Philippines ripe for Smart Energy Solutions
With the Philippines’ cost of power among the highest in the region and being one of countries that are most vulnerable to natural disasters, the country is ripe for smart energy solutions.
Pierre Cheyron, chief executive officer of ENGIE Services Asia-Pacific, is undertaking a more aggressive ambition in the Philippines with its smart energy systems.
ENGIE Services Asia-Pacific is part of the ENGIE Group, one of the largest independent power producers in the world and leader in energy efficiency services worldwide.
The 50-year-old French company with a grand history, having built the Suez Canal in the 19th century, has modified its energy infrastructure business looking into the low carbon and sustainable solutions of the entire energy chain.
ENGIE is committed to taking on the major challenges of the energy revolution, towards a world more decarbonized, decentralized and digitalized.
The Group aims to become the leader of this new energy world by focusing on three key activities for the future: Low carbon generation, in particular from natural gas and renewable energy, energy infrastructure and efficient solutions adapted to all its customers (individuals, businesses, territories, etc.). Innovation, digital solutions and customer satisfaction are the guiding principles of ENGIE’s development.
Listed on the Paris and Brussels stock exchanges, ENGIE is active in around 70 countries, employs 150,000 people worldwide and achieved revenues of €66.6 billion in 2016.
Being actively involved in energy production, ENGIE has made a conscious effort to divest a lot of its coal power business in Indonesia. It is also heavily engaged in gas retail chain and liquification and in energy services. ENGIE is also providing efficient and sustainable solutions to any kind of establishments whether it is a building, airports, cities or hotels.
“We always provide design solution to impact on energy conservation,” says Cheyron.
In countries where they have high carbon intensive power plants, Cheyron said, they either sold these plants or close them down, but not its people.
“And we are not only changing our strategy, but changing our workforce by training them in the digital way of doing business as we develop new digital solutions,” says Cheyron.
“The carbon intensive power component of its business has shrunk substantially and our target is by 2018 we’ve already increased our renewable energy to over 50 percent,” he says.
The entire company is also working towards providing smart energy solutions not just because of carbon dioxide issue, but because they believe in the Paris Climate Agreement where ENGIE is one of the contributors from the private sector.
To do this, Cheyron has to decentralize solutions to be able to provide very efficient and affordable power cost. Doing so, the company believes, this is also good for their business.
“We believe the future is to decentralize power solution at the rooftops of buildings, small wind farms and more distributed,” says Cheyron.
“This is so unlike the way energy is produced where the supply comes from a big power plant. Now the more power is decentralized, the more it is decarbonized.”
“We believe these are the trends toward deep transformation of business and we decided to be in the future. This is the future in the next 10 to 20 years not only production but the way consumption of power.”
One important mission for ENGIE is to provide efficient and sustainable solutions for building cities in areas where they operate in.
Two years ago, ENGIE has partnered with the Gotianun-owned Filinvest Land, Inc. (FLI) in a 60-40 joint venture called the Philippine DCS Development Corporation (PDDC), which marked a milestone with the grand launch of the operations of its first District Cooling System (DCS) plant located in Northgate Cyberzone, Filinvest City, Muntinlupa.
This joint venture project of FLI, one of the largest property developers in the country, and ENGIE, the world leader in energy services, is the largest DCS plant in the country. This plant will provide an energy efficient cooling system to existing and future office buildings within the 18.7-hectare premier IT Park. This is also in line with the Gotianun Group’s way of reducing its carbon footprint and the realization of its vision to produce a clean, sustainable and resource-efficient cooling system.
Studies show that DCS offers a host of benefits, especially in comparison with individual cooling systems. It helps reduce energy consumption, provides greater efficiency, lowers the initial capital investment and enhances real estate value by freeing up building space for other uses. Most importantly, DCS protects the environment by cutting carbon dioxide emissions due to lower energy consumption. It is a key component of sustainable development.
PDDC’s DCS in Northgate Cyberzone has put the Philippines on the global map alongside the world’s key players in District Cooling System, such as ENGIE’s Climespace in Paris, France, and the Megajana in Cyberjaya, Malaysia, that is operated by ENGIE.
