COVID-19'S Rapidly Changing Impact on Asia Pacific Electricity Markets

A Webinar for IAEE COVID-19’s Rapidly Changing Impact on Asia Pacific Electricity Markets

Mike Thomas, 5 June 2020 [email protected] Disclaimer and Credits This presentation has been prepared to facilitate general discussion and not for support of any commercial or business decision.

Special thanks to the entire team at The Lantau Group, particularly: Stefan Robertsson, Xiaoran Liu, Miaosu Li, and Liyuan Zhao. Additional support was provided by Bobby Ditric, Paul Buckland, Chris Starling, Zander Bischof, David Fishman, Soyeon Park, Jan Stempien, JP Stovall, Ian Yao, Schuyler Kapnick, Sovathana Kem, Anna Leung, and Oscar Ng.

Hong Kong | Singapore | Seoul | Perth (and Shanghai via Nicobar Group)

1 Agenda

1. Executive Summary 2. Overview of Singapore Electricity Market About The Lantau Group 3. Key Market Drivers

4. ModellingHeadline Results Impacts

5. Appendix Other Points

Summary Decades of experience in commercial and regulatory matters across the globe

Our focus and orientation

Washington DC London

Languages: Paris Arabic* Bahasa Indonesia Bahasa Malaysia Markets & Industry Economic Client Impact Bengali Transactions Insights Regulation Service Cantonese English We focus on We focus on We advise on We apply Our senior French what can be what matters key projects economics and team members German measured and to energy throughout the analysis to are actively Hindi substantiated. stakeholders Asia Pacific address involved in the Japanese facing changes region and the challenges execution of ASIA Khmer We provide in markets, rest of the facing mandates and PACIFIC Korean objective, technologies, world. regulators, assignments. Malayalam independent, regulations, commercial Mandarin well-grounded and policies. We influence stakeholders, We own our Russian advice for the evolution and policy company, so Serbian decision- This is what of the energy makers. when we say Spanish makers facing we do. sector through we are Swedish high stakes our work and dedicated to Tagalog choices. expertise. our clients we Tamil mean it. Key: Telugu& Office Thai* Affiliate/Senior Advisor Vietnamese* Network Partners *Senior Advisors

Economic, commercial, and strategy advisory for energy sector stakeholders throughout the region

3 3 We draw from a diverse range of experience and expertise

Vietnam Thailand Uzbekistan Mainland China Extensive due diligence support for new RE and Demand response pricing CNG vehicle market Curtailment study in Gansu, Jilin and West Inner Mongolia traditional power supply resources across the evaluation Grid solar evaluation Multiple studies on small-hydro power investment opportunity country Gas to power economics Coal-fired power generation and carbon policy in Zhejiang LNG market entry studies Market development Market modelling / development Singapore Coal-fired power investment opportunity in Chongqing Renewable energy Assessment of gas-fired CHP opportunities in Guangdong Market design and regulatory Malaysia support Strategic assessment of opportunities in multiple provinces Demand forecasting Green procurement options / end user market support MESI 2.0 reforms Commercial transactions PPA (Green and Other) Tariff benchmarking Electricity/gas markets Korea Corporate PPA support Tariff benchmarking LNG and gas strategy Renewable energy study for solar and wind Third party access Due diligence on CCGT and renewable power plants Disputes / expert witness Demand forecasting Capacity/ancillary market design and evaluation Capacity market Commercial transactions SMP/REC modelling and implications to IPP business Disputes / expert witness Gas and coal IPP opportunities Taiwan LNG/Coal competitive procurement Philippines Offshore wind Market design and development Transaction support Due diligence support Oman India Corporate energy pricing Business strategy Performance regulation Wholesale market Market development modelling Natural Gas Masterplan and LNG entry strategy Direct sales and corporate PPAs Fuel switching Distribution sector structure and regulation Market readiness and scarcity pricing Australia End user pricing/invoice Retail competition Power price forecasting tracking Capacity market design Indonesia Contract disputes / expert witness Market design and policy / reviews Gas to power (small and large scale) New Zealand Evaluation of market entry opportunities Corporate green procurement Market development / regulation / pricing Demand response Market development Retail sector development Market modelling / transaction support Gas pipeline access policy Japan Market design and regulation Market trading and market making Customer Solar Entry Strategy Network regulation and cost recovery Disputes / expert witness End user pricing of gas and electricity Storage Founders, Partners, Directors

Mike Thomas Dave Carlson Stefan Robertsson Managing Director Director Partner [email protected] [email protected] [email protected]

Mike is an expert in energy markets and regulation with experience Dave is an experienced energy market operator, designer and change Stefan has over 20 years of experience in business development, M&A, throughout the Asia Pacific region. He works with stakeholders on manager with a track record spanning Asia, Africa, Australia and New and corporate and project finance across the Asia Pacific region. Prior matters involving regulation and market design; market evaluation; Zealand. Most recently he was a Senior Business Development to joining TLG, he spent nearly 10 years with CLP Group, where he strategy; and commercial and regulatory disputes. He has advised Director at SGX, responsible for new initiatives in the gas and power served as head of Corporate Finance and Development for non-Hong buyers and sellers on over 50 GW of commercial transactions and sectors. Prior to that he served for 10 years as the COO and CEO of Kong activities. He led the CLP Group Investment Committee and associated market and business strategies. And, he has advised the Energy Market Company, EMC, the national electricity market Chaired the TruEnergy Risk Committee for CLP's Australian trading and governments, regulators, and other stakeholders on numerous major operator for Singapore. Dave has served on and chaired many business activities. He also had significant involvement in CLP's market and regulatory reviews and disputes. Prior to co-founding TLG, industry and governance panels to further liberalise energy markets investment activities in Mainland China, India, and South East Asia, he was the Asia Pacific energy and environment practice leader for a including market rules covering such topics as market rules evolution, covering the full spectrum of energy assets and opportunities. Prior to global consultancy. Mike has an MPP from Harvard Kennedy School the implementation of retail contestability, developing gas trading and CLP Stefan was with various ABB Financial Services companies in the and a BA in economics from Carleton College. introducing electricity derivative products. US, UK, and Asia. He earned his degree in Financial Economics at the Stockholm School of Economics.

Central James Ooi Middle East David Kim East Asia Asia Partner Partner [email protected] [email protected] South SE Pacific James Ooi has over 20 years of experience in the energy industry. He Asia Asia David is a partner and director of TLG, based in Seoul, where he works is an expert in areas related to energy market design, asset valuation, with both inbound and outbound clients interested in investments in the commercial contracting for gas and power (LNG SPA, GSA and PPAs), energy sector. He particularly focusses on new energy opportunities corporate strategy, planning and operations, with experience across throughout the region, helping to connect Korean and global companies Asia Pacific, the Middle East and North Africa. Prior to joining TLG, into new markets and to help other companies evaluate opportunities in James headed the Gas & Power practice for a global consulting firm in Korea. Prior to joining TLG, Dr Kim was the Managing Director at Asia. In addition to consulting, James brings deep operational Hanwha Energy’s Energy Solution System Division. Previously, David experience and has held management leadership positions at major was a Partner at A.T. Kearney and a Principal at the Boston Consulting generators and power utilities in the region. James is based in Group for over ten years. David holds a PhD in Mechanical Engineering Singapore. James holds an MSc and BEng in Electrical Engineering from Massachusetts Institute of Technology. David is fluent in Korean from the UK and is fluent in English, Mandarin, Cantonese and Bahasa and English. (Malaysia and Indonesia).

5 Agenda

1. Executive Summary 2. Overview of Singapore Electricity Market About The Lantau Group 3. Key Market Drivers

4. ModellingHeadline Results Impacts

5. Appendix Other Points

Summary

6 Confirmed Cases in the Asia Pacific Region (as of May 31)

Cumulative Confirmed Cases Mainland ASEAN (as of May 31) China, countries, 84570 China Taiwan 80000 35000 Singapore 34366 5000 70000 30000 Indonesia 26473 60000 China 25000 84570

50000 Philippines 20000 18096 Taiwan 442 40000 Myanmar 224 Lao 15000 19 30000 Thailand Vietnam 328 Malaysia 3081 Philippine, 18096 Cambodia 7762 10000 Taiwan, 442 125 20000 Vietnam, 328 Thailand Myanmar, 224 3081 Brunei, 141 Brunei 5000 10000 Malaysia Cambodia, 125 7762 141 Lao, 19 Singapore 34366 Indonesia 0 0 26473 Feb 4 Feb 9 Feb Apr 04 Apr 09 Apr 14 Apr 19 Apr 24 Apr 29 Jan 25 Jan 30 Jan Feb 14 Feb 19 Feb 24 Feb 29 Feb Ma r 05 Ma r 10 Ma r 15 Ma r 20 Ma r 25 Ma r 30 Ma y 04 Ma y 09 Ma y 14 Ma y 19 Ma y 24 Ma y 29

7 Source: WHO; Taiwan CDC Asia Pacific countries continue to be well below global mean for mortality

• COVID-19 mortality in Asia Pacific, thankfully, has been extremely low given population size and density

Country/Region Deaths Cases Deaths per 1M % Death population per Case

Philippines 960 18,638 9 5.15% Japan 891 16,851 7 5.29% Indonesia 1,641 26,940 6 6.09% Korea 271 11,503 5 2.36% Singapore 23 35,292 4 0.07% New Zealand 22 1,504 4 1.46% Australia 103 7,204 4 1.43% Malaysia 115 7,857 4 1.46% Mainland China 4,634 83,017 3 5.58% Hong Kong 4 1,088 0.5 0.37% Taiwan 7 443 0.3 1.58% Vietnam 0 328 0 0.00% • World deaths per 1M = 48

