Review: ‘Asia’s Energy Revolution: China’s Role and New Opportunities as Markets Transform and Digitalise’ By Joseph Jacobelli 

We cannot speak about climate change – nor about addressing climate change – without talking about the energy landscape in Asia, which is undergoing a vast, unprecedented transformation. This is the fundamental premise of Asia’s Energy Revolution, written by long-time industry insider and analyst Joseph Jacobelli. At 60% of the world’s population and 47% of its power generation (as of 2019), Asia is in the midst of a sea change in energy that is affecting the lives of its people as well as those of the rest of the world.

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Asia’s Energy Revolution is a complete text: it covers the economic underpinnings of Asian growth, the changes currently at hand, the policies and technologies that are accelerating those changes, and the financial models that will drive them. Throughout the book, every claim is backed up not only with supporting facts but with an extensive exploration of the basis for these facts. The author makes the case for each pronouncement, and then drills down into the details. For example, the reader is informed that Asia’s energy needs will rise. By how much? How much exactly? Where do these figures come from? What do other experts say about this? These questions are all answered comprehensively.

The extensive inclusion of Jacobelli’s own network of experts is a valuable aspect of the book. Throughout the text, he quotes expert opinions extensively to elucidate particular areas such as policy choices and how they might play out in practice. A clear graphic – chart, table, or image – accompanies each important point. These graphics serve to bring the information-dense text to life.

Because energy and energy production go hand in hand with economic factors, the book fittingly opens with an overview of both current and expected Asian economic growth, and that of the continent’s energy needs. 

In the second section, the book moves to a sweeping examination of the changing energy landscape from multiple aspects. First, with bold headings such as “The Energy Consumption is Unique and Rising”, it explores the demand side, including transportation (especially electric vehicles), buildings, and lighting. Then, it goes into regulation market by market, explaining in detail not only the differences between developing and developed Asia, but also between more developed markets like Hong Kong and Singapore that might seem similar on the surface. The merits of liberalized markets versus monopolies are shown, along with an explanation of pricing structures and examples of how different systems have worked, or not, and lessons we can learn. 

These subsections examine Australia, to explain the problems its energy policy has created; Japan, which slowly reformed and opened its power sector starting from the early 2000s; Singapore, an open, vibrant, and competitive power sector; and China, the single largest electricity market in the world in terms of power generation and installed capacity, where full liberalization will be reached during the 14th Five-Year Plan which ends in 2025. The author also highlights the interesting case of New Zealand, with its large proportion of renewables and lots of consumer choice.

Jacobelli clearly appreciates the financial and administrative complexities of energy, and the need to develop policy based on the entire energy value chain and its impact on the economy – not digging into fixed positions on either renewables or fossil fuels. He also describes the changing nature of industry players, with some utilities now becoming “comprehensive energy solutions providers.” 

This section, like the rest of the book, has a total absence of rhetorical fluff, rants, or bombast; it is refreshingly matter-of-fact. It is also interesting to note that although much of the book was written while the Covid-19 pandemic still raged, it accurately predicts the sad abandonment of energy-saving virtual alternatives to business-as-usual. It explores opportunities and risks as well as laying out the facts, and tells the reader why each area is important, whether that be the evolution of energy monitoring systems or lighting technologies.

In the third section – the most readable – Jacobelli moves from describing systems as they are to talking about the future more explicitly. He is careful to warn that energy transformation is complex and happens over decades. He also points out the inherent conflict between top-down desire for the benefits of market forces through privatization, and the ability to direct the fuel mix from the top. “Environmental concerns are not so easy to address in a competitive market that delivers power at the lost cost,” says one UK industry veteran who lived at the coalface of energy-sector reforms under Thatcherism.