With P1.5-billion investment, the first large-scale energy-efficient district cooling facility provides efficient cooling solution to the 15 buildings inside the Northgate IT Park. The partners are also looking into other projects and investments in the country, including production of renewable energy.
Aside from the Northgate IT Park, Cheyron said they are also planning to provide efficient district cooling services to other FLI projects such the cyberzone in Cebu and the Clark City. They are also looking at other projects outside of FLI also in partnership with this Filipino conglomerate.
Aside from energy efficient solutions, Cheyron said they are looking into power generation of renewable energy, particularly solar power in the Philippines.
While district energy systems are not new, the shift in the electricity demand and supply balance has paved the way for district energy networks to be adopted as the fastest and most efficient way to decarbonize dense areas with clean, renewable energy. As such, they have become the backbones of sustainable cities in addressing energy shortages, increased energy demand and global warming.
ENGIE and FLI officially opened the Philippines’ first district cooling plant on September 21, 2017. This is the first in the country and ENGIE’s third district cooling facility in Asia Pacific, in addition to Malaysia’s Cyberjaya and New Zealand’s Christchurch district.
The facility consists of a centralized chilled water plant supplying power to 15 buildings, totaling 420,000 sqm, over the next 20 years.
Employing energy efficient solutions, the water is then funneled back to the plant in a closed circuit. The system runs on its own electricity, enabling savings in electricity bills and is more environmentally friendly compared to conventional cooling systems.
The centralized DCS plant in Northgate Cyberzone generates up to 10,000TR of chilled water with a cooling capacity of 42.2 Megawatts providing air-conditioning to 15 buildings through a 3.4km underground distribution network of steel pipes over a span of 20 years.
The system runs on its own electricity, enabling savings in electricity bills and is more environmentally friendly compared to conventional cooling systems.
This district cooling technology supports the Philippines’ drive for renewable energy through the nation’s ratification of the Paris Agreement and its renewable energy target of 15.3 gigawatts (GW) by 2030 – almost triple the 5,438 MW installed capacity in 2010.s of converting an existing system.
The use of its energy efficient cooling solutions has already started to result in substantial 35-40 percent power cost savings among locators in the Northgate compared to the traditional cooling system.
Cheyron sees sizeable business in the country as awareness about new technologies is also growing. In addition, the many infrastructure projects going on in the country will further fuel demand.
“Northgate locators are now starting to realize the savings. It is very exciting,” says Cheyron noting that they had been present in the country in 2010-2011 after striking its first commercial contract with a local bank.
“FLI is a big step and we’re very happy with the partnership because this is the first of this scale that we’ve done in a live building and we have to be extra careful not to disrupt the ongoing business of the locators,” says Cheyron.
The partnership also sees other opportunities in other FLI cyberzone developments in Cebu and the Clark City project.
ENGIE is also excited with Clark City because it is completely native, meaning it is an entirely new project, enabling them to incorporate its technologies in the masterplan, making it a part of the development from the very start.
According to Cheyron, the Asia Pacific, where he is more responsible is a very important region for ENGIE.
ENGIE though has no specific timeframe, but is looking at some opportunities in the RE sector in the country. But Cheyron said “the sooner the better” to enter the market even as it takes into consideration lots of time to spend for active interaction with the headquarters in France.
“The Philippines is a good market because the cost of electricity is high so the impact in peso terms is much larger. So, Philippine property developers like Filinvest have good vision of moving towards more sustainable and more green cities than any other cities,” he adds.
In fact, he said, that Philippines and Singapore are two leading countries in the region with more sustainable cities.
“FLI is ahead of competitors in southeast Asia since the Northgate project is the first in the country. This is a strong indication that developers see the value of developing more sustainable solutions because we cannot do it alone, we need partners in building the ecosystem,” he adds.
For the Northgate project, ENGIE undertakes the technical and operation and maintenance aspect but the joint venture has also created a management group to handle these aspects once everything has been put in place.
“We decided three years ago that Philippines is a very interesting market so approaching main developers and we found that this area of Northgate is very suitable in doing and expertise and ideas and they like it and we have a good chemistry,” adds Cheyron.