Data circa 1 June 2020 (https://www.worldometers.info/coronavirus/)

8 Demographic differences

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0% Hong Kong Australia/New USA South Korea Thailand China Singapore Viet Nam Ma laysia Philippines SAR Zealand Under 50 Between Over 70

Older Younger

Source: United Nations, Department of Economic and Social Affairs, Population Division (2019). World Population Prospects 2019, Online Edition. Rev. 1. About The Lantau Group

Headline Impacts Impact on Demand

Other Points

Summary

10 Hubei’s power consumption chronicles the evolution of the COVID-19 situation, incorporating both lockdown effects and the beginning of a recovery profile Hubei Province, China Daily Power Consumption on Hubei Provincial Grid System

800 Jan 23 Hubei/Wuhan Mar 16-25 movement control order Feb 18 Ratio of workers resume 700 in effective Peak existing confirmed Apr 8 work in large institutions cases in Hubei (50,633) Exit Wuhan control in Hubei raises from eased 600 22-68%

Jan 20 500 Chinese government confirmed 400 human-to-

GWh human transmission 300 of coronavirus Feb 12 Mar 25 Peak daily new deaths Exit Hubei (except 200 in Hubei (242) Wuhan) control eased

2020 Lunar 2019 100 New Year Lunar Holiday New Year 2020 2019 Holiday 0 1-Jan 8-Jan 15-Jan 22-Jan 29-Jan 5-Feb 12-Feb 19-Feb 26-Feb 4-Mar 11-Mar 18-Mar 25-Mar 1-Apr 8-Apr 15-Apr 22-Apr 29-Apr 6-May 13-May Weekly change in daily demand in 2020 (vs. 2019) 0%

-7% -8% -6% -5% -1% -2% -24% -17% -16% -36% -27% -41% -46% -45% -39% 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Week No. 11 Source: Hubei Statistics, Hubei DRC, DXY.cn; TLG Analysis * Note: % difference data only available after the week commencing 27 Jan 2020. Policies aimed to contain COVID-19 in Asian Pacific countries (1 of 2)

More Region Steps Taken Strict • Home quarantine – exit/entry of neighborhoods regulated and closely monitored; businesses and public services, except for those serving basic living needs, shut down; all gatherings prohibited. Violation could result in fine and/or imprisonment. Mainland • City lockdowns – Wuhan city shut down on Jan. 23rd; other cities in Hubei Province and all over the country followed soon; inter/intra-provincial China transportation strictly controlled. • Border restrictions – border closed to common foreign passport holders on March 28th • Current Status – all restrictions, except for border restriction, greatly eased/removed as of first week of May.

• Quarantine Orders – legal order issued to travelers and citizens suspected of carrying COVID-19 infection in March; • Partial lockdown (“circuit breaker”) across the country – 85% of workplaces shutdown, with only most essential services remaining open. Singapore • Border restrictions – border closed to foreign visitors on March 15th • Current status– partial lockdown recently eased (1 June); border control still in effect

New Zealand: • Lockdown – nationwide lockdown in effect on March 26th ; businesses & schools closed, public gathering prohibited • Home quarantine – people are required to stay at home except for absolutely necessary reasons • Border restriction – border closed to foreigners on March 19th New Zealand • Phased relaxation starting on May 14th & Australia Australia: • Lockdown in place for two months, policies vary in different states, in most states social gathering with more than 2/10 people is not allowed; people are required to stay at home and minimize outings, very recent easing • Border closed to all foreigners on March 19th; policy eased on April 7th; Australian nationals not allowed to travel abroad with few exemptions

Malaysia: • Movement control order (MCO) in place on March 18th -- closure of all government and private premises except those for essential services; prohibition of mass gatherings; Border closed to foreigners; MCO eased on May 4th Philippines: Philippines, • Partial lockdown – strict lockdown in Luzon, lockdown in certain regions/municipalities in Visayas; border closed to all foreigners; border restriction still Malaysia in place & Thailand • Metro Manila lockdown ended on Monday, June 01

… Thailand: • Lockdown – Partial lockdown in Bangkok since Mar. 21st; nationwide lockdown since Apr. 20th; State of emergency on Mar. 9th, curfew in place • Border closed on April 4th

[continued…]

12 Policies aimed to contain COVID-19 in Asian Pacific countries (2 of 2)

Region Steps Taken

Korea: • No lockdown/quarantine ordered – restriction on personal activities is advised but not enforced; the Enhanced Social Distancing

… campaign from 22 March to 19 April advising limited operation of high-risk facilities, businesses and sectors; relaxed form of social distancing from 20 April to 5 May; transition to ‘Distancing in Daily Life’ form 6 May Korea & • Border restrictions – entry ban to travellers from selective countries/areas with severe outbreaks, i.e. Japan, Hubei Province, China, etc.; Taiwan all incoming Koreans and foreign nationals are subject to 14-day quarantine Taiwan: • Early and aggressive track, trace • No lockdown – some businesses suspended, public gatherings restricted • Border restriction – border closed to foreigners on March 19th Vietnam: • Movement control from April 1st – 22nd ; more than 30,000 business shut down • Border restrictions – flights from China suspended on Feb. 1st, international flights on Mar. 25th , visas stopped Less Oher • Status quo – movement control lifted, businesses reopening ASEAN Strict Cambodia: Countries • No lockdown – state of emergency declared; New Year (Sangkran, Festival in Mid April, 2020) cancelled; some public/private zones are closed (gyms, nightlife areas, etc) • Border restrictions – suspending foreign visas; entry ban on selective countries with severe outbreaks, i.e. U.S., EU, Thailand, Vietnam

13 Peninsular Malaysia (example): COVID-19 Impact

Number of active cases, deaths, and recoveries No. of COVID tests: 519,944 (15,391 tests per 1M population) 9,000 Pre-MCO MCO 1 MCO 2 MCO 3 MCO 4 CMCO 5 Movement Control Order (MCO) Phases 8,000 6,941 7,629 7,000 6,535 March 18 April 15 May 12* 5,851 6,000 5,305 1 2 3 4 5 5,000 4,119 4,000 April 1 April 29 3,000 2,470 2,000 1. Prohibition of mass gatherings including religious, sports, 900 social and cultural activities. All houses of worship and 1,000 22 25 117 business premises would be closed, except for supermarkets, 0 public markets, grocery stores and convenience stores. 2. Closure of all government and private premises except those 7-Mar 4-Apr 2-May 9-May 15-Feb22-Feb29-Feb 14-Mar21-Mar28-Mar 11-Apr 18-Apr 25-Apr 16-May23-May involved in essential services (water, electricity, energy, Active Case Death Recovery telecommunications, postal, transportation, irrigation, oil, gas, fuel, lubricants, broadcasting, finance, banking, health, Total number of cases per 1M population pharmacy, fire, prison, port, airport, safety, defence, cleaning, Selangor: 274 retail and food supply) 3. Closure of all kindergartens, government and private schools, Kuala Lumpur: 1,042 public and private higher education institutions, and skills training institutes nationwide Putrajaya: 983 4. Sanctions covering all Malaysians travelling abroad. Those Negeri Sembilan: 682 who have returned from overseas would be required to undergo a health check and a 14-day quarantine. 5. Restrictions on the entry of all tourists and foreign visitors into the country Note: *Phase 5, a conditional movement control order (CMCO), is a relaxation 40 500 1000 Melaka: 225 of MCO regulations, which allows operations of major economic sectors.. 14 Source: Worldometer (29 May), Department of Statistics Malaysia, Ministry of International Trade and Industry Lockdown measures were clearly the immediate cause of reduced demand

17 March 2020 Philippines 18 March 2020 Malaysia Enhanced Community Quarantine Movement Control Order 250 500 ▼12.2 % ▼ 16.0 % 200 400

150 300 GWhs GWhs 100 200

50 100

- - 16-Mar 17-Mar 18-Mar 19-Mar 20-Mar 21-Mar 22-Mar 16-Mar 17-Mar 18-Mar 19-Mar 20-Mar 21-Mar 22-Mar 1 April 2020 Vietnam 7 April 2020 Singapore “Soft Lockdown Measures” Circuit breaker measures 200 800 ▼ 6.8 % ▼6.2 % 600 150

400 100 GWhs GWhs

200 50

- - 30-Mar 31-Mar 1-Apr 2-Apr 3-Apr 4-Apr 5-Apr 6-Apr 7-Apr 8-Apr 9-Apr 10-Apr 11-Apr 12-Apr

In the charts above we highlight the day to day drop in reported GWhs between the day before lockdown and the day of lockdown. However, for Vietnam and Singapore the impact was slightly delayed. • For Singapore we measure the day to day drop based on 8 Apr (day after lockdown, and day when schools closed) • For Vietnam we measure the day to day drop based on 3 Apr (2 days after lockdown as 2 Apr was a public holiday)

15 Source: PEMC; GSO; NLDC EVN; EMC; TLG Analysis Lockdown measures were clearly the immediate cause of reduced demand (2)

25 March 2020 New Zealand 25 March 2020 Australia Lockdown “Stage two restrictions" 150 600 ▼3.0 % ▼12.5 %

100 400 GWhs GWhs 50 200

- - 23-Mar 24-Mar 25-Mar 26-Mar 27-Mar 28-Mar 29-Mar 23-Mar 24-Mar 25-Mar 26-Mar 27-Mar 28-Mar 29-Mar

Comparison with the 3 preceding weeks Comparison with the 3 preceding weeks New Zealand Australia NEM 110 600

100 Lockdown 500 GWhs

week GWhs 90 Lockdown week

80 400 Mo nday Tuesday We dnesday Thursday Friday Saturday Sunday Mo nday Tuesday We dnesday Thursday Friday Saturday Sunday

