Power investors eyeing Asia must focus on three countries: Expert

Find out the most investable markets for renewables in the region.

Attention has been flocking to Asia as emerging economies around the world continue to steer global energy demand eastward, dimming the spotlight on Western countries.

"We think that the Philippines, Thailand, and Indonesia at the moment are the three primary markets which have a lot of the factors that we would like for investment," says founder and managing director of Armstrong Asset Management Andrew Affleck, in an exclusive interview with Asian Power during Terrapinn's Power and Electricity Philippines 2014 Conference.

Affleck adds that Armstrong, a private equity fund in Southeast Asia, uses a top-down approach in choosing which countries to fund and looks at two primary aspects: the country and the working team. The process of getting approvals and constructing a project is a key consideration as well as the policies present in each country and the availability of experts to design, build and get necessary permits.

What's in store for investors

Resource abundance for renewables has made the Philippines very attractive, despite a lot of concerns with its bureaucracy. Affleck, who has lived in Asia for more than 20 years, indicates that radiation in the country is good overall while some parts of the Philippines are useful wind resources, and that hydro power investors would not find the country lacking.

Indonesia and Thailand are also well-situated on the map, with solar and hydro being an asset for each country, respectively.

All countries are open for foreign investment, according to Affleck, as Thailand is already recovering from its recent political tensions. He adds that the country's investability was affected by the turnarounds in its political landscape but that nothing is to be worried about as the long-term outlook for the country is positive.

Although there are different restrictions for each of the three markets, investment has been going on for many years and there are good policies present to support foreign investment.

"The general mood is that there is optimism around the potential but I think there are still practical challenges to achieving the kind of targets that are being sent. The optimism is tempered with realism around the speed that things can happen," Affleck says.

A sidetrip to Myanmar

A lot of investors are now looking at the country west of Thailand, because its physical location and potential for renewables may not be a far-cry from its neighbor.

Myanmar is slowly opening up but its reliance on diesel, much like the Philippines, is holding it down from affordable power. Affleck mentions big potential to replace diesel with other forms of renewable energy sources, if only Myanmar looks to other countries like the Philippines for project successes.

"We’re excited about the change that’s happening in Myanmar but realistically, a lot of change needs to occur before institutional funds like ourselves will have enough of the factors in place to make it viable for investment. So we look, we watch, we stay up to speed but at the moment I would say that there are primary markets in the Philippines, Indonesia and Thailand," Affleck concludes.