Cheyron added that ENGIE will always work with a local partner because they need a local knowledge to implement their technical know-how more effectively.
ENGIE employs at least 200 people in the country and half of its workforce are engaged in the technical aspect, mostly engineers and technicians. Globally, ENGIE employs at least 155,000 people.
“Most of our staff are technical key people who have been with us for quite some time,” he says citing the technical skills of the Filipinos as very good. Some of them are even being deployed for technical work in Malaysia and Singapore for their district cooling projects.
Since most of their solutions are digital, their staff are also adopting to these changes. “We have a digital workforce and it is important as we see an environment of massive digital expansion,” he adds.
Its future recruits will also focus on digital and technical men who can be deployed to any of their projects overseas.
“We have very good engineers in other countries like Thailand but their English is not good unlike the level of English of Filipinos so that is one good thing going for Filipinos,” says Cheyron.
Cheyron, who has been working with ENGIE for the past 7 years, has also been living in Asia for the past 14 years. But previous to ENGIE, he spent 15 years with the telecom industry.
Prior to ENGIE, served as the Managing Director and CEO of Alcatel-Lucent Malaysia and has held numerous other management roles with the group in Europe and Asia. His extensive experience in local and regional markets has helped him to develop a deep understanding of infrastructure and service deals between government agencies and government-linked companies.
Prior to this, he was CEO of Cofely South East Asia in 2010, before the rebrand to ENGIE Services in 2015. In his role, Pierre oversees 2,500 employees across Asia-Pacific to offer solutions and technical services in energy efficiency for cities, industries and commercial buildings across key markets such as Singapore, Australia, New-Zealand, Thailand, Philippines and Malaysia.
He has served as the President of the Malaysian-French Chamber of Commerce & Industry from 2011 to 2015 and is currently a board member of the Singapore French Chamber of Commerce, since 2015.
Shifting fields from telco to power was like exploring something else, but he soon found the energy sector challenging because of lots of new things happening in this sector
“A lot of challenges and transformation towards mobile energy,” says Cheyron, who prefers to be in a market segment where there is change and dynamism.
He said that ENGIE is investing in the digitization of energy systems citing the company’s investments for connectivity in the Internet of Things (IoT). This means they also have to invest in telco which is closely connected when it comes to developing smart energy systems.
With IoT, ENGIE can network solutions to its portfolio of services. So, there is a good amount of synergy with the telco and power sectors.
“We in the energy world have lots to learn from telco. When the Internet started and the oldfashioned telco was just the fixed line business, and now in the energy sector we have to move to mobile so it is a complete transformation now coming to us. So, we are partners, we do not compete,” adds Cheyron, a former telco engineer.
Cheyron will always go back to the partnership with FLI for its business in the country, grateful for finding a partner with the right fit.
“The growth lies in our partnership with FLI. The ambition is to continue building projects with them and to be the leader in energy cooling here because we are the world’s leader in cooling plants by far. The ambition is to build with FLI,” he adds.
One thing that Cheyron loves working in Asia is diversity.
“Every week I work in a different culture and environment and I learn and listen. I believe in building a lot of Asian talents and managers that is why we have more and more internal training just specifically for local managers to grow our competency and develop leaderships skills,” says Cheyron.
The ENGIE management has also taken into consideration the diversity of their people that even with this positive factor, all processes have to follow a certain course.
“We need to trust them to take some local decisions because that is the way things should be done, we cannot be micro managing because they know the Philippines much more. Even if I stay in this country for 15 years I still would not know all the nuances of the local business. So, we have to pay attention and leave room for local senior managers and trust them as well,” says Cheyron.
And the strategy is working well, translating into very good business growth in Malaysia, the Philippines and Australia.
“We grew in five years and most of growth originally came from Singapore and Australia, but growth now is driven by the Philippines,” he adds.
Aside from that, Cheyron said “I like the Filipino people, they are very nice, welcoming and friendly, a big difference from the business environment in my sector. And I like the fact that FLI shares our vision.”
The secret after all lies with its local partner because of the maturity of the vision of the company.