Energy Efficiency Continues to Gain Prominence Across End User Sectors

According to Frost & Sullivan Asia Pacific Director of Energy & Power Systems Practice Ravi Krishnaswamy, the derailment of these projects is still a possibility; this time due to the credit crunch.

He added that the global financial crisis and slowing down of the US economy will impact the Energy & Power industry inAsia due to the reduced demand for industrial and consumer goods in the US andEurope.

"The reduced demand would mean less demand for electricity from factories inChina,India and other parts ofAsia Pacific. Since there is a peak power shortage in most of the Asian countries, exceptMalaysia andSingapore, the real impact will be for vendors of standby and backup power equipment such as generator sets and UPS to the industrial sector," Krishnaswamy said.

He also added that there is a valid possibility for some of the energy & power sector projects with US Foreign Direct Investment or project financing will not go through due to the collapse of Wall Street giants and the adverse impact on interbank lending.

However, things are not as severe as it seems. To cushion that effect and keep their order books healthy, some electrical equipment manufacturers like GE Energy has promised to offer project finance or supplier credit.

In terms of industry specifics, Krishnaswamy says that the slew of coal and nuclear power plant addition announcements in the first half of 2008 might have been tempered by the economic crisis but committed projects remain on track. "US alone have planned construction expenditures of US$85 billion on new coal plants and environmental retrofits on existing ones. I believe most of it will go through," he said.

Industry trends will see a focus on efficiency and fuel savings due to a sluggish economy and history of high electricity prices. Krishnaswamy foresees that products from light bulbs to turbines with these features will be in demand.

"Currently, low oil prices will be a challenge to justify some green energy investments but the situation will change in the not too distant future," he said. "Newly elected US President Barack Obama's final policy on climate change and Kyoto Protocol will affect the energy & power sector globally," he adds.

According to Krishnaswamy, the early part of 2009 may see renewable energy projects suffer because of the death of debt financing brought on by troubles at large green energy investors like Lehman Brothers, Wachovia, AIG, and Merrill Lynch. He continues to say that it should pick up in the latter part of the year, due to anticipated government support in form of affirmative policy and tax credits, making alternate energy one of the few growth sectors in 2009.

"Energy efficiency will continue to gain prominence across the end user sectors of industrial, commercial and residential. Governments are likely to support these measures because of avoided cost of asset creation in new generation capacity and also proven benefit in terms of emission reduction," he added.

Other areas that may continue to show growth include alternate energy technologies such as solar and fuel cells, metals like lithium and zinc used in the development of energy storage technologies, clean coal research as a result of carbon tax by the new US administration, and the biomass and waste to energy sector.

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