2020 Global Energy Forum
Delivering Energy Access and Meeting Demand in South and Southeast Asia
Mohamed Al Ramahi,
Chief Executive Officer,
The Hon. Dr. Tawfiq-e Elahi Chowdhury,
Energy Adviser to the Honorable Prime Minister,
People’s Republic of Bangladesh
Senior Vice President,
President and CEO,
Ambassador Paula Dobriansky,
Senior Fellow, Future of Diplomacy Project, Belfer Center for Science and International Affairs, Harvard Kennedy School of Government; Former Under Secretary of State for Global Affairs
Location: Abu Dhabi, United Arab Emirates
Time: 4:00 p.m. Local
Date: Saturday, January 11, 2020
ANNOUNCER: Ladies and gentlemen, please welcome to the stage senior fellow, Belfer Center for Science and International Affairs, Harvard Kennedy School of Government, former Undersecretary of State for Global Affairs Ambassador Paula Dobriansky. (Applause.)
PAULA DOBRIANSKY: Thank you.
Good afternoon to all of you. We’re going to have really an exciting panel. And as you can see they’re setting up the chairs, so let me put it in context. First of all, the title of the panel is “Delivering Energy Access and Meeting Demand in South and Southeast Asia.” This is one of the most exciting areas really to be focusing on, and I have to commend the Atlantic Council for doing this. Why? Because it’s a dynamic region. It’s one of unprecedented economic growth and also opportunity.
And as we heard earlier today when Fatih Birol was giving his presentation, we heard some datapoints that are very significant for this region. First, the developing economies in Asia account for over a half of global demand in natural gas. But he also pointed out that coal reigns in Asia. So one of the big challenges which we’re going to be discussing, and opportunities: How do you reconcile all of this – the growth in population, the growth in energy demand, and also facing environmental and energy security challenges?
So I hope our panelists will be coming out at this time so we can introduce them because they will have a lot to say about their respective experiences and related to the region in particular, the opportunities and the challenges. Let me pause for a minute and hopefully they will be coming out. Great. Please. (Laughs, applause.) Please, please.
So we do have, indeed, a very distinguished panel, and let me introduce them in the order in which I’m going to be referring to them and posing a number of questions. And then, also, you should be thinking of what your questions are or comments if you hear something you want to challenge.
First, here on the end, welcome. We have Mohamed Al Rahami – Ramahi, excuse me, CEO of Masdar.
Then we have The Honorable Dr. Tawfiq-e Elahi Chowdhury. I’m not going to refer to you by that each time.
TAWFIQ-E ELAHI CHOWDHURY: No problem. (Laughter.)
MS. DOBRIANSKY: But he’s well known to all of you, as is the CEO of Masdar. And you have been an advisor and are an advisor to the prime minister of Bangladesh.
Then we have Alisa Newman-Hood, who is senior vice president with Excelerate Energy.
And then we have Paddy Padmanathan, who’s president and CEO of ACWA Power.
So welcome to all of you. Mohamed, if I may begin with you – and forgive the informality, if I may call you Mohamed – Masdar has done really a lot of work and investment in this region. And my question to you is, first, give us a little bit of flavor of what things are like in terms of the trends. When you began, was it easy, not so easy? You know, in working in the region, what are the trends that you’ve seen when you began and then now for you and for Masdar?
MOHAMED AL RAMAHI: Well, I mean, obviously, this is an exciting region, extremely exciting region. It’s a growth region for Masdar and for renewable energy in particular.
So in the past let’s say decade, what has happened in the region is outstanding: great penetration of renewable energy driven by mainly China and India, and then followed by Southeast Asia. And today we see Central Asia following the trend of growth in terms of renewable energy penetration. On top of that, we have seen drastic decrease in the cost of renewable energy technology, particularly solar and wind, approximately 80 percent reduction in the cost when it comes to solar and 50 percent when it comes to onshore wind.
So the region is great. It has a lot of opportunity. And with the reduction of the cost of renewable energy, we see an acceleration into more deployment.
Now, as Masdar we are active, obviously, in India through our partnership with our Munjal family and the IFC, a platform called Hero Future Energy. And through Hero Future Energy we are developing projects in Bangladesh, Vietnam, and Thailand. On top of that, we are participating directly into certain activities in Southeast Asia, particularly in Indonesia. So we are currently finalizing the largest floating PV farm in Cirata, in Java, in Indonesia, and it will be most probably the largest floating PV farm in that region. So our activities there are – we are very happy with the ongoing activities there and we see even further growth in the whole region starting from India to Southeast Asia.