We ek 10 (2 Mar - 8 Mar) We ek 11 (9 Mar - 15 Mar) We ek 10 (2 Mar - 8 Mar) We ek 11 (9 Mar - 15 Mar) We ek 12 (16 Mar - 22 Mar) We ek 13 (23 Mar - 29 Mar) We ek 12 (16 Mar - 22 Mar) We ek 13 (23 Mar - 29 Mar)

16 Source: EA; AEMO; TLG Analysis The initial impact of lockdowns was then typically followed by further consumption declines in weeks to follow

Daily Electricity “Demand” (March and April)

800

700 Average Daily “Demand”

% change Week before Week after 600 Lockdown Lockdown

▼ 7.8 % 680 GWh 627 GWh 500

400

300 ▼ 29.2 % 380 GWh 269 GWh

200 ▼ 25.5 % 257 GWh 192 GWh Daily electricity “demand” (GWh) ▼ 6.5 % 145 GWh 136 GWh 100 ▼ 12.4 % 101 GWh 88 GWh

6-Apr 2-Mar 9-Mar 16-Mar 23-Mar 30-Mar 13-Apr 20-Apr 27-Apr March 17 March 18 March 25 April 1 April 7 Philippines Malaysia New Zealand Vietnam Singapore

Lockdown start date Vietnam Peninsular Malaysia Philippines (Luzon and Visayas) Singapore New Zealand

17 Source: PEMC; GSO; NLDC EVN; EMC; EA; TLG Analysis Diversity of impacts and staging across Asia Pacific to end March

Change in March Electricity “Demand” Average Daily Electricity “Demand” February & March - 2019 & 2020 Y-o-Y M-o-M Mar 2020 vs Mar 2019 Mar 2020 vs Feb 2020 .

Peninsular Malaysia Malaysia February -10.0% Peninsular Malaysia -8.3% a (Peninsular) lar March Malaysi Peninsu

Australia February Australia - NEM -6.6% Australia - NEM -7.0% (NEM) March Australi a - NE M

Philippines February Philippines -5.2% Philippines -1.0%

nes March

(Luzon and Visayas)Philippi

February China -4.2% China 16.8% China March China

February South Korea South South Korea March -4.0% -7.6% South Korea Korea

February NewZealand New March NewZealand -1.9% -4.2% New

Zealand Zealand February

Singapore re Singapore 1.3% Singapore March 2.4% Singapo February

Taiwan Taiwan March Taiwan 2.6% 2.0% Taiwan

Vietnam February Vietnam

March Vietnam 3.0% 4.8% Vietnam

All countries 0 500 1,000 1,500 2,000 except China 0 5,000 10,000 15,000 20,000 February 2019 February 2020 China March 2019 March 2020 Average Daily “Demand” (GWh)

18 Source: GSO; AEMO; PEMC; NEA; KPX; EA; EMC; MOEA BOE; Taipower Statistics; NLDC EVN; TLG Analysis It then just got worse (April)

Change in April Electricity “Demand” Average Daily Electricity “Demand” March & April - 2019 & 2020 Y-o-Y M-o-M April 2020 vs April 2019 Apr 2020 vs Mar 2020

March Peninsular Malaysia Malaysia -22.5% Peninsular- Malaysia13.0% ia April

(Peninsular) ular Penins Malays

Philippines March

s Philippines Philippines (Luzon and Visayas) April -19.8% -10.8% Philippine

March China April China 0.7% China 4.8% China

March

NewZealand New Zealand NewZealand

New April -9.5% -6.9% Zealand

March e Singapore Singapore April Singapore -6.0% -6.2% Singapor

Vietnam March

Vietnam April Vietnam -8.8% -7.6% Vietnam

South March

South Korea April South Korea -6.4% South Korea Korea -6.5%

March

Taiwan Taiwan

April Taiwan -3.4% -2.2% Taiwan All countries except China 0 500 1,000 1,500 2,000 China March 2019 March 2020 0 5,000 10,000 15,000 20,000 April 2019 April 2020 Average Daily “Demand” (GWh) 19 Source: GSO; PEMC; EA; EMC; NLDC EVN; KPX; MOEA BOE; Taipower Statistics; TLG Analysis With more movement or adaptation, some reversion/recovery is evident

Change in May Electricity “Demand” Average Daily Electricity “Demand” April & May - 2019 & 2020 Y-o-Y M-o-M May 2020 vs May 2019 May 2020 vs April2020

April Malaysia -Peninsular11.1% Malaysia Peninsular Malaysia

ar May (Peninsular) 14% Peninsul Malaysia

Philippines April

Philippines (Luzon and Visayas) May -13.8% Philippines 13% Philippines

April

Singapore Singapore May -8.3% Singapore -1% Singapore

April Vietnam Vietnam May 1.8% Vietnam 13% Vietnam

April South Korea

South Korea May -0.8% South Korea -8% South Korea

April Taiwan

May Taiwan Taiwan

Taiwan 19.8% 16%

0 400 800 1,200 1,600

April 2019 April 2020 Average Daily “Demand” (GWh) May 2019 May 2020

20 Note: South Korea data is as of May 10th ,2020 Source: GSO; PEMC; EA; EMC; NLDC EVN; KPX; MOEA BOE; Taipower Statistics; TLG Analysis Impact on Electricity Demand Level and Profile – Peninsular Malaysia

Daily Consumption Before and After MCO • Movement Control Order (MCO) resulted in a 16% drop in daily GWh consumption on March 18, 2020 450 • The daily consumption has experienced a slight recovery after 400 the conditional movement control order (CMCO) was 350 implemented within MCO phase 4 on May 4, 2020 300 250 • Total consumption in April 2020 decreased by 22.5%, compared 200 to that of the same month in the previous year March 18, 2020 May 4, 2020 150 • Peak demand in April shifted from daytime (8am – 7pm) to MCO in effect CMCO of phase 4 night-time (7pm – 1am) 100 in effect 50 0 Monthly Consumption 2019 vs 2020 TWh 12 -0.79% 6.85% -9.99% -22.50%

11.4 01-Jan-202016-Jan-202031-Jan-202015-Feb-202001-Mar-202016-Mar-202031-Mar-202015-Apr-202030-Apr-202015-May-2020 10 11.0 10.9 11.1 10.4 10.2 9.8 Shift in Diurnal Demand Profile (Evening Peak) 100% 8 8.6 95% 6 90%

4 85% 80% 2 Load Factor 75%

0 70% 2019 2020 2019 2020 2019 2020 2019 2020 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Jan Feb Mar Apr Hour

Apr 2020 (Post-MCO) Feb 2020 (Pre-MCO) Before Movement Control After Movement Control 21 Apr 2019 (Pre-MCO) Source: GSO With Covid-19 still under control Taiwan maintains a mostly upbeat outlook

Taiwan has managed to contain the outbreak (442 confirmed cases and 7 deaths as of 31 May) without a lockdown seen elsewhere. Taiwan’s economy is heavily reliant on exports (70% of GDP). Major export partners includes Mainland China and HK (40%), ASEAN (18%), USA (12%), Europe (9%) and Japan (7%). In March 2020, exports dropped to Europe, USA, and Japan but increased to Mainland and HK.

Daily New Cases (as of May 31) Taiwan 2020 GDP forecast 30

1.7% Taiwan government (28 May) 25 -1.32% IHS Markit (May) 20 0.5% S&P (4 May)

15 1.6% TIER (24 Apr) Taiwan Institute of Economic Research 10 1.0% CIER (17 Apr) Chung-Hua Institution Economic Research 5 -4% IMF (14 Apr)

0 1.80% ADB (3 Apr)

-5% -4% -3% -2% -1% 0% 1% 2% 3% Feb 2 Feb 6 Feb Apr 02 Apr 06 Apr 10 Apr 14 Apr 18 Apr 22 Apr 26 Apr 30 Jan 21 Jan 25 Jan 29 Jan Feb 10 Feb 14 Feb 18 Feb 22 Feb 26 Feb Ma r 01 Ma r 05 Ma r 09 Ma r 13 Ma r 17 Ma r 21 Ma r 25 Ma r 29 Ma y 04 Ma y 08 Ma y 12 Ma y 16 Ma y 20 Ma y 24 Ma y 28 Source: S&P, IMF, IHS Markit, ADB, TIER, CIER, Directorate General of Budget, Accounting and Statistics Source: Taiwan CDC

22 Taiwan’s electricity demand in April dropped due mainly due to slowing global growth and lower temperature

Average Daily Demand by Week (Jan - May) Peak Daily Demand (Jan - May) 800 35% 800 30% 30% 700 2020 Chinese New Year 700 25% 25% 600 20% 20% 600 15% 500 15% 500 10%

GWh 400 10%

GWh 400 2019 Chinese New Year 5% 5% 300 300 % changes

0% 0% % changes 200 -5% 200 -5% 100 -10% 100 -10% - -15% - -15% 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Week No. Week No.

% 2020 2019 % 2020 2019 Average Daily Demand by Month 700 30%

600 25% 20% 500 15% 400 10% GWh 2.9% 300 1.9% 1.4% 5%

0% % changes 200 -5% -3.4% 100 -10% - -15% Jan & Feb Ma rch April Ma y Week No. 23 % Change 2020 2019 Source:Taipower Never forget to check the temperature….

