• 3 hours UK On Track To Approve Construction of “Mini” Nuclear Reactors
  • 7 hours LNG Glut To Continue Into 2020s, IEA Says
  • 9 hours Oil Nears $52 With Record OPEC Deal Compliance
  • 12 hours Saudi Aramco CEO Affirms IPO On Track For H2 2018
  • 14 hours Canadia Ltd. Returns To Sudan For First Time Since Oil Price Crash
  • 15 hours Syrian Rebel Group Takes Over Oil Field From IS
  • 3 days PDVSA Booted From Caribbean Terminal Over Unpaid Bills
  • 3 days Russia Warns Ukraine Against Recovering Oil Off The Coast Of Crimea
  • 3 days Syrian Rebels Relinquish Control Of Major Gas Field
  • 3 days Schlumberger Warns Of Moderating Investment In North America
  • 3 days Oil Prices Set For Weekly Loss As Profit Taking Trumps Mideast Tensions
  • 3 days Energy Regulators Look To Guard Grid From Cyberattacks
  • 3 days Mexico Says OPEC Has Not Approached It For Deal Extension
  • 4 days New Video Game Targets Oil Infrastructure
  • 4 days Shell Restarts Bonny Light Exports
  • 4 days Russia’s Rosneft To Take Majority In Kurdish Oil Pipeline
  • 4 days Iraq Struggles To Replace Damaged Kirkuk Equipment As Output Falls
  • 4 days British Utility Companies Brace For Major Reforms
  • 4 days Montenegro A ‘Sweet Spot’ Of Untapped Oil, Gas In The Adriatic
  • 4 days Rosneft CEO: Rising U.S. Shale A Downside Risk To Oil Prices
  • 4 days Brazil Could Invite More Bids For Unsold Pre-Salt Oil Blocks
  • 4 days OPEC/Non-OPEC Seek Consensus On Deal Before Nov Summit
  • 5 days London Stock Exchange Boss Defends Push To Win Aramco IPO
  • 5 days Rosneft Signs $400M Deal With Kurdistan
  • 5 days Kinder Morgan Warns About Trans Mountain Delays
  • 5 days India, China, U.S., Complain Of Venezuelan Crude Oil Quality Issues
  • 5 days Kurdish Kirkuk-Ceyhan Crude Oil Flows Plunge To 225,000 Bpd
  • 5 days Russia, Saudis Team Up To Boost Fracking Tech
  • 6 days Conflicting News Spurs Doubt On Aramco IPO
  • 6 days Exxon Starts Production At New Refinery In Texas
  • 6 days Iraq Asks BP To Redevelop Kirkuk Oil Fields
  • 6 days Oil Prices Rise After U.S. API Reports Strong Crude Inventory Draw
  • 6 days Oil Gains Spur Growth In Canada’s Oil Cities
  • 6 days China To Take 5% Of Rosneft’s Output In New Deal
  • 6 days UAE Oil Giant Seeks Partnership For Possible IPO
  • 6 days Planting Trees Could Cut Emissions As Much As Quitting Oil
  • 7 days VW Fails To Secure Critical Commodity For EVs
  • 7 days Enbridge Pipeline Expansion Finally Approved
  • 7 days Iraqi Forces Seize Control Of North Oil Co Fields In Kirkuk
  • 7 days OPEC Oil Deal Compliance Falls To 86%
Alt Text

Footloose Iraq Cannibalizes Saudi Market Share

OPEC’s de-facto leader Saudi Arabia…

Alt Text

This Key Data Points At Strong U.S. Oil Demand

U.S. Gasoline prices haven’t risen…

Michael McDonald

Michael McDonald

Michael is an assistant professor of finance and a frequent consultant to companies regarding capital structure decisions and investments. He holds a PhD in finance…

More Info

Is A Pan-Asian Power Grid Possible?