MS. DOBRIANSKY: Well, let’s focus on what your growth strategy is. You’ve mentioned that now you’re in a number of areas. I’m very struck by the fact of your work in India in particular because that’s a very sizeable market, but it’s also one in which there are a great number of challenges associated with it. Tell us a little bit about that, because you are – you have a stake in Hero Future Energies, which is one of India’s largest renewable companies. And it’s also considering, as I understand it, projects in neighboring countries. Share with us a little bit about that.
MR. AL RAMAHI: Indeed. Obviously, the past 10 years India has grown to be a major player in renewable energy, and this is driven through the government’s policy and the push towards diversification of the energy mix. India and the rest of Asia was heavily dependent either on coal, fossil fuel, or hydro. Renewable energy has been the name of the game over the past 10 years. India, through its policy, has driven a lot of capital, like I’ve said.
Hero Future Energy is a very active company within India. It started in India. We have around two gigawatt(s) of operational renewable energy projects within India. And obviously, if you look at India, in the past it was a bit stretched around different states without a clear policy at the center. And the real drive for more deployment of renewable energy was the fact when New Delhi decided to push these reverse auction by providing developers and investors like us with the required guarantees and clear transparency on the investment within the country. And that really fueled and fast-tracked the – and attracted foreign direct investment into the country in a way that I have never seen before.
So with that in mind, India will continue growing and will continue to be a key player, because if we look at India we still see that renewable energy in terms of percentage is not that much with the total energy mix. So we’ll see – we’ll see continuous growth in renewable energy. We will see that the government will continue promoting these projects. And through our platform, Hero, we will continue playing an important role within that country.
Now, the issues that we see – and this is across, not only in India – the bankability has been always the main drive for foreign direct investors like us. I mean, obviously, we are in Abu Dhabi, but we do look at ourself as foreign investors when we go outside Abu Dhabi. So within these countries, bankability of the agreements is key. On top of that, the connectivity and the connections through the ongoing whatever infrastructure these countries have. And thirdly, but not least, the availability of land is crucial in these regions.
And that’s why, for example, in Indonesia, when we decided to develop a project in Indonesia – and Indonesia is a huge country – we opted to choose a water reservoir, OK, because land is an issue. Even though it’s a huge country, land is still an issue. Bangladesh, land is an issue, even though it’s a huge country. So this is one of the challenges that we face and we’ll continue facing that.
MS. DOBRIANSKY: All right. Great. Thank you for that.
Dr. Chowdhury, you are well known as an architect and someone who has really provided an energy vision for Bangladesh. So give us a feel for where Bangladesh was, where it is now, and where you see it going. Let’s start with that context.
MR. CHOWDHURY: Well, thank you very much.
First, to understand Bangladesh, it has 160 million people in 150,000 square kilometers. So I was working out that would mean UAE to have 10 times more population. So it’s very cramped, but the economy is growing at 8 percent per annum. And we set our goals to start with that we should give electricity to ordinary folks in the shortest possible time. So we covered in 10 years’ time half of the population with access to electricity, and now we are almost done with it.
But the choice for us has been evolving. We want to be a middle-income country by the end of the decade and a developed country by 2040. So we have focused on how much energy we need, but with an eye on efficiency, conservation, and responsibility. We have set our targets and some fuel mix, but there are also – you know, it’s changing over time. We started only with gas. Then we introduced diesel and furnace oil. Then we increased our gas input by importing LNG. You know, Alisa is sitting next to me. And then, you know, we’re adding nuclear power plant to our mix.
But let me repeat, you know, a country with such uniqueness, you know, you can’t have the normal solution. You mentioned land is very scarce. It is so scarce that, you know, you don’t have enough place to – I mentioned 100 million population in UAE. But then you have to be creative. Like, we are using what is called net metering. We are asking people to use their roof and then they could tie up to the grid, they could use the electricity themselves and then when they have the excess, you know, they could put it up in the grid. So net metering is a solution.
In remote areas where it’s expensive to take the grid, we are setting up the mini-grid which are solar, basically. But they are mini-grid which can meet all the – which provide all the necessary services to the customers. So in this way we are – you know, we are evolving.
But it is possible. You know, going green is not a binary choice. You know, if you are efficient, if you use less to produce more, it’s a degree of greenery that you’re achieving. And so the insistence on renewable energy to be an anchor is a misplaced argument. It can add on depending on what is the endowment of a country, what are the locales of that country between seasons, during the day. That would mean how much is available in – as solar energy. I’ve been trying to find out that you had two cents – less than two cents a kilowatt-hour here. We have been struggling to get even 10 cents. So you know, but there’s a wide range of choice that is involved for us.