The author’s determined prediction is that a decline in fossil-fuel consumption is likely to be faster than expected, although the motivation for this change in each location differs. Australia, currently over-dependent on black coal and over-focused on gas-led economic recovery, has opportunities in solar due to its geography – even with the possibility of exporting energy. In East Asia (Japan, Korea, and Taiwan), energy is an import-reliant commodity, while nuclear power is politically stalled, so a big rise in renewable energy is planned. And in China, there is a long-term shift away from air-polluting coal. “The leadership finally realized some time in the late 2000s that the price the country and its people were paying – emissions – was just too high.” 

China’s situation is of the greatest interest not only due to its size but due to the depth of change that it will undergo. The author points out that there has already been a massive increase in wind, followed by solar. In fact, the challenge currently is not in installed capacity but in curtailment, the restriction of connection to the grids. According to GEIDCO, China had 1,040 gW of coal-fired power generation in 2019, representing 87% of thermal power generation. However, after a temporary rise through 2025, this will drop by 2050 to just 403 gW. Meanwhile, solar and wind capacity will jump from 414 gW in 2019 to 4325 gW – in short, renewables will account for more than 50% by 2050. This section provides an excellent deep-dive into hydrogen, including gray vs green hydrogen, and provides insights into predictions for when, and why, natural gas based power generation will peak.

This section also offers a fascinating review of the digital technologies that are affecting energy: it’s not only smartphones that have been getting better and faster over the past several years, it’s also energy technology. These digital advancements create cost savings, allow investments into smaller projects like mini-grids and distributed energy; they create energy efficiency gains, and allow cost-effective financing solutions.

Industry 4.0 is at the heart of this technological transformation. Many innovations can be used concurrently to enhance the impact. These solutions include virtual representations of electric power infrastructure, or “Electric Digital Twins”; UAVs (drones) that can inspect and maintain transmission lines, currently a huge cost for the energy industry; and a much more powerful version of “Smart home” technology that can be deployed for industrial and commercial users at scale.

It is notable that the author, who has extensive background in the financial sector and previously covered energy companies like the Korea Electric Power Corporation (KEPCO), sees the potential of technology as much through a financial lens as through an environmental lens. He therefore explains both the technology and its financial impact. He goes through real innovation examples in Korea and Singapore, as well as in the enormous innovation happening in China. There, he points out, policy change will be bumpy – as it is everywhere.

And who will pay for all of this? In the final sections of the book, Jacobelli moves explicitly to the hard questions of financing. He is optimistic, outlining the potential for digitalization technology financing and green capital growth. While he acknowledges that ESG investing is currently fragmented, he is confident that it will soon have a “broadly agreed taxonomy” aligned with the United Nations Sustainable Development Goals (SDGs). He goes over the causes and pressures, and points out how “plain vanilla financing turns green” as corporates build their green credentials. He also explains how exchanges have responded, talks through bonds and bank borrowing, and sustainable finance commitments from Asian banks. 

“There is little doubt in my mind that green and sustainable finance principles will dominate the vast majority of capital flows globally, including in Asia,” says Jacobelli. He makes several good arguments for this stance, including the streamlining of processes, development of new tools, and other advances in fintech. Here, he again brings in expert views when forecasting the future.

This is not a book that can be read in a sitting; there is nothing lyrical or whimsical about its prose (unless the electricity pun “many Energy 4.0 solutions actually work in parallel” was on purpose). But at the same time it is not simply a reference book; absorb it in its entirety and you will have taken a master’s course in the topic. It is smart, dense, organized, and accurate, with explicit chapter headings, a solid index, and crystal-clear charts and tables.

It is also surprisingly hopeful. The reader gets the impression that Asia’s vast transformation is unstoppable and titanic, and only the specifics of individual markets might vary. With the enormous and compelling evidence presented, it is hard to disagree. If the book is lacking something, that might be more exploration of what could go wrong – what might prevent his predictions from coming true. But fundamentally, the author’s winning certainty prevails: “The common denominator is that institutional attitudes towards clean energy are rapidly changing.” And not a moment too soon.

Asia’s Energy Revolution: China’s Role and New Opportunities as Markets Transform and Digitalise
Joseph Jacobelli
2021, De Gruyter, 298pp

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