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Finance GreenWatch » 8.Eathquake & Nuclear accident » After Fukushima, Renewables Get Push In SE Asia(Nikkei)

After Fukushima, Renewables Get Push In SE Asia(Nikkei)

HANOI (Nikkei)–Southeast Asian countries are taking another look at renewable energy as they work to satisfy rising demand for electricity amid new concerns about nuclear power following the accident at the Fukushima Daiichi nuclear plant.

Using more renewable energy is expected to help reduce carbon dioxide emissions in the region, which gets most of its power from fossil fuels. But the renewable energy sector in Southeast Asia is still too underdeveloped to draw much investment, due in part to a cloudy profit picture.

Plagued by power shortages, Indonesia decided on its first nuclear plant recently. Construction of the 1 million kilowatt plant was to start in 2016 and go online three years later. But local opposition has put that time table in doubt and the accident at Tokyo Electric Power Co.’s (9501) Fukushima Daiichi plant has further slowed the effort.

Dahlan Iskan, CEO of PT PLN, said the state-run utility will now give priority to other forms of energy, such as geothermal, hydropower and natural gas. Indonesia is betting particularly on geothermal energy, with about 40 plants on the drawing board. PLN plans to break ground on a 660 million dollar, 220,000kw geothermal plant in Central Java Province.

Other countries in the region had also been eyeing nuclear plants. Malaysia planned two reactors, aiming for start-up in 2021. The Philippines was considering starting commercial operation of its nuclear power plant that was built in 1984.

But the accident in Fukushima has set off opposition to nuclear power in these countries.

The Vietnamese government, which aims to begin nuclear power generation in 2020, said it is going ahead with its plan. However, the feasibility study is likely to be delayed and may force the government to alter its plans.

The nuclear power delays, in turn, could worsen shortages in these countries. They are responding by encouraging private business to invest in renewable energy.

The future is green

Hanoi said in May that it will consider steps to promote construction of wind farms, including low-interest loans, cuts in land-use fees and preferential tax treatment.

Thailand offers higher feed-in tariffs for renewable power and preferential tax treatment on related investments. Japanese trading house Mitsubishi Corp. (8058) is looking to take advantage of these incentives and is starting construction on what will be one of the world’s largest solar power plants, together with independent power producers from Hong Kong and Thailand. The partners hope to have the 22 billion yen, 73,000kw plant up and running by the end of the year.

The Philippine government also plans to purchase electricity generated from renewable sources at guaranteed prices. That prompted Ayala Corp., the country’s biggest conglomerate, to enter the wind power business in March.

Singapore, for its part, aims to become a renewable energy hub for overseas firms looking for a foothold in Asia. Finland’s Neste Oil Oyj opened a biodiesel refinery in the city-state in March, while Norwegian solar equipment maker Renewable Energy Corp. set up a factory, and Vestas Wind Systems A/S of Denmark built an R&D facility.

Despite the flurry of activity, there is scope for an even bigger renewable energy push in the region. In Indonesia, for example, companies hoping to start geothermal power generation have to do their own prospecting for hot spots.

“I think it will be difficult to attract investment unless the government helps firms avoid risk by, for example, looking for geothermal steam on its own,” said an official with a Japanese trading company.

In Vietnam, the government keeps electricity prices low, which deters investment in power plants, even coal-fired ones that can generate electricity efficiently.

— Translated from an article by Nikkei staff writer Yoichi Iwamoto

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