And I was, you know – in the morning, I mean, someone mentioned about, you know, Elsemal (ph), the model that’s – (inaudible). That may turn out to be very useful for us because you can set them up in small volumes in places, and that may help, you know.
MS. DOBRIANSKY: Well, let me – let me ask you. I understand that the government has given consideration and maybe even has established what are called industrial zones in Bangladesh. And a question for you is, in these industrial zones, which place a premium on diversified energy sources, is this a model that you think is useful in the region?
MR. CHOWDHURY: Yes, I think so. You know, we are setting up a hundred special economic zones where industries are clustered. So it’s kind of mimicking what happened in Silicon Valley, that you have synergy amongst industries and it is economic to have them together. So yes.
And one other point I need to mention, that because we support it and India support it and it’s contiguous we are trading – importing electricity from India. We are thinking of cooperating with Nepal and Bhutan and to accept their hydropower. So you know, there is a whole lot of economies of scale that we can achieve by cooperating amongst our countries.
MS. DOBRIANSKY: Thank you very much.
Alisa, I want to ask you a follow on. We will come to Bangladesh. But your company has certainly operated in this region, and I think you’re in an excellent position to give us all a feel about the fact that this is one of the least-integrated regions globally, and certainly in terms of energy cooperation. And it’s an area that’s important, obviously, for it to even advance further. Give us your thoughts on that – on that point. How can the region cooperate more fully and effectively and integratively?
MS. NEWMAN-HOOD: OK. Thank you. I think probably the short to near term I won’t paint such a rosy picture. I think you do have power sharing – solar-powered electricity from India and hydroelectric-powered electricity coming from – being exported from Nepal. But at least, again, in the short to near term we really do see some serious political and economic challenges, again, in the short to near term to further integration in the region, and I’ll focus on the economic because I think that’s – those are probably the most important ones.
As you look around different regions of the world, the ones that have achieved the greatest and the best integration are regions where you have countries that are both hydrocarbons rich and hydrocarbons poor. Unfortunately, the challenge for South Asia is that it has countries that are not gas rich, let alone oil rich, and, certainly, not relative to their large and growing and modernizing populations.
So those obvious linkages within a region between net exporters, or exporters and importers, doesn’t exist in South Asia the way it exists in a number of other regions in the world. So I think that’s one challenge.
You have, for example, Myanmar, which has historically been or is a significant gas producer but that is now diverting gas from exports to meet its own domestic needs. So that’s taking gas in the region away from exports. Another idea or concept that’s been mooted and I guess is potentially possible is India, obviously, is a huge LNG exporter, the fourth largest in the world, will soon become even greater, probably – did I say exporter? Sorry. Importer of – sorry, to correct myself – an importer of LNG.
So there would seem to be economies of scale of importing LNG into India and then sending regassified LNG through pipelines to neighboring countries. There are a few challenges or problems with that. One is that most of India’s LNG import terminals are being built on the west and south coast where – coasts whereas its gas-hungry neighbors sit to the east. That’s one challenge.
The other is that a number of India’s neighbors – Bangladesh, Pakistan – have proved themselves perfectly capable of importing LNG directly from the global marketplace. They don’t need to go through a neighbor. And, of course, if they were to go through a neighbor that could present all kinds of sort of security of supply risks. You could imagine a demand surge in India where LNG or other energy sources were diverted to the – to the domestic market, leaving neighbors in a difficult position. So we definitely see, again, in the short and the near term some challenges to integration.
If I can spend just another minute with some – maybe ending on a more optimistic note – or 30 seconds – hope for the future, we actually do see Bangladesh as a potential, again, in the long term or longer term net exporter to its neighbors.
There have been, I think, promising discoveries in the Bhola region. The leadership of Bangladesh has had the foresight to set – establish maritime boundaries with India and Myanmar, which any E&P company knows, thereby takes a big political risk off the table, knowing that there are stable maritime boundaries with neighbors that allows offshore oil and gas exploration to go on.
And then, finally, LNG import into Bangladesh has catalyzed the building of gas-fired plants and a pipeline network that makes it easier to – and more commercially viable to develop your own domestic resources and then, again, in the future allows better linkages with Bangladesh as a potential gas exporter to neighbors.
MS. DOBRIANSKY: Tell us about your company, Excelerate, because you have these two big LNG terminals in Bangladesh. What innovative solutions are you looking at?
MS. NEWMAN-HOOD: OK. Well, I think I’ll focus, yeah, first, on the very large projects that we have.