Taipei temperature comparison (Jan - May)

10 Jan Feb Mar Apr May 2019/2020 5 -3.2% -1.1% 4.7% -13.6% 7.7% YoY 0 Apr Apr Apr Apr Apr Apr Apr Apr Apr Apr Jan Jan Jan Jan Jan Jan Jan Jan Jan Jan Jan Feb Feb Feb Feb Feb Feb Feb Feb Feb Ma r Ma r Ma r Ma r Ma r Ma r Ma r Ma r Ma r Ma r Ma y Ma y Ma y Ma y Ma y Ma y Ma y Ma y Ma y Ma y Ma y

2019 2020

35 Taipei temperature comparison - April 35 Taipei temperature comparison - May 30 30

25 25 20 20

15 15 10 10

5 5 0 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 1 2 3 4 5 6 7 8 9 10111213141516171819202122232425262728293031

24 2019 2020 2019 2020 Source:Taiwan Central Weather Bureau Philippine experience highlights temperature in a different way…lockdown has occurred during an exceptional heat wave recovering some of the lost demand

MW Luzon MW Visayas 12,000 2, 200

11,000 2, 000

10,000 2017 2017 1, 800

9, 000 Nearly 50 degrees C 1, 600 July 2017 earthquake ~20% fall in Luzon (extreme heat wave) in Leyte 8, 000 peak demand vs. 1, 400 Limited impact preceding weeks

7, 000 1, 200

6, 000 1, 000 More resilient offpeak demand in Visayas relative to Unlike Visayas, offpeak demand in Luzon, likely reflecting a lower concentration of industrial the main economic region of Luzon demand – we note, however, that quarantine measures 5, 000 has also suffered a sharp decline 800 were implemented later in Visayas compared to Luzon

4, 000 600

3, 000 400

Wk.1 Wk.5 Wk.9 Wk.13 Wk.17 Wk.21 Wk.25 Wk.29 Wk.33 Wk.37 Wk.41 Wk.45 Wk.49 Wk.1 Wk.5 Wk.9 Wk.13 Wk.17 Wk.21 Wk.25 Wk.29 Wk.33 Wk.37 Wk.41 Wk.45 Wk.49 2017 Min 2017 Max 2018 Min 2018 Max 2017 Min 2017 Max 2018 Min 2018 Max

2019 Min (YTD) 2019 Max (YTD) 2020 Min (YTD) 2020 Max (YTD) 2019 Min (YTD) 2019 Max (YTD) 2020 Min (YTD) 2020 Max (YTD)

25 Note: Years have been rebased to show Week 1 commencing from the first Monday of each year; demand figures are ex-post Source: PEMC; TLG analysis Summary points

• Covid-19 incidence rates are still not under control across all countries, but the mortality story is distinctively encouraging and population age demographics are favourable • Lockdowns had by far the largest impact on demand (of course)

• Several countries are showing demand recovery, even modest growth, on a year-over-year basis as Covid progresses and movement restrictions ease – Mainland China’s recovery continues to show strength – Many Asian countries are still poised get back onto a growth track, even if the rate is less than it was – The impact of the rest-of-world economic demise is not yet clear

• In teasing out key factors, just note that February through May has highly variable weather – Normally the peak period for markets like the Philippines – Residential bill shock in the Philippines, for example, will be much greater – Temperature effects also present in the data

• Because growth is already part of many (not all) Asian’ electricity systems, adaptation to a lower rate of growth will often lead to new project deferral, restoring fundamentals sooner

26 About The Lantau Group

Headline Impacts Impact on Fuel Markets

Other Points

Summary

27 Fuel market “stories” are always easiest in retrospect

Dated Brent Price Outlook (Real) Year In US$/bbl Dated 120 over Brent 2017-2018 Year

Higher-than-expected 2014 99.0 100 production management; sharp collapse in 2015 52.4 -47% Venezuelan output; 2019 2016 43.7 -17% US sanction expectations on Price declined 9% y-o-y to 80 Iran; Geopolitical risks $64/bbl in 2019 amidst escalated 2017 54.4 24% US-China trade tensions and weaker global oil demand 2018 71.0 31% 2019 64.3 -9% 60 2020 39.7 -38% ? 2021 41.6 5% 40 2014-2016 2022 44.7 7% US$/bbl (real terms 2020) Oversupply (driven by surge in US output); weak demand; Saudi 2020 Recent events have 20 policy to keep market share Covid-19 and Saudi/Russia been dramatic, but we’ve seen similar year- 0 over-year changes in 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 the past

28 Notes: Forecast prices in 2020US$/bbl; 2010-2019 are actuals, forecast thereafter Source: ICE, Based on latest market forward curves for the front 2 years Korea’s cost-based electricity pool market is a useful “lens” into the impact of the most recent (short-term) fuel market disruption

Snapshot of Short Run Cost-Based Merit Order in Q3 2020 at Different Oil Prices 160

140 PricePrices ($/MWh) at oil price $65/bbl in H1 2020 (prior expectation)

120 PricePrices ($/MWh) at oil price ~$52/bbl in Q1 2020 / ~$23/bbl in Q2 2020 Oil

100

80 LNG

60 Price ($/MWh) Coal 40 Coal and LNG 20 Renewables Nuclear ILLUSTRATIVE

0 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000 100,000 Cumulative Quantity (MW)

• The chart compares typical merit order of the Korea wholesale power market – stacking renewables, nuclear, coal, LNG and oil in the order – against the expected merit order for Q3 2020 based on outturn oil prices since Q1 2020.

• Typically, there are occasions where SRMC of high coal units coincides with low-priced LNG-based units, SRMC of LNG generation mostly sit after coal. And, LNG often sets SMP (more than 85% of the time).

• In 2020, the impact of oil price drop in Q1 2020 on SMP is expected to be realised in Q3 2020. Associated price drop in oil-linked gas volume would make many of LNG-using power plants competitive against coal unit, resulting in reversal of coal and gas in the merit order. (This would be highly dependent on plant efficiencies of coal and gas power units). Accordingly, SMP currently hovering 75-85 KRW/kWh is forecast to drop to 40-50 KRW/kWh level.

29 Note: The supply curve is a snapshot of a particular timeslot of Q3 2020, on the basis of TLG assumptions around availability of each power plant. Source: TLG Analysis The outlook for oil prices has changed less than immediate disruption suggests

Dated Brent Monthly Price Dated Brent and Forward Curves 80 140 Since 2008 70 120 Since 2014

60 June 2014 100 October 2014 50 End 2009 Dated Brent fell to multi year lows of Since 2015 80 Jun 2015 US$17/bbl on April 21, 2020 40 US$/bbl

Global Financial Crisis Financial Global Jul 2018 USD/bbl End 2008 60 Feb 2019 30 Aug 2019 Demand reduction from Covid-19 Spot outbreak following on from the Saudi- Brent May 2020 Russia production standoff 40 20 Jan 2016

10 20

0 0 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024

Jan-2019 Apr-2019 Jul-2019 Oct-2019 Jan-2020 Apr-2020 30 Things to watch: US Oil Production (bbls per day)….

Brent Price Outlook (Real) 14,000 120

100 10,500

7,000 60

3,500

0 0 thousands of barrels produced in the USA per day per thousandsproduced ofin barrels the USA 1983-01-01 1984-01-01 1985-01-01 1986-01-01 1987-01-01 1988-01-01 1989-01-01 1990-01-01 1991-01-01 1992-01-01 1993-01-01 1994-01-01 1995-01-01 1996-01-01 1997-01-01 1998-01-01 1999-01-01 2000-01-01 2001-01-01 2002-01-01 2003-01-01 2004-01-01 2005-01-01 2006-01-01 2007-01-01 2008-01-01 2009-01-01 2010-01-01 2011-01-01 2012-01-01 2013-01-01 2014-01-01 2015-01-01 2016-01-01 2017-01-01 2018-01-01 2019-01-01 2020-01-01

31 Source: www.macrotrends.net Dated Brent Forward Curve Evolution – a lot of strengthening lately – particularly at the back end

Brent Forward Curve USD/bbl As of end of May 65 14 Jan (Before COVID

60 18 Feb -19) February price range 29 May 18 May 55

50 20 March 6 March

45 Long-term price saw a recovery 11 March 9 March in early May because of the easing of economic restrictions 40 Will the near term kill so much investment and expected demand recovery that the long-term 35 shortage risk rises?

25 Near-term prices continued dropping in April due to depressed demand and

29 April insufficient storage 20 Jun-20 Jun-21 Jun-22 Jun-23 Jun-24 Jun-25 Jun-26 Jun-27 Jun-28 Sep-20 Sep-21 Sep-22 Sep-23 Sep-24 Sep-25 Sep-26 Sep-27 Sep-28 Dec-20 Dec-21 Dec-22 Dec-23 Dec-24 Dec-25 Dec-26 Dec-27 Dec-28 Mar-21 Mar-22 Mar-23 Mar-24 Mar-25 Mar-26 Mar-27 Mar-28 Mar-29 32 Source: Bloomberg In Asia Pacific, coal market impacts are strongly influenced by China

China’s annual coal import and export China’s Coal import by country in 2019

350 China became a net 300 coal importer for the Vietnam Others United States 0% first time in 2009 0% 5% 250 Colombia 1% 200 Canada 1% Russia 9% 150

Indonesia 100 46% Mongolia 12% 50

Annual import/export (mmt) import/export Annual 0

-50 Australia 26% -100 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Import Export Net import

Source: NDRC, World Bank Source: Bloomberg 33 China’s thermal generation (coal) down 10% in January-March, but could have been much worse, as there was also sharply reduced hydro availability

China Daily Average Generation mix 2019 – 2020 2017-19 Q1 Changes Jan-Feb vs Mar CAGR % 20 18.6 18.4 17.7 17.8 Total +6.4% -15.6% 17.1 16.7 17.0 Solar 15.8 15 Solar +37.5% +40.2% Win d

