Is Renewable Energy The Answer For Southeast Asia?

Wealth & Giving

November 26, 2017 | BY Hong Xinyi

For developing economies, renewable energy could launch a great leap forward, Sunseap Group’s Frank Phuan tells Hong Xinyi.

In the Sunseap Group office, solar panels are hung on the walls like art—after all, these were the foundational building blocks of the company, which began in the 1980s as a manufacturer of solar panels for German firms. Today, Sunseap bills itself as Singapore’s leading integrated clean energy solutions provider, and is looking to make its mark in the region as well.

In August, it secured investment from Shell’s corporate venture arm, with intent for Sunseap and Shell to collaborate on solar projects in the Asia-Pacific. Sunseap began venturing into regional markets four years ago, and director Frank Phuan points to the 10MWp solar farm in Cambodia’s Bavet City (the country’s first-ever solar farm) as an example of how renewable energy could have a transformative effect on the region.

“Bavet experiences power outages quite frequently, especially during drought season, because the area is heavily powered by hydroelectric power. When we set up a solar farm, it could power thousands of homes. People would come up and ask our team when the farm would be completed, and rush us, because they knew it would change their lives,” explains Phuan. A reliable power source means light for classrooms, electricity for businesses, and all the potential boosts in productivity and innovation that these imply. With renewable energy slated to make up nearly two-thirds of the Asia-Pacific’s growth in new power generation capacity over the next 25 years, it is certain that many more lives are going to see a new illumination.

Your father started Sunseap Group to manufacture solar panels. How has the business evolved?
Frank Phuan (FP)
In the 1980s, ’90s and 2000s, and even as recently as five years ago, solar energy was always regarded more as an option for the future. In 2010, we transformed the business by moving from selling solar energy systems to running it as a service. This means we sell the energy that our systems produce; we no longer sell the systems. Customers pay for the power they use, which is what they’re used to doing, and this has increased the adoption rate.

We’ve been able to make this transition by focusing on research and development, system integration and data analytics. Anybody can buy and install solar panels. The question is how to optimise yield from these systems, and we’ve found processes to do that. We’ve very strong monitoring and maintenance teams, equipment and software so that we can manage our systems efficiently. Solar generation is just one aspect of the business. To value add, we’ve also come up with parallel businesses such as energy storage and energy‑efficient equipment. 

"Every megawatt of power that we install in Singapore is equivalent to planting 30,000 trees. So far, we have installed 160MW in Singapore alone" 

Sunseap opened its first overseas solar farm in Malaysia four years ago and is growing its regional presence. What have you learned from going abroad?
FP 
Singapore as a market is limited by area and population size, so it’s important to source for bigger markets and bring solar energy as a service to people in the region. Electricity is always a regulated market, and our strategy is to look for local joint venture partners so that we can learn how to work with different agencies and regulations.

Singapore has always been regarded as a country that’s honest and efficient, and we bring those attributes with us into a new market. When we say we’ll do something, we’ll get it done. Being recognised as that kind of company gives us an edge. In this region, many governments subsidise traditional forms of energy, to reduce the day-to-day expenses of the people. But in Singapore, the government has always taken the position that no energy is subsidised, that prices have to be market-driven in order for the industry to be sustainable. In this environment, propelling the solar energy sector is an uphill task, but we’ve been able to do it without grants and incentives by making sure our solar systems are very cost-competitive.

When we go into the region, we’re used to operating without subsidies, so we say we don’t need any to make our business viable. That’s a big statement. In Europe, Australia and Malaysia, the government subsidies are tapering off, and some day the tap will be turned off completely. We’re trying to be ahead of the curve, and many companies are now looking at our business model.

How much room for growth is there in Southeast Asia for solar energy?
FP 
For urbanised areas, solar panels on rooftops are just the beginning. Building facades, fences, roadways and water bodies can all be used to capture solar energy. I believe solar energy will become commonplace. It’s all about the creative use of spaces to integrate solar technology.

For developing areas, solar energy will unlock a lot of potential. Traditionally, an extensive grid network is built to distribute power from a centralised oil‑fired or gas-fired power plant to many parts of a country, which means spending millions, even billions, on infrastructure. Going solar means skipping a lot of this process, and jumping straight into a model where you use microgrids, solar panels and batteries. You don’t have to lay thousands of kilometres of cables to power one location, which means you skip years of development. Renewable energy has a big role to play in allowing developing countries to catch up. This is already happening in Southeast Asia, especially in places where there’s explosive growth. They can’t wait five to 10 years for a power station to be built, and a solar farm can be built in six months.

The Singapore government plays an important role as well. A solar generation contract tends to be a 20-to 25-year project, which means we’re going to work with these local governments for decades. The Singapore government acts as a figurehead that can lend support to Singapore companies like ours, and also provide other auxiliary services. In Southeast Asia, Singapore stands a very good chance of increasing our level of influence through such long-term projects. I encourage more local companies to go out there—it’s a good way to get Singaporeans exposed to developing countries, and help them level up.

What do you think the future of renewable energy will look like in Singapore?
FP 
In the future, I believe that we’ll be able to produce so much renewable energy that we’ll be exporting the excess to other countries. With the technology that we have today, and the untapped areas for solar panels such as rooftops and reservoirs, it’s entirely possible. But there must also be political will.

The year 2018 will be an important milestone, because that’s when Singapore will have a fully liberalised electricity market. That means consumers will be able to choose whether they want to buy power from a conventional electricity retailer, or buy clean energy. We’ll be one of the choices. We’re already supplying Apple’s regional logistics hub here with 100 per cent clean energy, and if we can do that, we can definitely supply HDB households.

So next year, we’ll move into the business-to-consumer area, and that’ll see us working with partners such as banks and telcos to roll out joint promotion packages so we can reach consumers through many touchpoints. Hopefully, the response will be good. There needs to be some level of education. When they’re given a choice next year, and the price of clean solar energy is competitive, what choice will they make? We believe they’ll choose us, because why not?

The US announced this year that it plans to withdraw from the 2015 Paris Agreement on climate change. How will this impact the renewable energy sector?
FP 
We shouldn’t look at the US only as what it is today, we should also look at what it’s done in the past. Without the previous US administration, the Paris Agreement would not have been possible in the first place. It played a big role in pulling together everyone to ratify that agreement. American companies such as Apple and Google are also part of the RE100 group of businesses committed to using renewable energy. Many countries and companies are now trying doubly hard to fulfil the terms of the agreement, so actually the recent US decision has helped to pull everyone else together.

In terms of dealing with climate change, I think we’re moving too slowly, but that doesn’t mean we’re without hope. As the situation becomes more dire, I’m sure the rate of adoption for renewable energy will become more important. Being in this industry has a big feel-good factor. Every megawatt of power that we install in Singapore is equivalent to planting 30,000 trees, in terms of the amount of carbon dioxide we remove from the environment. So far, we have installed 160MW in Singapore, so that’s a lot of trees. I like that image, because we want to be associated with the attributes of trees—strong, enduring and green.

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