So Excelerate – we are a Houston-based energy company with a fleet of FSRUs. We develop LNG import terminals around the world in cooperation with the government of Bangladesh and also PetroBangla, the national oil company. We’ve commissioned Bangladesh’s first and second – and developed Bangladesh’s first and second LNG import terminals in Moheshkhali, then the Summit LNG terminal as well just in – this is since 2018. These are quite new projects that, again, have allowed LNG import for the first time. We think this allows – Bangladesh is extremely well poised now to take advantage of very low LNG prices. Bangladesh’s demand is countercyclical, meaning that its peak demand season is in the summer when LNG prices worldwide are historically lower. So we’ve been, yeah, very pleased to be a partner of this government.
One sort of interesting fact to throw in the mix is that the obligation on the – there’s an obligation written into the constitution of Bangladesh, your founding document, for the government to provide electricity to rural areas. Again, that’s in the highest sort of law of the land. And some of the innovative solutions that we’re thinking about for the future involve LNG trucking to modular power plants that would allow us to sort of capitalize on the large projects that we have in Bangladesh to provide power to modular power plants in currently underserved regions.
MS. DOBRIANSKY: Well, also an interesting factoid here is that natural gas accounts for nearly two-thirds of Bangladesh’s primary power fuel, which is very striking, and we saw the trends earlier this morning when Fatih Birol had put them on the screen, more broadly for the region. But it’s interesting about where Bangladesh is at this time.
Paddy, I came down here. I’m going to go back over there. But I wanted to get you to talk about particularly your company, ACWA, because an interesting dimension that your company has really focused on – they do desalinization but my question is not going to be about desalinization but it is going to be about water and about the issue of the nexus of water and energy.
Put that a little bit into context and in the – in terms of the specific kinds of projects that ACWA is leading on.
MR. PADMANATHAN: Thank you. So founded in the Kingdom of Saudi Arabia, a water-stressed country and from get-go focused in power generation, it was pretty logical that we twinned power generation with desalinated water production because – well, pretty much any water supply automatically is energy intensive at a different level. But desalination – taking seawater and taking the salt out – is probably the most energy-intensive process.
So from day one we started to get involved in co-generation – that is, taking fuel, producing heat to run a turbine to produce power but at the same time then efficiently taking that excess or the waste heat out, reheating and producing desalinated water with it. So the initial, sort of way back 15 years ago when energy was either really cheap or was perceived to be cheap, which was probably the correct thing at the time, this kind of sounded like the most efficient thing to do.
We have moved on enormously, so in the meantime we have grown. We now are involved in desalination in many countries and we’ve ended up becoming the largest desalinator in the world, and the technology has moved on. So nowadays what is the most competitive way of delivering reliable potable water by desalinating either seawater or even taking wastewater and taking the impurities out is by a membrane – pressurizing and creating an osmotic pressure membrane process, which is still very energy intensive but it is a hell of a lot less energy intensive than just boil a kettle – brute force and ignorance, as I used to call it – boil a kettle, get a vapor, and hey, presto, you’ve got nice clean water.
So just to – as a point of reference, technology has moved on phenomenally in the last 15 years, particularly in the last five years. So we are now able to produce water by taking seawater – so if we take wastewater it’ll be even less, but take seawater and take salt out, we are able to desalinate at fifty cents per cubic meter. So we take it out and at the point of distribution when we discharge it on a purely commercial basis we are able to do it at fifty cents per cubic meter. Now, of course, that’s infinitely cheaper than your Pellegrino or Evian or whatever. But it is still a hell of a lot more expensive than just taking water from the river and purifying it.
Having said that, as a point of reference that same process just five years ago would have delivered $1.50 per cubic meter of water. So just in five years energy intensity has come down. Technology has improved so phenomenally. We reuse membranes. We recycle membranes much slower. So many other innovations that has gone in. And also the cost of energy has come down. So the combination of all of that has made that process much, much more cost effective. It all turns out to be good news because, OK, so we are in an energy – in a water-constrained environment, but it turns out pretty much the whole world is.
So even in Southeast Asia this is not such a significant problem yet but it is starting to be. So even in a country like Indonesia, where we are operating now, we stepped in to participate in the energy sector. But, interesting enough, we’re getting dragged in more and more into conversations about water supply for all the islands.
So you would think, OK, there’s a hell of a lot of rain, surrounded by water, so what’s the problem. Well, no, because the islands – the topography is what it is. It doesn’t – you know, they can’t conserve the rainwater and at these type of costs now desalination becomes probably a more cost-competitive solution. So –
MS. DOBRIANSKY: Let me ask you about your projects in Vietnam because it’s rather interesting. On one hand, you have the photovoltaic project and the – you know, a renewable energy space, and at the same time, if I may, you also have a coal-fired power plant that you’re also launching. So how do you account for the two in the mix? And this has been a core question actually that came in earlier today about how does one mix these two.
