Tag Archives: asian
Investment Insider: Where Next For Asian Growth?
Look to middle-class consumer spending for the next opportunities DAVID KUO SATURDAY 07 SEPTEMBER 2013 The flight of capital from Asian markets in recent months would appear to suggest the eastern growth story may have run its course. As soon as Ben Bernanke announced in May that the US Federal Reserve would start to consider winding back its money-easing activities, investors began withdrawing funds from Asian markets. That not only triggered sharp falls in some Asian currencies such as the Malaysian ringgit, the Indonesian rupiah and the Indian rupee, but also sparked a drop in Asian stock markets too. It would seem, on the face of it at least, that the Asian growth story might have been built on the sands of cheap money created through quantitative easing in developed economies. So when the cost of money is likely to rise, it is perhaps understandable to assume that the decade-long Asian growth story might be drawing to a close too. There is some tacit evidence to suggest that the market might be correct in its assumption. For instance, Thailand has slipped into recession and red flags have been raised over growth in India. The world’s 10th-largest economy once boasted double-digit growth but that has slowed to just 4.5 per cent between April and June, less than most economists had predicted. However, it is important to bear in mind that Asia is a vast continent that comprises 49 separate countries. Just as it would be wrong to tar the UK and Greece with the same economic brush, it would be just as inaccurate to put embattled Thailand and, say, successful Philippines into the same economic basket. The Philippines’ second-quarter growth of 7.5 per cent was faster than expected. Additionally, China’s growth is expected to exceed 7.5 per cent and Indonesia, which is the world’s fourth-largest country by population, could grow around 6 per cent this year. Indonesia, of course, has some economic problems to resolve. It is importing more than it exports; inflation jumped to almost 8 per cent in August; its current account is in the red and its currency has fallen sharply. That said, there are many developed economies that would gladly trade places with Indonesia right now. Meanwhile, much has been made of China’s economic slowdown. But let us not forget that China is the second-largest economy in the world. Consequently, a 7.5 per cent annual growth rate is hardly pedestrian. In fact, recent data appears to suggest that China’s objective to rebalance its economy from export-led to one that will be driven by consumers is showing early signs of success. In the early days of Asia’s growth, investors found opportunities in the commodities sector as China and other Asian economies consumed minerals and metals to develop their infrastructure. That is likely to continue but probably at a slower pace. The next crop of opportunities is likely to come from growing demand by middle-class consumers. According to Ernst & Young, two-thirds of the world’s middle class will reside in Asia-Pacific by 2030. These are likely to want the same things consumers in developed economies have long enjoyed. So look at household names that have exposure to the East. These could include Swedish retailers such as Hennes & Mauritz, Spain’s Inditex, which owns Zara and Bershka, and the UK’s upmarket retailer Burberry, which now generates 40 per cent of revenues from Asia Pacific. David Kuo is director of fool.co.uk Continue reading
Powering Ahead With Biomass
Biomass is often overlooked within the renewable energy sector, but is now emerging as a key player for many countries seeking cleaner ways to power their economy, Gosia Klimowicz reports. One emerging technology that could boost the biomass sector is a new, 40MW straw-fired localized biomass model by DP CleanTech and the Polish Energy Partners. Image:biomassenergy.gr With urbanisation accelerating across the world, the global demand for energy is set to double by 2035. Given the dwindling supply of fossil fuels, those countries which are abundant in renewable energy sources are finding themselves in a privileged position – particularly those rich with wind, hydro, or solar energy. However, from being an often overlooked energy resource, biomass may just become the game changer for some countries. In countries such as Poland, for example, biomass co-firing has emerged as one of the largest sources of renewable power. As part of their green energy initiatives, several local utilities – including PGE, Tauron and Enea – have upgraded their coal-fired installations to allow for burning biomass as well as coal. Under its new three-pack energy law, Poland has just concluded works on a new law on renewable energy sources, which covers electricity, gas and renewables. Legislators debated whether to increase the share of renewable energy in the power generation mix, which will drive reforms to the green certificates system, whilst at the same time limiting subsidies for biomass co-firing generators, as well as other renewables such as wind or photovoltaics. Green certificates – tradeable documents proving that certain electricity is generated using renewable energy sources – are part of Poland’s scheme to support the renewable energy market. Green certificate trading enables the industry players to generate additional profit from the production of renewable energy. Changes to this system would help to avoid last year’s market crash where prices plunged almost 70 per cent, caused by the oversupply of green certificates. This reform could also help lift the share of the energy mix using renewable sources to 15 per cent in 2020 to meet the European Union (EU) targets. This target has been scaled back from the initial target of 20 per cent, which was an ambitious target for a country heavily dependent on coal. “The new law seeks to adjust Poland’s renewables support mechanism to the changing conditions of the renewable energy market,” Piotr Czopek, renewable energy specialist at the Polish Ministry of Economy