India, with a young skilled work force, high growth rate and deregulation being undertaken by the government, is set to become an important destination for foreign investment, a former top US trade official has said. “With the young skilled work force, its growth rate that is going to surpass China for the coming years as well as the market opening and deregulation undertaken by Prime Minister Narendra Modi will make this a really important destination for foreign investment,” Wendy Cutler, who was the Acting Deputy US Trade Representative under Obama administration told a Washington audience yesterday
Speaking at a panel discussion on the occasion of launch of Foreign Direct Investment (FDI) Confidence Index, Cutler said, India under Modi has emerged as among the favourite destinations for foreign investors. For the second consecutive year, India appears in top 10 of the index. This year, it was placed at eighth spot as against ninth last year.China has slipped to the third spot. Germany has now become the second top destination in the FDI Confidence Index after the US, which takes the fifth spot for the fifth year in a row
“Five of the top 10 countries are from Asia. There is a lot of optimism about investment opportunities in Asia, not only among Asian but also global investors as well. Clearly China and India seems to be the cause of this lot of optimism. India moved eighth on the index,” she said
Cutler said the optimism about investment in China “does not seem to be in line from what we are hearing” from not only the US business community but also the European business community as well
In her previous stint in the United States Trade Representative, she was responsible for the Trans-Pacific Partnership agreement (TPP), US China trade relations and US India Trade Policy Forum. “The investment climate is getting worse in China. Companies are facing a lot of restrictions in China, whether it be licensing or approval process or favourable treatment of domestic competitors or requirements to share technology. We are hearing from our companies that their optimism is declining,” Cutler said
Noting that the Chinese FDI in the US and vice versa should be watched closely, she said there is a growing concern that while the US and foreign companies are facing restrictions in China, there is a feeling that Chinese companies face few restrictions here in the US
“India on the other hand is moving towards becoming a favourite FDI destination,” she said. “When you loom at India, it is moving from a close market to an open market. The reforms that are being undertaken are perhaps not as ambitious as one would hope for. But under Prime Minister Modi, India is really under track towards opening,” she said
Contrasting India, a little bit with China, Cutler said that China was really open to foreign direct investment. “But we are seeing that trend going in a different direction,” Cutler said
“The other thing that makes me think very favourably about India is that it does not face the same demographic challenges that many Asian countries face. India with most of its population under 40 offers a very attractive destination, coupled with the high skilled nature of the work force,” she said. However, she said India is “one of the difficult countries” to negotiate
“So while all these developments are positive, they have a way to go here, but they are moving in the right direction,” Cutler said. Global Business Policy Council chairman Paul Laudicina said that India’s youth population gives India wage price advantage over China
In China, average manufacturing wages have tripled between 2006 and 2015. “This is part of the reason that coupled with a robust growth, a huge internal market, Modi government’s attempt to promote investment, the intention to abolish the foreign investment promotion board, access to the retail sector is being made more accessible. All of this makes India a robust environment,” he said.
India’s growth has been “impressive” in the recent years which makes room for tax broadening efforts by the government, according to a top IMF official.
“India has recorded quite an impressive growth performance in recent years. Our view is that the elimination of fuel subsidies and the targeting of social benefits has delivered in terms of allowing the union budget target to be achieved at 3.5 per cent of GDP,” Vitor Gasper, Director of the IMF Fiscal Affairs Department told reporters at a news conference here yesterday.
“We have been collaborating with the Indian authorities in terms of looking at fiscal structural measures, including expenditure rationalisation while protecting infrastructure investment, tax broadening efforts,” he said.
In this context, the rollout of Goods and Services tax (GST) is an extremely important step that will create a true unified national market in India, he said. “We see room for tax broadening efforts. We see room for more progressive income taxes in line with trends in income inequality. Perhaps more generally, we do see a case for a medium-term framework and we know that the authorities are actively working on that,” Gasper said.
He also said inequality has increased in both India and China. “As was the case for India, in China you see that inequality has increased. From that viewpoint, you could advocate, you should advocate social spending and taxation reform in order to address that issue in China.