MR. PADMANATHAN: I’m so glad that I’m here at the Atlantic Council and not at IRENA across the – across the road. (Laughter.) But no – OK, look. OK, so first of all, get-go, we are in the business of delivering reliable electricity and desalinated water so we are technology neutral, fuel agnostic.
However, as we go forward, the fact of the matter is so we are – so in Vietnam we are already dispatching photovoltaic energy into the system so that that plant is built. It’s operating. It’s dispatching. We are about to go into construction on a fairly large coal-fired power plant.
I personally think that that probably will be the last coal-fired power plant that we are likely to be involved in, not because we are not going to go forward and invest necessarily if a country requires it, but also – but more so because financing coal-fired power plants are going to become pretty impossible.
As it is today, there are pretty much only three countries that would make significant sums of money available – China, Japan, and Korea. Korea is – Japan will stop first now, this year, almost certain. Korea probably latter part of this year. I think China will follow suit pretty soon thereafter. Already China is becoming – we are very heavily involved in many partner issues with China on energy projects in several countries. China is becoming very, very, very selective in how they finance projects and what kind of projects they finance. So coal-fired, I think we’re coming to an end of it.
But as far as Vietnam is concerned, the fact of the matter is they don’t have too many other alternatives. Renewable energy is not so easy in Vietnam. Not only is land a problem but also the climate. You know, so you would think oh, well, it’s a – it’s a hot country, et cetera. Well, it’s a heavily rainy country, too. So and the wind resources are not reliable, not consistent, so – and they don’t have geotechnical – sorry, geothermal like Indonesia has.
So they have a – and they don’t have the topography for hydro. So they are stuck, and I think as we go by they will start to look at possibly more gas, which is what they’re starting to look at, and looking to see how they can benefit from regional interconnections.
MS. DOBRIANSKY: All right. Well, thank you.
Let me put you on notice we’re going to come to you for questions, comments. I’m just going to ask two of the panelists one more question. So be thinking about your questions, if you would.
I want to ask this of Alisa and Mohamed, and the reason why is Excelerate, you concentrate on LNG and Masdar, among a number of things, but your focus has been on renewables. Is there room for collaborating in your spaces in this region? I’ll go with you first, Alisa.
MS. NEWMAN-HOOD: Sure.
MS. DOBRIANSKY: What do you think?
MS. NEWMAN-HOOD: First, I’ll just quickly make the environmental case for gas. (Laughter.) In South Asia, of course, we’re displacing not only coal and have the potential to displace not only coal, as was mentioned at many earlier panels today and is, obviously, a theme in our industry, but also I think more – just as important we displace oil products, which shouldn’t be used for power generation but in so many countries are out of necessity. So our projects in Bangladesh, for example, and Pakistan this is LNG displacing higher-carbon higher-cost oil products – diesel and fuel oil.
But to your specific question, definitely there is room for cooperation. I think a key theme that’s really – I hear now regularly from oil and gas companies, or gas and oil companies, as some have sort of rebranded, is that natural gas, whether LNG, pipeline gas, et cetera, is a natural complement for solar when the sun doesn’t shine, for wind when the wind doesn’t blow, and for hydroelectric when the water doesn’t flow.
To give a specific example from a project of ours in another part of the world, we have an FSRU in Brazil and that is basically a Plan B when hydroelectric power in Brazil is insufficient. So, again, we very much see natural gas as a natural complement to what Masdar does. (Laughter.)
MS. DOBRIANSKY: Do you agree, Mohamed? What do you think?
MR. AL RAMAHI: Yes, totally.
MS. DOBRIANSKY: Totally. OK. (Laughter.)
MS. NEWMAN-HOOD: Thanks.
MR. AL RAMAHI: They complement – they complement each other 100 percent.
MS. DOBRIANSKY: OK. All right. Great.
Well, let’s turn to you. Questions, comments, please. Yes, sir, why don’t we get you right here, and if you don’t mind introducing yourself so we know who you are.
Q: Hatem El Moussa (ph) – (inaudible) – National Oil Corporation.
Just a quick question. In Dubai, we announced we can produce solar power at 1.7 cents per kilowatt hour. In Bangladesh you say you struggle to get 10 cents. Where is the disconnect? Why is it not possible to produce the same in both places?
MR. AL RAMAHI: Well, maybe I can start –
MR. PADMANATHAN: I’ll add.