told Eco-Business. Poland presented its draft bill on renewable energy support in mid-August. The main legislation is expected to come into force by the end of the year, or at the latest by June next year. According to the Ministry, the current green certificates framework – which provides the same level of support for all technologies using alternative energy sources – has been one of the causes of excessive development of technologies which offer very little innovation. Specifically, this equal treatment of different technologies has led to a rapid growth of biomass co-firing in coal power plants. Whilst, 50 per cent of current Polish electricity from renewable energies is produced from biomass, almost a third comes from co-firing biomass in coal-fired power plants. However, this method of generating power has come under criticism by environmentalists who say that most co-firing coal power plants do not use the emerging waste heat – about 75 per cent of the electricity from biomass is produced without using it. Waste heat is a by-product of energy conversion processes, mostly discarded in cooling towers, ponds, the atmosphere, or discharged into the sewer. Recovering value from waste heat can be another major opportunity to lower energy costs, increase the productivity, as well as reduce greenhouse gas emissions. Furthermore, Polish bioenergy experts have noted that Poland has been importing a huge amount of biomass in the past five years, when there is a vast amount of idle land, and waste agricultural streams which could be used for growing country’s own feedstock. They also state that the activities of large energy companies, which use biomass in order to receive compensation in the form of green certificates, have contributed to a considerable wastage of this resource. Nearly 30 per cent of the available biomass from agricultural waste weighing millions of tonnes is used for co firing, which is a highly inefficient use of the fuel. With more efficient technology and feedstock distribution, it is estimated that around 170,000 households could be heated with the same amount of biomass. Benefits and challenges of biomass co-firing Co-firing can be a cost-effective and relatively swift means of adding a renewable energy component, converting biomass to electricity by adding biomass as a partial substitute fuel in high-efficiency coal boilers. “ Provided the biomass is sourced sustainably, co-firing reduces emissions of carbon dioxide. Biomass also contains significantly less sulfur than most coal. This means that co-firing will reduce emissions of sulfurous gases such as sulfur dioxide that will then reduce acid rain.” Krzysztof Dragon, DP CleanTech “It incorporates environmental, socio-economic and strategy advantages”, says Krzysztof Dragon, vice president of clean energy solutions provider DP CleanTech. “For example, provided the biomass is sourced sustainably, co-firing reduces emissions of carbon dioxide, a greenhouse gas that can contribute to the global warming effect. Biomass also contains significantly less sulfur than most coal. This means that co-firing will reduce emissions of sulfurous gases such as sulfur dioxide that will then reduce acid rain.” Co-firing facilities are also less sensitive to seasonality in biomass fuel production as well as biomass availability and price. Power stations allows for greater flexibility in terms of the origin of the fuels, (for example from forestry, agriculture or municipal waste), as well as the ratio of each biomass fuel in the power mix. This is because it does not affect the fossil fuel load, which can still operate at 100 per cent. For many European countries, the promotion of co-firing is a key initial step for the development of sustainable biomass markets as well as for the creation of expertise on biomass handling and combustion. In Poland, biomass projects will continue to be supported through 2017, but the increasing number of projects has led to a large price hike for popular biomass feedstocks. Acting on such environmental and economic concerns, the government is cutting subsidies for biomass co-firing and the issuance of green certificates for co-incinerators. In response, the industry has come up with innovations that could boost the country’s biomass sector – without subsidies. One such solution is a new, localized biomass model conceptualized by DP CleanTech and the Polish Energy Partners. Currently under development, this optimized 30MW and 40MW straw-fired model will be more sustainable and energy-efficient. It will process most types of organic, carbon-containing feedstock without causing air pollution, greenhouse gases (GHG) and environmental harm. “It allows the co-firing of agricultural and forestry biomass, where agricultural waste can make up to 100 per cent of the power mix; and wood chips can constitute up to 80 per cent”, explained Piotr Maciołek, Industrial Energy Outsourcing Director, Polish Energy Partners. “This gives us a lot of flexibility in terms of location and availability of resources. In the future, we would like to build more power plants based on this model.” “ The new technology will significantly reduce the fuel consumption of biomass power plants, which leads to increased energy savings, improved cash flow and better return on investment. The project also features a special boiler design that will also minimize nitrogen oxide emissions, and an innovative feeding system that will handle both square and round bales. The new technology will significantly reduce the fuel consumption of biomass power plants, which leads to increased energy savings, improved cash flow and better return on investment. During the next two years, DP CleanTech will exclusively engineer, manufacture and commission the combustion boiler, fuel feeding and air system. The complete straw-fired power plant will be delivered to PEP in Winsko, in South West Poland. “The design is done, the location confirmed and we have all the approvals for construction. We are now waiting for the government’s decision regarding the new