Bengal refinery

After a series of massive investments into the power industry, China is now looking for ways of exporting excess electricity. This past March, the Interconnection Development & Cooperation Organization was established with the goal of creating the means to transport power across Asia. Countries such as India, South Korea, and Japan have already expressed an interest in the plan, along with other neighboring countries.

The Asia Super Grid would require billions of dollars invested in high voltage power lines over the next several decades. Planners are also considering how to deal with the problem of energy loss, undeveloped regions and obstacles such as mountains. If the project were successful, however, it would signal the integration of smart grids, high voltage power lines and renewables across numerous countries. This could indicate higher efficiency and result in lower electricity prices.

This could be a big win for advocates of renewable energy. The cost to create coal-powered plants in China is at an all time low, meaning an influx in manufacturers. These additional plants have limited utilization of older ones, which now stands at less than 50 percent, according to an article by Sierra Club. China is now taking the necessary steps to restrict future coal plant’s construction, but projects under development will continue. Investors should be weary of coal producers like Shenhua Energy Co., Shaanxi Coal and Chemical Industry Group Co. who are likely to underperform in this time of limited demand and inundated supply.

Announced at the G20 summit this past September, China and the United States joined the United Nations in their global effort to halt climate change. This includes increased dependence on renewables and stepping away from sources of power like coal in order to reduce their combined total of 40 percent of the earth’s carbon emissions. Companies specializing in renewable energy production would likely benefit from a larger, more connected Asian power market. Power Construction Corp. of China Ltd. is diversified across multiple forms of renewables and will earn returns based on these activities.

Countries like India struggle to meet demand for energy primarily due to the number of rural households in their country. As of 2015, over 240 million households in India have no accessibility to electricity. India is extremely reliant on coal plants and coal generation is increasing by a staggering amount.

(Click to enlarge)

Source: India Energy Outlook 2015 Related: Oil To Crash Back To $40 If OPEC Fails

Ramping up coal production isn’t solving the power crisis, though. The dim villages are so remote that no electricity is likely to reach them. By expanding the abundance of Asian power lines, India can ease off coal production with Chinese power exports and focus on funding the production of stand-alone renewable energy systems in these isolated regions.

Following the conception of the Chinese group in March, multiple companies have agreed to participate in the planning of this continental grid. Softbank Group Corp., Korea Electric Power Corp., and Russian Rosseti PJSC will be conversing on potential options along with China. Softbank, a Japanese firm that specializes in telecommunication networks, announced in October that they would be working with Saudi Arabia and other partners over the next few years to fund technology projects possibly amounting to over $100 billion. All three of these public companies could prove to be successful long-term investments if their plans pan out.

Coal, on the other hand has been fizzing out for a while with environmentally conscious governments pushing to lower carbon emissions meaning demand will likely drop off in the coal market over the next several years. Investors should react accordingly and watch for changes pertaining to characteristics of the power grids in Asia.

By Michael McDonald of Oilprice.com

More Top Reads From Oilprice.com:

Back to homepage

Leave a comment
  • Elaisa on November 06 2016 said:
    Power grids are more vulnerable than distributed generators.
    BrilliantLight Power, and Brillouin and others are preparing their first generation of devices.

    MagravBlueprintingProject off grid


    Infinity SAV magnetic generator

  • Bill Simpson on November 08 2016 said:
    Those Chinese are brilliant. They can save hundreds of billions on wasteful defense spending by investing in electricity infrastructure. In a decade, if will be, "Do it, or we shut down your electric grid." How would you answer that question? Suffer rotating blackouts for a decade until you can throw off the Chinese handcuffs? Very little chance of that happening.
    Too bad the US never had any long range plans. That is why this will be the century when China becomes the dominant global power. While scientists and engineers run China, we let the masses, who use what they see in movies and on Facebook as their information source, decide our national policy. It is rule by the uninformed. Thankfully, the oceans and nukes will prevent any country from dominating us politically.

Leave a comment

Oilprice - The No. 1 Source for Oil & Energy News