MS. DOBRIANSKY: Please. (Laughs.) Please.
MR. AL RAMAHI: Well, I’m sure the panelists also have their – it’s not a fair comparison – this is where we start – and there are a lot of variables. One of them was mentioned by my colleague, Paddy, is the environment itself, the radiation, or the wind speed, the resource. At the end of the day, renewable is dependent on a resource. You don’t burn it but you utilize that resource and this resource comes in the form of radiation or wind speed. So resource is key. There are differences between the resource in Bangladesh, for example, and the resource in Dubai or in Abu Dhabi or in the Kingdom of Saudi Arabia. That is the driver of the cost reduction.
The other driver of the cost reduction in the United Arab Emirates, particularly between Abu Dhabi and Dubai, to be specific. We are in Abu Dhabi right now. Let’s stick with Abu Dhabi. The life cycle of a development is less than six months. Why? Because the government will issue RFPs to tender. The government will identify the land and they will give you the land for free.
The government will provide the connection for you and they’ll provide that connection for free. The government will sign a clear bankable power purchase agreement with you for 25 to 30 years. So it makes lenders happy. They give you guarantees. It makes you happy because you don’t have to spend five years developing a 100-megawatt project. You can actually put in the best offer and win a project in six months – in less than six months – and start construction just after.
In Bangladesh and in other areas – in India, for example, and some countries that we – (inaudible) – in the United States some of these projects take us four years to develop. Four years of cost. Four years of time. That is money. That money is reflected in the tariff. And then the cost of lending, which is crucial – the cost of lending in the United Arab Emirates is very cheap.
Why? Because the country in terms of credit rating is extremely high. It’s one of the highest in the world, backed by a sovereign guarantee. So the Abu Dhabi government provides the developer with a guarantee to offtake your power. That’s a main driver also to the tariff prices, and on top of that, tax free. So nobody taxes you for anything. So if you add all of these on top of each other, OK, you will get the delta between two cents and nine cents.
MR. PADMANATHAN: Having – I’m sorry.
MS. DOBRIANSKY: Go ahead, Paddy, and then, Dr. Chowdhury, if you’d like to. Go ahead, Paddy.
MR. PADMANATHAN: Yeah, just – Mohamed is – Mohamed is absolutely right. So all of that, and just a hell of a significant sort of premium you end up adding.
Having said all of that, I’m not sure when was the nine cents number. But the fact of the matter is cost of renewable energy predominantly due to technology – technological innovation, methodology in construction, and many other matters – has dramatically reduced just in the last few years. So if Bangladesh was to launch a tender today, even taking into account all of – all of what Mohamed is saying, I would be very surprised if they end up with – OK, I’m not going to stick my neck out here, but five cents.
MS. DOBRIANSKY: Go ahead. (Laughs.)
MR. PADMANATHAN: Five cents, probably, OK? Because I think there is a lot more – a lot more work that has been done. People are much more familiar with it now, et cetera, et cetera. And also the cost of technology, as I say, has come down fairly significantly. So projects at scale, I cannot see why it should cost more than five, five and, you know, six cents, even in the most resource-poor area of Bangladesh.
MS. DOBRIANSKY: Before we go to the next question, Dr. Chowdhury, would you like to give your view on this?
MR. CHOWDHURY: No, I agree with these – the issues raised. And it has, in fact, come down now to seven cents.
MR. PADMANATHAN: Are they – oh, already.
MR. CHOWDHURY: Seven, last one. But it’s –
MR. PADMANATHAN: So I wasn’t sticking my neck out too much.
MR. CHOWDHURY: But we were – we were struggling, I said, to come below about 10 cents. And that’s why the important thing is the resources are not uniformly – just because the sun shines, it’s not uniformly distributed. Just because you have a lot of land, we don’t have land. So they all – literally, they make it almost impossible to have a project because you can’t have land at all.
MR. AL RAMAHI: Yeah, land.
MR. CHOWDHURY: So, you know, it is a nonstarter to start with.
But then, you know, you can be very creative. I just thought I should share we are trying a lot – we have already had a pilot project which is zero waste area where, you know, the water starting from rainwater, toilet water, they never go out, you know. You continuously purify them and use them again. And then, you know, the waste that come, they going to biodigester, and then you have biomass that comes – (inaudible) – into the – for cooking purposes, so that we have a neighborhood or 1,000 flats where nothing goes out, nothing comes in, you know.
MR. PADMANATHAN: It’s a closed loop.
MR. CHOWDHURY: A closed loop with all – and the energy efficiency is very high. We have solar panel on the roof also.