Wind +15.0% +19.7% 10 Hydro TWh Note: Weak water flow in Hydro +3.1% -13.6% Q1 and weak demand Thermal both contributed to hydro generation reduction. 5 China also probably Thermal +5.5% -10.5% increased some storage. Nuclear

0 Nuclear +18.5% +1.9% 2017 2018 2019 2020 2017 2018 2019 2020 Jan-Feb Ma r

6 China daily thermal coal consumption estimation -10.3% -8.1% yoy yoy 4

2 Million tonne

0 Jan-Feb 19 Ma r-20 19 Apr-2019 Ma y-2019 Jun-2019 Jul-2019 Aug-2019 Sep-2019 Oct-2019 Nov-2019 Jan-Feb 20 Ma r-20 20

34 Source: Generation from NBS, Demand from CEC. TLG Analysis Coal price dynamics were less immediately responsive, but subsequently responded to downward demand pressure

In US$/MT Monthly Newcastle Coal Price Newcastle Coal Price Outlook (Real) 120 100 140 2017-2018 80 60 Coal prices were historically strong in

USD/MT 40 Coal price has fallen ~32% ~59 recent years as China’s power demand from a year ago to US$59/MT 120 jumped 8.5% y-o-y in 2018. Coal imports 20 increased 3.9% while exports fell by 0 55.3% in 2018

Jan-19 Apr-19 Jun-19 Jul-19 Oct-19 Jan-20 Apr-20 100 Feb-19 Ma r-19 Ma y-19 Aug-19 Sep-19 Nov-19 Dec-19 Feb-20 Ma r-20

Impacts on Fuel Markets Observation: If coal pricesUS$/MT recover 80 faster than (or do not decrease as much as) oil/gas, then gas may enjoy a ? more persistent advantage. This is not 60 a strong theme that we’ve noticed yet in 2019 China, but it would make sense.

US$/MT (real terms 2020) Coal prices plunged nearly 28% y-o-y in 40 2019 to $77.5/MT on the back of 2020 slackened demand from China coupled with switch to gas amidst the glut of Near term outlook expected to remain cheap gas in Europe soft as concerns over weakened economic and industrial activities place 20 growing pressure on demand.

0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Notes: Forecast prices in 2020US$/MT; 2010-2019 are actuals, forecast thereafter 35 Source: ICE, Based on latest market forward curves for the front 2 years About The Lantau Group

Headline Impacts Impact on Utility Costs

Other Points

Summary

36 The pandemic will have different effects in each jurisdiction – however, we can look at the impacts for a generic utility cost structure

Generic Utility Cost Structure in SEA Before Pandemic Other (Retail, Operations) 100% 4% Distribution Network Costs Over 50% of utility costs are largely fixed in the near- term, and thus, demand destruction related to the 16% • These are often the next largest component gen pandemic will generally increase the average costs per kWh for customers corresponding to these costs (NB: not 80% • Distribution is typically more an increase in costs, but in average rates) Transmission costly than transmission 10% The details of the differences between regulatory Generation Generation Costs frameworks from one jurisdiction to the next will (Capacity and FOM) • These are often the largest 60% determine the mechanics of the extent to which these 23% utility cost component, often costs are passed through (future tariffs and ‘clawbacks’), comprising around 70% of and the period over which they are passed through total utility costs • These are often primarily Generation variable costs (~2/3rds), 40% (Fuel and VOM) mostly related to fuel, but also contain a substantial amount of fixed costs related to capacity Broad energy demand destruction globally has placed payments 47% immense pressure on energy prices, which have 20% • These can vary substantially plummeted since the beginning of the year – this will drive by jurisdiction depending on declining variable costs across jurisdictions the generation mix and Domestic fuel availability and policy 0% 1

37 The short-term loss of sales from reduced demand is likely to be more than offset by the longer-term fall in fuel prices

Indicative Analysis of Cost Impacts of Pandemic

Lockdown Period Easing Period Recovery Period (Apr – May 2020) (e.g., Jun – Dec 2020) (2021)

• The process by which demand Demand destruction related to the pandemic will increase the burden of fixed Fixed Cost Pressures: destruction increases end-user Assuming Fixed Costs are ~53% of Total costs for remaining customers tariffs will differ by regulatory regime, and in some cases, this Demand Destruction: -15% -5% -2% (Indicative assumptions) burden may be borne in part by the utilities/retailers Impact on Average Cost: • Generally, this takes more time (Assuming all non-fuel/VOM costs are +9.4% +2.8% +1.1% under most regulatory mechanisms ‘fixed’ in the near-term) to impact end-user rates (lagged)

Fuel Cost Relief: Softened fuel markets related to the pandemic will decrease sector costs for • In regulated jurisdictions, fuel cost Assuming Fuel Costs are ~43% of Total customers savings will be passed through to end-users, albeit with some lag Coal Price Change*: depending on the applicable regulatory (Newcastle, adjusted for shipping) +3% -22% -16% mechanisms • In unregulated jurisdictions, fuel Gas Price Change*: cost savings may not be (Brent price change – this does not account for new gas/LNG contract -25% -54% -41% immediately realized by retailers, slopes or spot purchases of gas/LNG) who often hedge these, nor by customers, who sometimes are Fuel Cost Impact: -4.6% -16.3% -12.1% ‘locked-in’ to specific rates for a period (Assuming fuel costs are 50/50 coal/gas) of time

Net Cost Impact: +4.8% -13.5% -11.0%

* Pre-Pandemic price based on Jan forwards; Post-pandemic based on combination of actual spot prices (April – May 2020) and recent 38forward curves (June 2020 and beyond) Comparison of fuel price expectations / out-turn before and after the pandemic

Newcastle Coal Brent Oil

USD/MT USD/bbl 80 10% 70 0%

5% -10% 75 60

0% -20% 70 50 -5% -30% 65 -10% -40% 40 60 -15% -50%

30 55 -20% -60%

50 -25% 20 -70% 2020-Jul 2021-Jul 2020-Jul 2021-Jul 2020-Apr 2020-Oct 2021-Apr 2021-Oct 2020-Apr 2020-Oct 2021-Apr 2021-Oct 2020-Jun 2021-Jan 2021-Jun 2020-Jun 2021-Jan 2021-Jun 2021-Feb 2021-Mar 2021-Feb 2021-Mar 2020-Aug 2020-Sep 2020-Nov 2020-Dec 2021-Aug 2021-Sep 2021-Nov 2021-Dec 2020-Aug 2020-Sep 2020-Nov 2020-Dec 2021-Aug 2021-Sep 2021-Nov 2021-Dec 2020-May 2021-May 2020-May 2021-May

Change Pre-Pandemic Post-Pandemic Change Pre-Pandemic Post-Pandemic

‘Pre-pandemic’ based on forward curve beginning of February 2020 ‘Post-pandemic’ based on actual spot prices through May 2020, and forward curves at beginning of May for June 2020 onwards

39 About The Lantau Group

Global Financial Crisis as Headline Impacts Comparator

Other Points

Summary

40 A perspective from the Global Financial Crisis

Monthly Electricity Demand

5,000 25% 5,000 25% 25,000 25%

4,500 4,500 20,000 20% 4,000 20% 4,000 20%

17% 3,500 3,500 15,000 15% 3,000 15% 3,000 15%

2,500 2,500 10,000 10% 7% 2,000 10% 10% 2,000 9% 10% 5,000 5% Annual growth rate (%) 1,500 1,500 Annual growth rate (%) 3% Annual growth rate (%) Monthly “Demand” (GWh) Monthly “Demand” (GWh) Monthly “Demand” (GWh) 2% 5% 1,000 5% 1,000 4% 5% 3% 3% - 0% 2% 3% 500 500 -1% 1% -2% 1% 0.1% - 0% - 0% -5,000 -3% -5%

2007 2008 2009 2010 2011 2012 2006 2007 2008 2009 2010 2011 2012 2006 2007 2008 2009 2010 2011 2012

Annual Electricity Demand Growth Rate (%) Annual Electricity Demand Growth Rate (%) Annual Electricity Demand Growth Rate (%) Monthly Electricity Demand (GWh) Monthly Electricity Demand (GWh) Monthly Electricity Demand (GWh)

41 Source: PEMC; EMC; MOEA BOE; Taipower Statistics; TLG Analysis During the GFC, for example, Philippine GDP growth stayed positive through a 15-month decline, taking ~9 months to recover from its bottom

Historical quarterly YoY real GDP growth in the Philippines

10.0% • In the 2008 Global Financial Crisis, Philippine GDP growth fell from 5.1% to 1.1% over 15 months, with electricity demand less impacted (the demand-GDP elasticity trended above 1)

• Whilst the nature of the exogeneous shock from COVID-19 is in many ways unique, analysis of the GFC highlights that the recovery of GDP to pre-GFC levels took 9 months. This is not inconsistent with the recovery currently projected by the IMF, ADB, and World Bank (see RHS) 7.5%

“V” Recovery

5.0%

2.5%

0.0%

Q1-08Q3-08Q1-09Q3-09Q1-10Q3-10Q1-11Q3-11Q1-12Q3-12Q1-13Q3-13Q1-14Q3-14Q1-15Q3-15Q1-16Q3-16Q1-17Q3-17Q1-18Q3-18Q1-19Q3-19Q1-20Q3-20Q1-21Q3-21

42 Note: Third party forecasts for GDP lack quarterly granularity.. Source: Bangko Sentral ng Pilipinas; ADB; IMF; World Bank As of now, the recovery profile is not yet clear – and probably depends most on the nature of COVID-19 response (vaccine, treatment, herd immunity, distancing etc.)