renewables bill. Without it, we won’t know all the economic parameters that we need in order proceed with works on the power plant,” said Mr Maciołek. Asia’s growing potential There is also significant potential for this biomass model in Asia, say private sector experts and academics. “ There is a lot of interest in biomass around the region but the main challenge is to make the business model work properly Dr Tong Yen Wah, National University of Singapore South East Asia has a huge need for distributed power generation and is also home to one third of the world’s usable biomass supply. However many countries still generate power through coal and expensive diesel fuel. Despite having vast waste streams such as rice husk, palm oil waste and wood chips, as well as strong government incentives for dedicated biomass plants around the 10MW range, they lack the infrastructure and resources to efficiently collect and transport biomass fuel. Perhaps by encouraging biomass co-firing as a cost effective first step for governments and utilities to meet renewables targets, the biomass industry will begin to better utilize waste streams and build a reliable fuel collection framework. With a more efficient fuel collection framework, the risk of disruption of fuel availability for small localized biomass power plants around the 10MW range is significantly reduced. Sales Manager at DP CleanTech, Jerome Le-Borgne said: “The incentives for dedicated 10MW plants in countries like Thailand and Philippines are very attractive and allow for fantastic profitability, because it is seen as a great solution for managing waste and providing distributed base load power to rural communities. However the number one challenge we are faced with is ‘bankability’ resulting from unpredictable fuel supplies”. According to Dr Tong Yen Wah, Assistant Professior at the Department of Chemical and Biomolecular Engineering, National University of Singapore (NUS), while biomass co-firing is the dominating technology in countries such as Korea and Japan, it is less developed in other Asian countries such as Indonesia and Malaysia, which are rich in biomass feedstock. Dr Tong heads a few teams of researchers at NUS who are looking at different models to convert and transport biomass. “The models that we are currently exploring are also strongly focused on the logistics: either collecting the biomass or implementing a transportable technology to convert biomass into energy. We need to find a cost-efficient solution to the many logistical issues.” “There is a lot of interest in biomass around the region but the main challenge is to make the business model work properly,” he said. Clearly, the opportunities are there for biomass to become a much bigger contributor to the renewable energy sector in many countries, but its development will depend on several factors. Building certainty into fuel pricing and fuel supplies can be realised through a combination of government support, market reform, and innovation in logistics processes. However, the efficiency and flexibility of the technology to move along the development curve from co firing to stand alone biomass power plants is an equally critical factor in the development of the industry as a whole. Continue reading
Property Deals Surge In Peripheral EU Countries
http://www.ft.com/cms/s/0/1066d5e2-1301-11e3-a05e-00144feabdc0.html#ixzz2dv1eMdXb September 1, 2013 Property deals surge in peripheral EU countries By Ed Hammond, Property Correspondent The appetite for commercial real estate in Europe’s most beleaguered countries has soared during the past three months, underlining the growing confidence among global investors that the continent’s property crisis is nearing an end. The value of property transactions in Europe’s peripheral economies – Portugal, Italy, Ireland, Greece and Spain – hit €2.3bn during the quarter to July, an increase of 60 per cent on the previous three months, according to research for Cushman & Wakefield, the property consultancy. The surge in activity is almost entirely the product of a return of international investment into property markets that, for the past six years, have been considered too risky at almost any price. Non-domestic purchases of offices and retail property in Spain, for instance, rose by almost 10-fold from the first three months of the year to €642m. In Italy, the quarter-on-quarter increase was a more modest 190 per cent. “Club Med was out of bounds for most investors just a few months ago,” said David Hutchings, head of research in Europe for Cushman & Wakefield. “But it has taken only a slight improvement in risk tolerances for the bigger markets of Spain and Italy, in particular, to start gaining attention again.” And it is not just the private equity investors – typically the first movers in Europe’s distressed property markets – who have started to sniff out deals in the peripheral economies. Large, traditionally low risk investment groups, such as insurers and pension funds, are on the hunt for fixed assets too. Axa Real Estate, the property arm of the French insurer, has completed deals in both Italy and Spain during the second quarter of the year. “Investors, including us, are starting to move slowly up the risk curve again and are seeing those markets open up,” said Anne Kavanagh, global head of asset management and transactions at Axa Real Estate. “But there will not be a rush into the peripheral countries; it was, after all, only a year ago that we were talking about a possible break up of the single currency.” The burgeoning activity puts the cluster of countries, often unflatteringly referred to as “the PIIGS”, at odds with the wider trend in Europe’s property market, where demand, having risen steadily for two years, ebbed during the past three months. The large cities of the continent, London in particular, have become saturated with competition from US, Asian and Middle Eastern property buyers, driving down yields and forcing many European investors to eek out returns in regional or higher risk submarkets. Continue reading