MR. PADMANATHAN: Yeah.
MS. DOBRIANSKY: If I – if I may, would you mind if I take this, since we’re talking about Bangladesh? We have a question up here, anonymous. It says, Bangladesh has also built a number of fuel-oil power plants. With IMO, will they switch from LNG to HSFO if the price is right? And/or what was the strategy for building the fuel-oil plants?
MR. CHOWDHURY: From liquid fuel?
MS. NEWMAN-HOOD: Yeah, liquid fuel.
MR. CHOWDHURY: Yeah, we are already – luckily, we have a (guest ?) network. We had to improve. Once accelerated LNG came in, we had to lay down new pipelines, which took some time, 14-centimeter pipelines. We’re just about finished with that. So yes, we replace.
But you know, ones – some of them will still stay, small proportion, because of the diversity that we want to keep and for some picking use for electricity there. And we have some of these plants which are – (inaudible) – we don’t pay any capacity charge to them. It’s like if we buy electricity we pay for you. In other cases, you have to have a PPA where you ensure capacity charge along with fuel and other things. So we are taking advantage of the lifecycle of those projects also.
MS. DOBRIANSKY: All right. Thank you for that.
Sir, you have a question. And if you would not mind introducing yourself. And thank you for letting me catch that one.
Q: Wathid Kathiri (ph), Watara (ph) Petroleum.
I will ask a similar question – (inaudible). Is there any room for cooperation between Masdar and ACWA Power – (laughter) – complement each other versus competing?
MR. AL RAMAHI: Absolutely! Why not?
MS. DOBRIANSKY: That’s why we have them seated at opposite ends.
MR. PADMANATHAN: Far apart. (Laughter.)
MS. DOBRIANSKY: You knew that.
MR. AL RAMAHI: Nice one.
MS. DOBRIANSKY: All right. Paddy, you want to go first? (Laughter.)
MR. PADMANATHAN: Thank you. You know, yeah, you heard it here first.
No, look, we have discussed collaboration before and we see no reason why we wouldn’t collaborate or we shouldn’t collaborate. Projects are getting bigger and bigger. The universe is getting bigger. So we – I see more likelihood of a collaboration this year than, clearly, last year. We didn’t do anything together. We have – I mean, you know, we’re both pursuing the same thing. We are both pursuing the same objective, trying to reliably deliver electricity at the lowest possible price using renewable resources. So I see a very natural fit. They’re a very strong company. I mean, you know, they can certainly bring value to us. So as I say, particularly as we step into the year of projects that are the size of 2,000, 3,000, 4,000 megawatts, which is what we are now involved in, renewable energy – you know, renewable energy projects at a multibillion-dollar investment scale, inevitably I think there will be opportunities for collaboration.
MS. DOBRIANSKY: Mohamed.
MR. CHOWDHURY: Before he – let me just interject.
MS. DOBRIANSKY: Oh.
MR. CHOWDHURY: I was wondering when I saw your solar energy power gone to such low level, you could use therefore desalination of water and that would be very cheap. And I was wondering that you have a, you know, unlimited resource now in the form of water because you have this solar power, you desalinate with this power, and then you are a water-rich country.
MR. AL RAMAHI: Correct. So we did that. So the government has split the power generation from the reverse osmosis or desalination, water desalination. Five years ago we’ve conducted a research and development project supported by His Highness the crown prince of Abu Dhabi to look and assess the possibility of (clubbing ?) renewable energy and looking at all different possible technologies to reduce the cost of desalination by at least 40 percent. And we have run this program for almost two years. We published a paper on that and a full comprehensive report. And what you see today is the fruit of this project.
So ACWA just got awarded in Abu Dhabi the cheapest cost of water desalination utilizing some of the technologies that we have assessed and – (inaudible) – with some of our technology players. (Clubbing ?) that with renewable energy, thus driving the cost not only by desalination but also utilizing renewable energy into the mix.
MR. PADMANATHAN: Correct.
MR. AL RAMAHI: With that you can produce cheap, clean water. You are right 100 percent. This is what’s happening today.
MS. DOBRIANSKY: OK. Thank you for that.
MR. AL RAMAHI: And we would like to collaborate. Actually, we are collaborating. (Laughter.) Paddy is not being full – very –
MR. PADMANATHAN: Transparent.
MR. AL RAMAHI: Yeah, yeah. We have collaborated in Egypt with ACWA Power.
MR. PADMANATHAN: Correct, yeah.
