Asian markets are experiencing tremendous growth and the demand for electricity is high. MC’s traditional markets here include Southeast Asia and Taiwan, where the company has been involved in numerous power plant and equipment transactions. MC’s strengths in these regions are its long history of doing business and the solid foundations that have been built up as a result. There is strong demand in Asia for diverse, environmentally-conscious methods of generating power – the challenges facing MC now are how best to leverage its strengths, provide a stable supply of affordable energy, and meet this demand. With these challenges in mind, the company set out to form alliances with the best partners possible.
In much the same way that MC teamed up with Tenaska in the US, a partnership was formed with Hong Kong’s CLP in Southeast Asia and Taiwan. The needs of each nation and region here are fairly diverse. For example, in Vietnam and Indonesia there is still significant demand for coal-fired thermal power plants; while other countries like Thailand have begun looking towards renewable energies. To meet these needs, MC has established several regionally-oriented projects, and is making steady progress to ensure they are sustainable over the long haul.
One particularly important issue in developing IPP businesses in Southeast Asia is cost competitiveness. The emerging economies that make up this region want affordable energy; and if MC isn’t prepared to provide it, there’s a good chance someone else will be. Recognizing this, MC forged an alliance with Hong Kong power company CLP.
For many years now, Southeast Asia has been a key market to Japanese manufacturers of heavy machinery. These companies have established strong, trusting relationships with customers in each country, and overall, Japanese enterprises continue to boast an unshakeable presence in the field of gas-turbine power generation. That said, the presence of rival Chinese manufacturers in hydro and coal-fired power generation cannot be ignored. Geographically, Southeast Asian nations are well-situated for coal imports from places like Indonesia and Australia. This keeps the cost of coal-fired power generation relatively low and attractive to these emerging economies, and accordingly the demand for this source is high. Unless alternative power projects can compete with coal, they will not be successful.
To keep power generation costs low, MC did consider employing the services of Chinese manufacturers; but to avoid risking delays in deliveries and machinery-related problems, MC ultimately decided to team up with CLP.
Knowing the prospects for growth were limited in the small Hong Kong market, CLP did not take long to begin working on overseas business ventures. By the time MC had joined forces with CLP, the latter had already been developing IPP projects in not only Southeast Asia and Taiwan, but China, Australia, India, and other areas. To MC the choice was clear.
It was CLP’s track record in China that interested MC the most. The engineers at CLP are experienced in part-purchases of machinery and equipment from Chinese manufacturers, and they have extensive know-how in managing technologies in the construction of power plants. Providing their expertise could be leveraged to build facilities incorporating Chinese-manufactured machinery, it would have a significant impact on lowering power generation costs.
MC is developing an independent power company in Southeast Asia. Mirroring our initiative in the US, where MC established a local subsidiary called DGC, we set up Diamond Generating Asia Limited (DGA) in 2009 to handle IPP businesses in Southeast Asia and Taiwan. There are currently nine employees from MC’s Tokyo headquarters on assignment at DGA. Three of these employees are posted in Hawaii, and one is based in Jakarta.
DGA is currently part of an alliance with CLP and a local firm that is building a highly-efficient, “supercritical” power plant in Vietnam. If the Electricity Regulatory Authority of Vietnam (ERAV) were to try building a power plant on its own, it would probably use “subcritical” boilers, technology from a previous generation. Plants that employ these older boilers are less efficient and produce higher carbon dioxide emissions. By utilizing the most advanced technologies, IPP companies have helped realize a cleaner form of coal-fired power generation.
DGA also jointly invested with CLP and a local company in the construction of a solar PV power plant in Thailand that qualifies as one of the world’s largest.
Thailand is the most affluent nation in Southeast Asia and prides itself on being a leader in this region. The Thai government should also be commended in establishing policy to support the use of renewable energies. Jumping on this opportunity, MC made a major commitment to the solar PV business in Thailand. To start, we worked with a local company to secure land in Lopburi Province, located 150 kilometers north of the Bangkok capital. We then signed a sales contract with the Electricity Generating Authority of Thailand (EGAT), and prepared a financing agreement to procure funds from the Asian Development Bank and Thai commercial banks. Construction of the Lopburi solar PV plant, which will have a maximum output of 73,000 kW, began in August, 2010, and is slated for completion sometime in 2012.
In 2002, as a joint initiative with Korea Electric Power Company and Kyushu Electric Power Company, MC built a combined-cycle thermal power plant utilizing cutting-edge technologies on the Philippines’ Luzon Island. The 1.2 million kW plant uses natural gas from an offshore gas field as fuel, and has helped minimize power shortages on the island. As the project utilizes locally-produced fuel, it is also making a considerable contribution to the Philippines economy.
The Ilijan Power Plant is situated on a desolate coastal area. Originally the region was completely devoid of human civilization, but when construction of the facility got underway, a village was set up nearby to accommodate the plant’s workers.
MC first got involved in this project six years before the construction was completed. The plant became operational in 2002, and thanks to the teamwork of the power companies, investment banks, and equipment makers involved, has to this day maintained a spotless record of accident-free power transmissions.
Much like the electricity they create, the folks responsible for powering societies work out of sight; yet despite their virtual anonymity, their value in providing us with stable and sustainable energy is unquestioned. One of the challenges met by Japan’s sogo shoshas is to fully understand the energy needs of local communities, and deliver uncompromised solutions and services.
Contents Produced in Cooperation with Nikkei Business Online Special / Cross Architects, Inc.