20% Real GDP growth rate yoy

Taiwan South Korea Australia Ma inland China Ma laysia Singapore Thailand Vietnam Philippines

15%

10%

0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020E

-5%

Global Financial Crisis COVID-19 -10%

43 Source: WorldBank, and Bloomberg Some segments (e.g. tourism) will be hurt more deeply and for longer – due to public fear and because of less discretionary income if a prolonged recession

Forecast providers Indicator Impact of COVID-19

44% International tourist arrivals in 2020: three scenarios International air (YoY monthly change %) passenger traffic 80% 20

Airlines’ revenue passenger Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 56% kilometers (intl. and dom.) 0

-20 Actual data International tourism US$910bn (-62%) Scenario 1 receipts US$1,170bn (-79%) -40 Gradual opening of borders Scenario 2 and lifting travel restrictions Scenario 3 Global merchandise trade 13% -60 Monthly change, % volume 32% In July In Sep -80 In Dec

-3% contraction World GDP -100

-6% contraction Source: UNWTO Source: ICAO, IATA, UNWTO, WTO, IMF, Note: All figures are V-shaped recovery 2020 data compared with 2019 data, except for airport revenue figures which are compared to 2020 business-as-usual. U-shaped recovery Commercial flights flow statistics 150,000 2020 domestic 2020 international 2020 not specified 2019 total

100,000

50,000

0 1-Jan 1-Feb 1-Mar 1-Apr 1-May

Source: radarbox.com 44 Sorting out economic impacts will take time. For example, Thailand, hospitality is a significant driver of electricity demand (a correlate with GDP)

Thailand

GWh Historic power consumption by industry type GWh Historic power consumption by business type 90,000 90,000

80,000 80,000

70,000 70,000

60,000 Manufacturing (Other) 60,000

50,000 Petroleum, Natural Gas 50,000 & Petrochemicals 40,000 40,000 Food 30,000 30,000 Restaurants & Hospitality 20,000 20,000 Retail 10,000 Metals, Metal Products, and Machining 10,000 Government, Public Services, and NGOs 0 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Metals, Metal Products, and Machining Food Petroleum, Natural Gas, and Petrochemicals Manufacturing (Other) Government, Public Services, and NGOs Retail Textiles Agriculture, Forestry, and Fishing Restaurants and Hospitality Logistics, Transportation, and Storage Mining Other Real Estate Wholesale Financial Institutions Construction

45 Note: Analysis based on TLG interpretation of TSIC codes - all industry types not necessarily represented Source: EPPO; TLG analysis China seems likely to recover faster (at this point) but exports from ASEAN countries depend heavily on USA and EU markets

Export from ASEAN to USA Export from ASEAN to EU28 Export from ASEAN to China (2019) (2019) (2018) 70 50 70

60 60 40

50 50

30 40 40

30 30 Billion USD Billion USD Billion Euros 20

20 20

10 10 10

0 0 0

Laos Laos Laos Brunei Brunei Brunei VietnamMa laysiaThailand VietnamMa laysiaThailand VietnamMa laysiaThailand SingaporeIndonesia CambodiaMyanmar SingaporeIndonesia CambodiaMyanmar IndonesiaSingapore Myanmar Cambodia

The Philippines The Philippines The Philippines

46 Source: USA census, European commission, and General Administration of Customs of China Agenda

1. Executive Summary 2. Overview of Singapore Electricity Market About The Lantau Group 3. Key Market Drivers

4. ModellingHeadline Results Impacts

5. Appendix Other Points

Summary

47 About The Lantau Group

Headline Impacts

Other Points Diversity

Summary

48 Wide variations in industry mix – suggesting very uneven impacts likely

Percentage Share of GDP by Industry Type (2018)

Cambodia 16% 23% 40% 22%

Vietnam 16% 28% 41% 15%

Malaysia 22% 18% 52% 8%

China 29% 11% 53% 7%

South Korea 27% 17% 54% 2%

Thailand 27% 8% 57% 8%

Philippines 19% 12% 60% 9%

Taiwan 33% 4% 61% 2%

Australia 6% 25% 67% 2%

Singapore 21% 10% 69% 0%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Manufacturing Non-Manufacturing Industry Services Agriculture

49 Source: WB, TW Stats, TLG analysis Markets like Singapore, Japan, Thailand, Korea (for example) all import LNG and will benefit (or offset pain) via lower imported fuel costs

(others like Philippines have gas linked to oil prices, and others like Taiwan, Malaysia and Vietnam import a lot of coal)

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0% Vic, Vietnam Indonesia Korea Ma laysia Taiwan China New Delhi, Thailand Me ra lco, WA , Tepco, Singapore Australia India Philippines Australia Japan

Hydro Other Renewables Nuclear Coal Natural Gas Oil Other

Source: Department of the Environment and Energy - Australian Energy Statistics, Electricity of Vietnam (EVN), Ministry of Energy and Mineral Resources Republic of Indonesia, Bureau of 50 Energy - Ministry of Economic Affairs - Taiwan, China Electricity Council, Central Electricity Authority – India, Meralco & Department of Energy – The Philippines, TEPCO – Japan, IEA, Countries like Vietnam with remarkably high growth rates may slow down, but are unlikely to reverse

Power demand by sector in Vietnam 05-18 CAGR of Consumption 200 192 40 • Against the backdrop of strong economic +9.1% growth, electricity consumption more than 180 175 trebled from 46 TWh in 2005 to 192 TWh in 35 +18.4% 2018 – representing a CAGR of nearly 11.7% 05-18 159 160 Consumption over 2005-2018 period. Peak demand is CAGR 144 30 growing at a CAGR of 10.8% during the same 140 period. +11.7% 129 115 25 120 • The industrial sector is the main driver of 105 +13.5% electricity demand, accounting for over half 100 95 20 (55%) of electricity consumption in 2018, 86 Peak Demand having grown at 13.5% CAGR since 2005. 75 CAGR 10.8%

80 Peak demand (GW) 66 15 • The residential sector accounts for Consumption (TWh) Consumption 58 approximately one third of total electricity 60 51 46 +13.6% consumption, with its share having gradually 10 reduced over time. Its CAGR of 9.1% is lower 40 than demand growth in either the industrial or 5 20 commercial sectors. +9.1% • The commercial and agricultural sectors 0 0 account for a relatively small portion of electricity demand but recorded relatively 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 robust CAGR 13.6% and 18.4% respectively Residential Commercial over the 2005-2018 period. Industrial Agriculture Others Peak Demand

51 Source: ADB, EVN and EVN NLDC Implications will vary greatly by region, and not just by country

Power demand growth YoY

2020 Jan-Feb 2020 Mar Northeast Grid Northeast Grid 2020 April Northeast Grid

+2.4% -1.2% +0.3%

+5.4% +1.3% +1.2% +1.0% +5.0% +1.5% +4.9% -1.1% +5.5% -4.0% +7.0% -0.5% +4.9% North Grid -3.3% -1.0% North Grid -3.4% +6.6% North Grid -7.2% -8.2% -7% -0.6% -7.6% Northwest Grid -4.6% Northwest Grid -1.7% Northwest Grid -4.1% +0.1% -8.8% -0.6% -8.6% +1.4% -9.1% -1.2% +1.4% +1.3% +6.4% -0.4% -7.9% -0.7% +2.0% -13.7% -6.5% +0.5% -16.8% -6.3% +0.3% -2.3% Central Grid - -5.4% Central Grid -0.8% +11.7% Central Grid +5.3% -2.6% -20.0% 10.4% -12.9% -2.9% -28.3% -9.3% +4.5% -5.4% -2.3% East Grid -7.9% -21.3% -1.3% -0.0% -12.2% -6.9% East Grid -0.8% East Grid -6.7% -8.5% +6.6% -1.4% +5.9% -5.5% -2.7% +5.1% South Grid -7.9% -6.8% South Grid -2.5% +6.6% +4.3%South Grid +9.3% -1.9% -3.8% +5.2% -13.2% Central grid and -6.2% -5.6% costal provinces were -4.9% hit bad, and has not -7.8% -11.7% recovered to 2019 level in March. Almost all provinces saw improved growth rate in April. 20% Jan-Feb Ma r April 10% 0% -10% Northeast Northwest South -20% Central Grid East Grid North Grid Grid Grid Grid -30%

Jilin Anhui Tibet JiangxiHenan HubeiHunan FujianBeijing Tianjin HebeiShanxi Gansu Sichuan Jiangsu Shaanxi QinghaiNingxiaXinjiang HainanYunnan Shanghai Zhejiang Liaoning Guangxi Guizhou Chongqing Shandong Heilongjiang Guangdong 52 Inner Mongolia Source: CEC; TLG research and analysis For some, fuel cost decreases already more than offset demand reduction

Generation Total operating Total operating Profit margin output 2020Q1 income 2020Q1 cost 2020Q1 vs. 2020Q1 vs. vs. 2019Q1 vs. 2019Q1 2019Q1 2019Q1

Datang International -5.7% -2.3% -3.3% +64.3% (601991.SH)

Huadian International -10.8% -6.0% -9.1% +54.4% (600027.SH)

Huaneng International -18.5% -11.6% -11.2% -22.4% (600011.SH)

China Resources Power -12.5% -8.2% N/A -10.4% (00836.HK)

Guangdong Electric -16.2% -15.8% -13.9% -93.3% Power (000539.SZ)

Zhejiang Zheneng Electric Power -36.8% -34.1% -32.8% -47.6% (600023.SH)

Note: Generation output - 完成发电量; Total operating income - 营业总收入; Total operating cost - 营业总成本; Profit margin - 归属于上市公司股东的净利润 Source: Company announcements; TLG Analytics, Caixin

53 About The Lantau Group

Headline Impacts

Other Points Tariffs

Summary

54 To date in most countries’ residential demand has increased due to stay-at- home working, affecting ~15% to 30% of overall load