“At the same time, it turns out that increase in social spending and change in taxation does support the transfer of expenditure from investment to consumption. That is part of the overall rebalancing of the Chinese economy,” Gasper said.
Gasper said globalisation and technological change have been major drivers of economic growth and cross country convergence. “More than one billion people have been lifted out of extreme poverty since the early 1980s, and most of them come from China and India,” he said.
“At the same time, when you focus on country indicators, you see that inequality has increased in most advanced economies and large emerging economies. Again, I am referring to China and India,” Gasper said.“The clear perception around the world of widespread increases in income inequality illustrates the dominance of national politics shaping these perceptions. Fiscal policies, government expenditures and revenues are powerful means to ensure the sharing of the growth dividend,” the IMF official added.
Malcolm Turnbull has defended the use of a federal fund to help Indian billionaire Gautam Adani build a vast coal project in central Queensland as Bill Shorten warns against offering a concessional loan to the project even though his Queensland Labor colleagues want it built.
The Prime Minister declared the coalmine would create “tens of thousands” of jobs and boost state and federal budgets for years and that the nation needed a $5 billion fund to open up the “economic frontier” of Northern Australia with big projects like Adani coalmine, rail link and connected port.
One day after Mr Turnbull met Mr Adani in New Delhi to discuss the mine plans, Labor sided with green groups who warn against the use of the Northern Australia Infrastructure Fund to give the project a concessional loan.
Mr Adani has told the Indian media his project is eligible for a $900 million loan and Deputy Prime Minister Barnaby Joyce yesterday warned the rail project was at a “tipping point” and needed the federal support. The Prime Minister did not repeat Mr Joyce’s warning but emphasised the broader gains from the project if it went ahead on commercial terms.
“The project, if it is built, will create tens of thousands of jobs,” he said. “It will generate, over the course of its life, an enormous amount in taxes and in royalties, revenues for state and federal governments. So plainly there is a huge economic benefit from a big project of this kind, assuming it’s built and it proceeds.”
Mr Turnbull compared the NAIF to the Clean Energy Finance Corporation, another government agency that offers loans to energy projects and has made a profitable return.
“The Northern Australia Infrastructure Fund is an important part of our commitment to development of Australia’s north — that is our big economic frontier, a huge opportunity with far too little development, far too little infrastructure,” he said.
Mr Shorten said the mine and rail line needed to make sense commercially rather than requiring taxpayer help. “We need the Adani project to stack up. It needs to stack up environmentally and commercially,” he said. “I haven’t seen the case made for the taxpayer to underwrite a $1bn loan.”
Adani has estimated its project will create 10,000 jobs over time, but this is based on economic modelling that goes out to 2030 and was disputed in a court hearing on the environmental approvals for the mine. With the rail link added, it could be 13,000 jobs. The mine would create 1464 jobs including indirect jobs according to consulting firm GHD, which was commissioned by Adani.
With the Nationals strongly backing the Adani project, Mr Joyce yesterday argued the federal loan was needed to ensure the plans survived a “tipping point” that could halt everything. “I know the greenies will go off their heads and they’ll be ringing me up and tweeting me and they’ll be ringing me up and tweeting me right now, but I can deal with that,” he said.
While Mr Adani has called for more federal help to remove regulatory barriers, Mr Turnbull said it was up to the company to overcome any commercial barriers.
“The obstacles or the challenges for Adani in this project are commercial ones. He is very confident basically because he is building a vertically integrated project — he is going to be producing coal, most of which he will be buying himself to fuel his own power stations in India,” he said.
Asked about whether he was confident the Adani mine would go ahead, Mr Turnbull said: “It’s a long time since I gave commercial appraisals on projects for a living. I’ll leave that to Mr Adani.”
BuildingIQ (ASX: BIQ) today announces that it has partnered with the Springfield Land Corporation (SLC) to implement its cloud-based platform for creating IoT-enabled buildings, at 6 Yoga Way Springfield Central which houses GE’s Queensland, Australia headquarters among other tenants. The 14,000-square meter, AU$72 million futuristic office, located in central business district (CBD), boasts a stellar reputation for sustainability with a 6 Star Green Star rating and the Current Performance with a 4 Star NABERS rating. The building is targeting a 4.5 NABERS rating performance. BuildingIQ’s 5i platform – built upon the five pillars of data capture and analysis, modeling, measurement & verification, control, and human expertise – is being used to add unprecedented transparency into the building’s operations, maximize occupant comfort and optimize energy usage.
