Imagination at work.

Kazunari Fukui

Marketing Director, APAC

GE Power & Water

Electricity market reform in Asia

– Opportunities and challenges -

30th October 2014

IEEJ Roundtable for SIEW 2014

© 2014 General Electric Company. All Rights Reserved.

Observations on market reform

Core elements:

• Purpose … reform for different purposes & targeted outcomes

• Starting conditions … diversity of starting conditions

• Market design … challenges in creating “market”

• Implementation dynamics … “reform” as a process (timing & phases)

• Competitive forces … both for power players & consumers

Unanswered:

• Perfect market liberalization model

• Eventual effectiveness of reforms

• Influence from other dynamics (e.g. macro, political, incumbents, fuel etc.)

Key items for consideration in market reform discussions

No simple formula / models … each reform require careful

considerations of the initial conditions & evolving dynamics

© 2014, General Electric Company IEEJ Roundtable for SIEW 2014

Sample dynamics in US & Japan

Japan dynamics

• Main motivation

… more robust & economical infrastructure

• Previous stages of deregulation

… ’95 start. Buying power on utilities

… PPS share ~3.5% in ’12

• Reform target

… 84 million customers / ~ $75B

• Different approach on stages

• Unique questions

… nuclear decommissioning

… declining power demand

US dynamics

• Market uncertainty around reform & associated power generation order delays

• Increase in capacity factor leading up to 2000 bubble

… Av. US RM in 1990s ~20%

… By 2000, dropped to ~10%

• Current dynamics

… Predictability of regulated market

vs. risk of deregulated market

Market uncertainty around reform play significant role

© 2014, General Electric Company IEEJ Roundtable for SIEW 2014

Challenges in ASEAN & View of energy market reform from power gen players perspective

ASEAN challenges Power Gen Players perspective

• Clear vision, rules and direction

• Credibility of the reform plans

• Transparency in decision making

• Removal of market distorting factors

• Private sector play … leads to better management of project timing

• Main motivations

… IPP plays to help electrification

… Transparency on costs

… Bring overall system cost down

• Still electrifying (ID)

• Complexity around subsidies

• IPP confidence (Asian financial crisis)

• Long term planning (c.f. PDPs)

• Changing governments

• ASEAN level reform

• Uncertainty around reform is not favorable

• Reform/competition … help bring the best technology forward

© 2014, General Electric Company IEEJ Roundtable for SIEW 2014

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