Residential Share of GWhs

Bangkok Beijing Hanoi

14% 26% 32%

68% 75% 86%

Kualu Lumpur Manila Seoul

14% 23% 28%

72% 78% 86%

Singapore Taipei

17% 18% Residential

Non-Residential 83% 82%

55 Source: TLG Research China’s electricity consumption trends – like most countries – saw residential use increase, with secondary industry and hospitality sectors hit the hardest

Secondary industry Q1 2020 vs. Q1 Tertiary industry Q1 2020 vs. Q1 2019 growth 2019 growth breakdown breakdown

Four energy-intensive 27% -5.00% industries Telecommunication/softwa 20 re/IT services High-tech and -14.80% equipment -22.80% Hospitality & dining 0.7 manufacturing 0 Consumer goods Retail and wholesale -18.50% -15.50% manufacturing services -20 Rental & Commercial -14.40% -8.90% other manufacturing services

-12.20% Real estate -40 -25% -15% -5% 5% Transport/Storage/Mail

TWh -5.20% services -60 -30%-20%-10% 0% 10% 20% 30% Change in in Change -80

-92.9 -100 10.2

-120 -23.1

-140 Primary industry Secondary industry TertiaryThird industry Residential

• The 2019 residential growth was 5.7%, with 2019Q1 grew 11% compare to 2018Q1; thus the growth rate in 2020Q1 is not as high as 2019Q1 56 • For tertiary industry, the Telecommunication/IT growth in 2019Q1 was 9.5%, thus the 27% growth in 2020Q1 more than twice the growth in 2019Q1 • Residential electricity consumption contributes to 17% of the overall consumption in 2019Q1, and 19% in 2020Q1. Residential customers pushed to higher usage may see disproportionate bill shock. Could this influence behind-the-meter technologies?

1 Rising Block Tariff Structure 2 Fixed + Volumetric Tariff Structure More common in Asian economies to help subsidise costs below cost- This more cost-reflective structure is more common in Europe, US and reflective levels for low consumption (typically lower income) groups Australasia, as well as Singapore and the Philippines

40 40 Marginal Cost Average Cost (US cents / kWh) (US cents / kWh)

30 30

20 20

10 10

0 0 0 200 400 600 800 1,000 1,200 1,400 1,600 0 200 400 600 800 1,000 1,200 1,400 1,600 Monthly Consumption (kWh) Monthly Consumption (kWh)

Taipei Kuala Lumpur Seoul Bangkok Sydney Singapore Ma nila Beijing Ma nila Hanoi

57 NB. Manila is included on both charts, as its residential tariff has both rising block volumetric charges and fixed charge components. Future tariff reforms/increases may well be needed the more that COVID-19 impacts result in unrecovered costs or accrued losses for utilities

(Many C&I customers pay a premium in Asia to cross-subsidise domestic customers – there could be much less scope for some countries to increase C&I tariffs disproportionately without damaging recovery prospects)

Low Tension Commercial High Tension Small Commercial Many variable rate only structures More commonly fixed + variable SGD/MWh SGD/MWh (‘flat schedules’) tariff structure (‘curved schedules’) 60 60

50 50

40 40

30 30

20 20

10 10

0 0 20% 30% 40% 50% 60% 70% 80% 90% 100% 20% 30% 40% 50% 60% 70% 80% 90% 100% Load Factor (%) Load Factor (%)

Hanoi Beijing Bangkok KL Hanoi Beijing Bangkok KL Sydney Ma nila Seoul Taipei Sydney Ma nila Seoul Taipei

58 Source: TLG Research (2019 data) Cross subsidies are common in Asian electricity pricing

3.0 C&I Tariffs > Domestic Tariffs 3.0 Domestic Tariffs > C&I Tariffs Not Based on Cost-to-Serve Based on Cost-to-Serve 2.5 2.5

2.0 2.0

1.5 1.5

1.0 1.0

0.5 0.5 Ratio of C&I Tariffs to Domestic (Residential)Domestic Tariffs to Tariffs C&I Ratioof 0.0 0.0 New Delhi Kuala Beijing Taipei Hanoi Singapore London New York Melbourne Frankfurt Lumpur

Commercial LT Commercial HTS Commercial HTL Commercial EHT Commercial LT Commercial HTS Commercial HTL Commercial EHT

Usually domestic customers have a higher cost-to-serve due to more infrastructure per electron

59 Note: TLG Research, based on 2018 data

Note: Customer types are defined by a load profile and usage level Power Tariff Relief Measures in the Region (1 of 3)

Location Measures User Group Duration Coverage and Funds

3% discount on electricity All types Apr-Jun 3.9 mil users, totalling 1,600 mil baht. bills 6-month payment Type 5 Apr-May 3,400 users, totalling 1,400 mil baht. extension (Hotel, rental business) Type 1 and 2 Refund of electricity Indefinitely since (Households and small 3.8 mil users, totalling 13,000 mil baht. meter deposit 31 March Bangkok, businesses) Thailand Cancellation of minimum Type 3, 4, 5, 6, 7 29,000 users, totalling 167 mil baht electricity charge* (medium-large businesses) Increase of free electricity Home type 1. 1 usage cap from 50 to 90 Consumption ≤ 90 kWh with Apr-Jun 205,000 users, totalling 74 mil baht kWh/month less than 5A meters） 6-month payment Home type 1.1 165,000 users, totalling 300 mil baht extension (Consumption ≤ 150 kWh) • Households from rate 1 to • VND 2.9 trillion for households rate 4 (0-300kWh) 10% discount • VND6 trillion for businesses and • Businesses and manufacturing companies Hanoi manufacturing companies Apr-Jun Vietnam Tariff adjusted to that of Service businesses (including VND 1.8 trillion manufacturing industry hospitality and accommodation) COVID-19 isolation and Power bill exemption VND 100 billion treatment facilities

60 Source: public information, TLG research Power Tariff Relief Measures in the Region (3 of 3)

Coverage and Location Measures User Group Duration Funds Household category: Home power, Business / religious buildings Exemption of electricity cost up to Non-household category: 150 kWh; Industries, Businesses, Street light, Government Myanmar Exemption of meter charge for Apr N/A Offices, State-owned industries, State-owned customers consuming less than 150 enterprises, Irrigation, Development Office / Works, kWh Non-Governmental Organizations, Foreign embassies, International Organizations Mainland Big industrial and C&I customers (excluding high 5% reduction Feb-Dec RMB 112.6 billion China energy consumption customers) 10% reduction (no more than NT$ Low Tension customers with 15%~50% YoY 100,000/month); 4-mon payment All industrial, C&I, revenue drop extension public organizations, Lower contracted capacity and agricultural applicable (thus reducing capacity High Tension customers with 15%~50% YoY customers fee) or 10% reduction (no more than revenue drop (there are Taiwan NT$ 500,000/month) Mar-Sep separate 30% reduction (no more than NT$ measures for Low Tension customers with more than 50% YoY 300,000/month); 4-mon payment agriculture & revenue drop extension public organizations, Lower contracted capacity + 30% High Tension customers with more than 50% YoY excluded in this reduction (no more than NT$ 3 revenue drop table) mil/month)

61 Source: public information, TLG research Power Tariff Relief Measures in the Region (2 of 3)

Location Measures User Group Duration Coverage and Funds

• 24 million customers (450 Household (450VA, least Power bill exemption VA) Jakarta, usage group) • 7 Million customers (900 VA) Apr-Jun Indonesia • Combined cost of Rp 800 Household (900 VA, billion ~ 1 trillion/mon, 50% discount second lowest group) estimated by IESR Manila, 1 month (bills due 30-day payment extension All types N/A Philippines on Mar 1— Apr 14) 5 targeted sectors: Tourism, Hospitality, Brunei 15% discount on electricity bills Apr-Sep N/A Restaurant and Café, Air Transport, Water Transport

62 Source: public information, TLG research Financial performance and tariff implications

• Two factors are occurring – Demand reduction à revenue loss from C&I customers who contribute in many Asian countries more than their “cost to serve” relative to domestic customers. Consequently, utilities lose more money relative to costs, when C&I sales drop, and make less money relative to costs when Domestic sales increase. • This effect will roll forward potential financial losses to be recovered in the future – Fuel cost reduction à potential savings for a given fixed tariff if actual fuel costs are less than embedded fuel costs in the tariffs • This effect is likely to more than offset demand reduction effects – but will play out over time • Which “wins” depends on duration and magnitude of each factor – Lockdowns have the greatest depressing impact on demand with material recovery once removed – A lingering recession (globally) would likely keep fuel costs lower, longer – Smoothing mechanisms could spread tariff “pain” over time, but some regulatory arrangements that exist currently have no formal longer-term cost-recovery mechanism for non-capex factors to cater for COVID- 19 related demand reduction

• On top of this is the prospect of direct support to customers that may be channeled through utilities either in the form of tariff freezes or reductions when tariffs might otherwise have increased or stayed constant, or other yet to be fully worked out mechanisms

63 About The Lantau Group

Headline Impacts

Other Points Investment

Summary

64 “New infrastructure”（新基建) is and will be a key buzzword of the post- COVID19 stimulus for several countries, notably (but not only for) China

Summary of New Infrastructure areas and relevant targets

• After the global financial crisis in 2008, China’s stimulus Area Targets spending focused on housing, highways, bridges and airports, resulting in a big boost for consumption of steel Build more than 550,000 base stations by the end of 2020 and finish a 5G network that covers the and concrete, along with the power consumption of those 5G networks industries. entire country by 2025 (approximately 5-5.5 million base stations) • This time around, the so-called “New Infrastructure” No quantitative targets, just to built “a number” of large and super-large data centers and edge stimulus plan is targeted on seven new areas, namely: Data centres 5G networks, data centres, AI, the industrial Internet of computing data centers to meet China’s data Things, UHV transmission lines, high-speed rail, and EV storage needs. charging infrastructure. Stimulus funding has been Construct 20 pilot zones for innovation and AI allocated for 10 trillion RMB, 2.5 times larger than the development of next-gen AI by 2023. stimulus funding allocated after the global financial crisis. Build 3-5 competitive industrial IoT platforms by Industrial IoT 2025. • China Southern Grid estimates growth from data centre power consumption will comprise 3.4% of all new By the end of 2020, a total of 16 new projects demand growth in Guangdong and 6.6% of all new UHV under construction or pending final approval, with growth in Guizhou out to 2025; Construction of new 5G 7 more in the finance scoping phase base stations and EV charging infrastructure are 12,000 new charging and battery swapping estimated to contribute 2.1% and 2.5%, respectively, to stations by the end of 2020, with 36,000 by 2025; all new power demand in the South China Grid over that EV charging 4.8 million charging piles by the end of 2020 and a same period. infrastructure national EV to charging pile ration of 1:1 by 2025.

