Coal-Fired Power vs. Gas and Oil Generation in

Asia. Any Role for Nuclear and Renewable Energy?

© 2016 Bloomberg Finance L.P. All rights reserved.

This document and its contents may not be forwarded or redistributed without the prior consent of Bloomberg.

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Mr. Joseph Jacobelli

Asia Utilities & Infrastructure Research

Joseph is a senior analyst heading Asia

utilities and infrastructure research for

Bloomberg Intelligence. Joseph has

held various senior roles in downstream

energy equities research at leading

global investment banks and brings with

him over 25 years of financial expertise

in research comprising power

generation, power transmission, power

distribution, gas distribution, water

treatment and supply and alternative

energy generation. Prior to joining

Bloomberg, Joseph was Head of Global

Cleantech and Asia-Pacific Utilities

research at HSBC and previously

served as Group Director - Carbon

Ventures at CLP Holdings. Joseph

earned his bachelor's degree in

international relations from the

University of Queensland, and his

master's degree in international law

from the National Taiwan University.

Joseph speaks fluent Mandarin, Italian

and French.

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English Coverage Ofc BI Dashboard

Analysts

Tim Craighead Gaming, Lodging, China HK CHINA, GAMEG, LODGG

Alex Gardner Financial Regulations HK BANKA, LIFEA, INPCA, REALA

Anthea Lai TMT HK TELCA, ITSVG, ASFTG, CETXG, INETG

Catherine Lim Consumer Discretionary, Household Products SG APPRA, LUXGG, HHCPG

Diksha Gera Banking SG BANKA

Francis Chan Banking HK BANKA, EXCHG

Jitendra Waral Technology US CETXG, EMSOG

John Mathai Shipping SG SHIPG, XPRSG, AIRLA

Joseph Jacobelli Utilities, Infrastructure HK NGTDA, EGENA, INFRA

Kristy Hung Banking, Real Estate HK BANKA, REALA

Lu Wang Energy HK EXPRA

Michelle Leung Building Materials HK BMATG

Michelle Ma Telecom, Internet HK TELCA, INETG

Nikkie Lu Automobiles HK AUTMA

Patrick Wong Real Estate HK REALA

Steve Man Automobiles, Industrials HK AUTMA

Steven Lam Insurance HK LIFEA, INPCA

Tom Jastrzab Consumer Staples HK FOODA, RETFA, APPRA

Yi Zhu Metals & Mining HK ALUMG, COPPG, BMETG, PMETG, RMSUG, ISTLG

Economists

Fielding Chen Asia - China, Korea HK ECON

Tamara Henderson Asia - South & Southeast Asia SG ECON

Tom Orlik Asia - Asia Pacific BJ ECON

Yuki Masujima Asia - Japan TO ECON

1. Determined Reforms

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Low Asia power prices good for governments wanting to initiate or

intensify sector liberalization and reform.

– GDP growth, interest rates, inflation, production costs all low

Weak fossil fuel costs, ample supply to keep lid on prices

More competition in China, Japan etc. may drive prices lower

Earnings and cash flows may be at risk for incumbent utilities as

they have to adjust their business models and brace for less-

predictable outlooks



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Source: Bloomberg © 2016 Bloomberg Finance L.P. All rights reserved.


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15 © 2016 Bloomberg Finance L.P. All rights reserved.


Source: Bloomberg



Source: Bloomberg



Asian countries with power markets face differing headwinds

Australia: unrelenting competition and regulatory actions

The Philippines: struggled to establish an independent operator

to boost its power markets

China: waited 14 years until March to create electricity-trading

centers

Korea: could resurrect reforms begun in 2003



Philippine Electricity Market Corporation



April 8 (Bloomberg First Word) -- Electricity rates in Philippine capital

and nearby provinces will rise 89 centavos/kWh this month as

generation charge increased when several power plants shut, Manila

Electric says in statement. Electricity demand also increased by

200MW in March. Generation charge increased 69 centavos/kWh to

5.90 pesos/kWh this month, driven by spike in spot market prices to

21.59 pesos/kWh in March from 4.90 pesos/kWh prior month.

Transmission co. National Grid Corp. said reserves on Luzon island,

where capital is, now at 217MW; system capacity at 8,087MW vs

peak of 7,870MW



16-Nov-15 Guizhou Electricity Trading Centre

n.a. Kunming Electricity Trading Centre

1-Mar-16 Beijing Electricity Trading Centre

Guangzhou Electricity Trading Centre

25-Mar-16 Xinjiang Electricity Trading Centre

6-Apr-16 Qinghai Electricity Trading Centre

8-Apr-16 Ningxia Electricity Trading Centre

12-Apr-16 Eastern Inner Mongolia Electricity Trading Centre

13-Apr-16 Jilin Electricity Trading Centre

Tianjin Electricity Trading Centre

Ningxia Electricity Trading Centre

18-Apr-16 Jiangsu Electricity Trading Centre

22-Apr-16 Heilonjiang Electricity Trading Centre

25-Apr-16 Shandong Electricity Trading Centre

4-May-16 Hebei Electricity Trading Centre

4-May-16 Henan Electricity Trading Centre

Source: Xinhua; SGCC; CSGC; Bloomberg Intelligence

2. Fuel Mix Shifts - LNG

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LNG: New Supply & Demand Landscape

– Capacity Surge: Australia to Be The Largest Supplier

– Demand Decline: Japan’s Nuclear Restart Adds Uncertainty

LNG Pricing Linked to Oil Prices

– Consensus Forecast of Oil Prices

– Buyers’ Market Opens Opportunities

– New Price Index Emerges in Asia



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Source: Poten & Partners, Bloomberg © 2016 Bloomberg Finance L.P. All rights reserved.


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Source: Japan Ministry of Economy, Trade and Industry, Bloomberg



2. Fuel Mix Shifts – Thermal Coal

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Global Seaborne Thermal Coal Demand Market

China: Asia’s Largest Coal Producing and Importing Country

– Supply Shrinking: Government Push, Low Return

– Demand Downturn: Slow Economy Growth, Change In Energy

Mix

Indonesia: Asia’s Largest Thermal Coal Exporting Country

Consensus Forecast of Oil Prices

– Rising Local Coal Demand: Tend to Reduce Exports

Japan: Asia’s Third Largest Thermal Coal Importing Country After

China, India

– Upside on Coal Demand Despite Efforts to Promote LNG



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Michelle Leung is an analyst covering the Asia-

Pacific Coal and Basic Material sector for

Bloomberg Intelligence, a real-time, interactive

industry research platform available on the

Bloomberg Professional service at BI <GO>.

She has 10 years of experience as a sell-side

research analyst and prior to joining Bloomberg,

she covered basic materials and metals & mining at

BOCI and CIMB in Hong Kong. Michelle received

her BBA from University of Michigan, Ann Arbor.

Michelle is an Institutional Investor ranked basic

material analyst in Hong Kong.



Lu Wang is an industry analyst covering the Asia-

Pacific Oil and Gas sector for Bloomberg

Intelligence, a real-time, interactive industry

research platform available on the Bloomberg

Professional service at BI <GO>.

Prior to joining Bloomberg, Lu was Assistant Vice

President at Sanford C. Bernstein in Hong Kong,

where she was part of its Asia-Pacific oil and gas

industry team for four years. Lu is a Chartered

Financial Analyst. She received her BS in

Chemistry and MS in Business Administration from

Tsinghua University.

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Asia's Power Markets Mega-trends: Determined Reforms, Fuel Mix … · 2017-09-15 · China:...

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