‘Strongest’ growth potential in gas-to-power sector seen in APAC: report
This includes Southeast Asian markets, such as Vietnam, and the Philippines amongst others.
The “strongest” growth prospects are seen in the Asia Pacific, including in Southeast Asian markets, such as Vietnam, the Philippines, Indonesia, and Myanmar, Fitch Solutions reported.
Fitch attributed this to the increasing reliance on liquefied natural gas (LNG) imports as gas supply chains are disrupted.
“LNG-to-power projects are gaining particular traction in the region, as they help to meet fast-rising energy demand while curbing emissions growth,” Fitch noted in a report.
After APAC, the project pipeline is also “heavily skewed” in Latin America, the Caribbean, and to a lesser extent in Sub-Saharan Africa, Fitch added.
Despite the optimistic growth forecast, the report noted identified a number of barriers, such as the project-on-project risk and complex contractual chains, that could arise from regasification facility and power plant projects.
Other risks include mismatches in currency between US dollar-dominated LNG prices and local currency power prices.
“Robust policy and regulatory frameworks, government guarantees, appropriate risk allocation, and the use of insurance and hedging can, amongst other things, help to mitigate these risks,” the report also read in part. “However, with the industry still in its infancy, challenges will remain.”
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