High speed rail Open 14 new lines by the end of 2020

65 Source: CCID white paper, Caixin, TLG Analysis China’s situation has changed dramatically…..from a “red light” for coal….

Provincial risks of developing new coal-fired power capacity as part of the ‘traffic light system’

2019 2020 2021 2016 updates 2017 updates 2018 Updates

Heilongjiang Heilongjiang Heilongjiang Jilin Jilin Jilin Xinjiang Liaoning Liaoning Xinjiang Liaoning Beijing Xinjiang Inner MongoliaBeijing Beijing Gansu Inner Mongolia Gansu Inner Mongolia HebeiTianjin Gansu Tianjin ShanxiHebeiTianjin Ningxia Ningxia Hebei Qinghai Ningxi Qinghai Shanxi Shandong Shandong Shaanxi Qinghai Shanxi Shandong a Shaanxi Henan Shaanx Henan Jiangsu Henan Jiangsu Jiangsu Tibet Anhui Tibet Sichuan Anhui Sichuan Hubei Tibet i Anhui Hubei Chongqing Shanghai Sichuan Hubei Shanghai Chongqing Shanghai Zhejiang Chongqing Zhejiang Huna Jiangxi Zhejiang Jiangxi Guizhou Jiangxi Hunan GuizhouHunan n Guizhou Fujian Yunnan Fujian Fujian Yunnan Guangxi Guangxi Yunnan Guangxi Guangdong Guangdong Guangdong Hainan Hainan Hainan Coal projects are allowed to under Provincial government and developers are required Suspend approving and building new coal projects government's guidance to consider cautiously on developing coal projects

Green Anhui, Jiangxi and Hainan Hunan and Hainan Shanxi, Hubei, Jiangxi, Anhui and Hunan

Orange Hubei Anhui, Henan, Hubei and Jiangxi Henan and Liaoning

• NEA assess the risks based on the following factors: Divergence of interests between the provincial 1. Existing coal capacity and reserve margin and central governments; and firms with 2. Estimated return rate of coal projects competing interests also played a role in 3. Local water resources, coal demand and emissions undermining the capacity cut policies

66 Source: NEA; TLG analysis Restraints on coal have been relaxed. But should coal still make sense?

2022 2023

2019 Updates 2020 Updates

Heilong Heilongjiang jiang West Inner Mongolia Jilin Jilin Liao Xinjiang East Inner N.Hebei Liaoning N.Hebei ning Xinjiang Inner Mongolia Gansu Mongolia Beijing Gansu Beijing Tianjin Tianjin S.Hebei Ning S.Hebei Ning Shan Shan Shan xia Shandong xia xi Qinghai xi Qinghai dong ShaanHenan Jiang Shaan Henan Jiang xi su xi Tibet Shanxi Tibet su Sichuan Hubei Anhui Shanghai Chong Hubei Anhui Shanghai Chong Shanxi Sichuan qing qing Zhejiang Jiang Zheji Hunan Hunan Jiang xi ang Guizhou Guizhou xi Fujian Fujian Yunnan Guang Yunnan Guang Guangxi dong Guangxi dong

Hainan Hainan Number of High Risk Alert (Red) Provinces for Coal Newbuilds 30 26 • High risk areas for coal newbuilds in 2023 decreased to 9 24 25 22 provinces, a 63% reduction from previous year 20 15 • While newbuild alert eased, potential economic risks remain 15 similar to previous year 9 10 • General trend shows that governing authorities’ restraint has 5 hit a turning point and boosting economy is reprioritized. 0

67 2016-19 2017-20 2018-21 2019-22 2020-23 Source: NEA; TLG analysis Note: 2016-19 means coal power alert for 2019, published in 2016. The options for gas vs coal are theoretically much more balanced and open at present; the coal development “pipeline” is thinner in China than in the past

Annual Approved Coal Annual Thermal Incremental Capacity (GW) Project (GW) 2016 50.48 35.9*

2017 44.53 15.05

2018 43.80 8**

2019 40.92 6.31

Q1 2020 7.02 ~10

*Among 35.9GW of projects approved in 2016, 14 GW was ordered to pause/delay by NEA in 2017. Construction/grid connection of some of those projects had already been deferred to 2020. ** Estimation

68 Source: CEC; public information; TLG analysis RE investment will be exposed more to falling fuel costs and will depend more on falling technology costs or perhaps more corporate support (CSR driven)

New policy on coal on-grid benchmarked tariff: Renewable LCOE and on-grid coal tariff NDRC, No. [2019] 1658 • The historical coal-power price linkage mechanism is 115 Illustrative abolished. • A new “Base benchmark tariff plus floating” mechanism is introduced from January 2020. 110 • Base benchmark tariff is existing coal on-grid benchmark tariff for each region, which allows for a cap of 10% and a 105 floor of 15% Current on-grid coal tariff • The coal on-grid tariff is not allowed to increase in 2020 to ensure that the C&I retail tariffs do not increase. Reduced on-grid coal tariff 100 LCOE

10% 95 Max. Base Benchmark 0% in 2020 Coal Price 90 Grid-parity delay 15% Min. 85 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Background of the now abolished coal and power price linkage • For grid-parity project, lower on-grid tariff means mechanism: the on-grid coal power price is to be adjusted when the renewable project developers need to wait for longer average 6 months coal price fluctuates more than 5%. The time to install new capacity for CAPEX to decrease. mechanism was refined in 2015. Adjustments have been made This can translate to slow capacity growth in the eight times since it went into effect. forthcoming years.

69 Source: NDRC, World Bank, TLG Research and Analysis RE development is still early stage in many countries, with many drivers, not just the relative cost of conventional fuels

Main RE promotion RE development trend GW RE future development trend approach 0 RE5 capacity10 additions15 (2017-2019)20 25 30 /Comments

Singapore Tenders (apply to BTM) SG Only solar; limited development; 2GW solar by 2030

Taiwan FIT (apply to BTM) ~85% addition from rooftop solar; 30GW TW 1 1.5 RE by 2025

Vietnam FIT/Auction (soon) 14.5 GW solar by 2025 VN 5 (apply to BTM) Solar only Malaysia FIT/Auction (apply to grid- 3.8 GW RE needed to meet 2025 target of MY 20% RE connected RE) 0 50 100 150 200 250 China FIT/Auction/RPS (soon) FIT phasing out; Forecast1 annual addition th (apply to BTM) CN 83 78 68 of wind 53GW, solar 58GW during 14 Five-Year-plan

Japan FIT/Auction (apply to grid- 22%-24% RE generation by 2030 connected RE) JP 6 12 7

Thailand Auction (apply to grid- 20% RE generation by 2037, adding 21 connected RE) TH 1.1 GW of new capacity

Philippines FIT/Merchant (RPS) (soon) FIT is based on a ‘first come, first served’ (apply to grid-connected RE) PH quota system with limited quota

Korea RPS (apply to grid-connected 30-35% renewable generation by 2040 RE) KR 1.7 2.3 2.3 (cost-based pool market and REC market)

2017 2018 2019

Mainland China GW 0 50 100 150 200 250 Rest of the counties/regions 0 5 10 15 20 25 70 1CERO 2019 by CNREC Source: TLG analysis and research; REN21, IRENA Agenda

1. Executive Summary 2. Overview of Singapore Electricity Market About The Lantau Group 3. Key Market Drivers

4. ModellingHeadline Results Impacts

5. Appendix Other Points

Summary

71 Observations

• Huge disruption – increasingly disproportionate to comparative numbers of cases and deaths – a slow, long-term recovery with a significant amount of government support required • Manifesting also as materially lower conventional fuel prices – Surely there will be a stronger gas and gas infrastructure story emerging

• Some disadvantage to grid-connected renewables, but behind-the-meter (rooftop) story depends much more on tariff structures which are likely to continue to favour development, especially if domestic usage increases or pricing volatility increases

• In some ways, much of Asia’s electricity sector is in better position for these developments than in the past – Imported gas is suddenly much lower in cost – giving new impetus to gas infrastructure development/discussions that have been going in circles in several markets for some time – Not as much “excess” capacity to begin with – RE outlook is the most complicated aspect, but should remain a growth area given the relatively low level of RE development in the region overall and the many locational differences in the region

• Key uncertainty is longer-term nature of the recovery if the rest-of-world slips more deeply into a lingering recession

72 End

Electricity Gas Networks

Insight By email

Mike Thomas Rigour [email protected]

Online Value www.lantaugroup.com

Hong Kong | Singapore | Seoul | Perth | Shanghai (Nicobar Group)