MR. AL RAMAHI: As Masdar. Our shareholders, Mubadala and ACWA Holding, own the largest district cooling company in the world, called Tabreed. That’s another collaboration. ACWA and Mubadala Utilities, they are partners in several projects including the water desalination project that I have highlighted. So between us and ACWA, either ACWA Power or ACWA Group which is called now Vision Invest, we have so many collaboration(s), and we would like to collaborate more in the future.
We work through collaboration. Our growth is driven through partnerships. And we do that across the board, and of course we would love to be in ACWA in future projects.
MS. DOBRIANSKY: So you got that on the record there.
MR. AL RAMAHI: On the record.
MS. DOBRIANSKY: On the record. (Laughter.)
MR. AL RAMAHI: Because I (know ?) the MOU now. (Laughter.)
MS. DOBRIANSKY: Let me ask, is – one more question from the floor. I could take that one up there, but I want to see, do we have any questions on the – from here? Anyone? Because we’re going to be winding down. All right. Well, then we will take this one.
The question is, where do you see the next growth area from – for FSRUs? Fatih Birol showed most growth for gas was in industry not power. Do you believe countries are willing to invest in pipeline infrastructure required given medium-term need to skip gas to renewable power? So I don’t know. Would you –
MR. PADMANATHAN: I can also answer.
MS. DOBRIANSKY: You want to? All right.
MS. NEWMAN-HOOD: I think I can probably take the first question, I think, there, a little bit unrelated.
MS. DOBRIANSKY: OK. All right. Please.
MS. NEWMAN-HOOD: So where do you see the next growth area – where do we see the next growth area for FSRUs? I’ll actually answer that in a – in terms of region rather than in terms of sector, but it’s all related.
So certainly regionally we are looking – now having been quite invested in South Asia, we’re definitely looking to Southeast Asia, to Vietnam and Philippines in particular, as our next growth areas in terms of countries. And that is very much actually for power generation, less so than in industrial use I would say.
MS. DOBRIANSKY: OK. And how about the second part?
MR. PADMANATHAN: And also, we also, again, in Indonesia for islands, there’s clearly a requirement on some of the larger islands for FSRUs and for gas supply. So that’s the first part of the question.
For the second part of the question, I think, look, we’ve all got our own views about gas being a transitionary fuel. We will, obviously, end up using more and more and more renewables. But the fact of the matter is all of a sudden it is not going to be sunny at night, so that’s not going to happen, right? And it’s not going to be windy all day and night. So we will need to find a way of balancing dispatch and demand. And I think – I believe everybody’s waiting for this panacea of the so-called 24-hour battery. I personally believe it’s never going to happen. You know, we’ve all been trying to get there for the last 20 years and we haven’t got there, so why is it going to happen in the next 20 years?
But in the meantime – and it’s not needed because I think what is more likely to – where we are more likely to end up with this sort of backup power and the base – the so-called infill or baseload power, is initially gas, but hydrogen. And I think – and the reason why all of a sudden hydrogen is because we are able to generate electricity at a very cheap cost, and the electrolysis process is a very, again, energy-intensive process. And once we are able to put those two together – cheap electricity, electrolysis process – I think we – I mean, my view is already we can start to deliver hydrogen at a fairly low cost than what we were able to do two years ago, and that cost will keep coming down to the point where I think hydrogen will become. Now, when hydrogen – then hydrogen can be put through pipelines. So for me, I think investing in the pipeline infrastructure is not a dumb thing because we’re going to have to distribute energy in some way anyway.
MS. DOBRIANSKY: All right. Thank you for that. And of course, Japan is looking at hydrogen.
We have literally only, you know, 30 seconds. I’m going to give both of you 30/30. Do you have anything you’d like to say, Dr. Chowdhury, on this question?
MR. CHOWDHURY: We are going to use gas both for industrial, let’s say, and domestic purposes, as well as for developing electricity. But we will combine the two in certain areas. In a special economic zone, we set up a small power plant and we’ll use the waste heat first to have more electricity in a combined-cycle sense, and then exhaust heat – high-temperature exhaust heat for boilers of industries, and then still low-temperature exhaust heat for chillers, so – and then use some of it to the ETP. So I call it penta-generation. You know, people generally talk about combined generation. So this is efficiency and putting gas both for electricity and industrial purpose.
MS. DOBRIANSKY: Thank you. And Mohamed, you get the last word. If you’d like to respond to that question or any parting information you’d like to give our participants here.
MR. AL RAMAHI: I’m just going to say that we are committed to the sustainable future of Asia, Southeast Asia, and India. And thank you so much. That’s it.
MS. DOBRIANSKY: Very important note. Please join me in thanking this outstanding panel. (Applause.)