Through ongoing analysis, the BuildingIQ 5i platform yielded immediate benefit. The platform has been used to identify high load within the building and has provided actionable, data-driven insights for the building manager to streamline operations. The moment BMS data begins to flow to BuildingIQ’s cloud, pattern and trend anomalies can potentially be identified and tracked. This approach also provides the benefits of scale that large portfolio owners require to manage energy across wide geographies. The same work that is being done at GE’s building can be replicated throughout numerous properties. BuildingIQ’s platform enables a portfolio approach to energy management, with building data from multiple structures and BMSs being pulled into one central repository or dashboard.
“We are excited about this strategic partnership to create a smart city solution using BuildingIQ’s technology,” said Paul Wyatt, Chief Digital Officer of Springfield Land Corporation. “There has been a large emphasis on the construction of Greater Springfield thus far, and creating a digital infrastructure to optimize operations is just as important. The data-driven approach that BuildingIQ provides to us through its 5i platform ensures that we continue to make informed choices that will benefit the fledgling city as it continues to grow.”
The scalability of BuildingIQ’s platform is significant as the building is just one structure within the Greater Springfield area. The development covers 2,860 hectares with 390 hectares dedicated to the CBD. The dedicated space provides a future employment base for an estimated 52,000 workers with an area of 2.6 million-square meter of office, retail, health and technology facilities. With BuildingIQ’s extensive experience in working to augment BMS’s from virtually any provider within commercial office spaces, education campuses, healthcare facilities and retail spaces, there is great potential for expansion within Springfield. In addition, to the benefits that daily energy optimization provides, widespread adoption of the 5i platform would also create the necessary foundation for the city as a whole to participate in demand response events.
“It’s inspiring to watch SLC execute on turning Chairman Maha Sinnathamby’s smart city vision into a reality,” said Michael Nark, president and CEO of BuildingIQ. “Incorporating our IoT-enabled, energy management platform will ensure that the city’s building infrastructure, such as 6 Yoga Way, lives up to its full energy efficiency potential. Without continuous monitoring and fine-tuning of controls and operations, even the highest performing buildings will drift into inefficiency. Incorporating BuildingIQ early in the building’s life will ensure the proper return on investment is reached.”
The first two stage of a 300MW solar farm – Australia’s biggest – has begun construction near Port Augusta in South Australia after its developers last Friday reached financial close on the project, and agreed to sell it to two of Europe’s biggest investors in renewables, Italy’s Enel Green Energy and the Dutch Infrastructure Fund.
The first two stages, totalling 220MW, of the Bungala project is being built around 12kms from Port Augusta, where the state’s last coal fired generator closed last May. Ironically, project developer Reach Energy is headed by Tony Concannon, the former head of the owners of the Hazelwood brown coal generator in Victoria which closed late last month.
The two first stages of Bungala will be completed late in 2018, and will be built by Spanish company Elecnor, which recently completed the 57MW Moree project in NSW and the smaller 21MW Barcaldine project in Queensland.Bungala will be built “battery storage ready”, and will also likely be the first major solar farm to participate in Australia’s FCAS market (frequency control and ancillary services), using SMA inverter technology to provide voltage control for the grid.
Concannon says the remaining 80MW of capacity could be built – along with battery storage – should the company win a South Australian government tender for 25 per cent of its electricity needs with “dispatchable” renewables.
Reach has submitted proposals for both 20MWh of battery storage and 100MWh, although it did not participate in the other tender for a separate 100MWh battery unit. If the tender is not successful, there are also discussions with other potential off-takers in train.
Concannon’s company, which is looking to develop 1,000MW of solar in Australia, has secured off-take agreements for the output of Bungala 1 and Bungala 2 with Origin Energy, raised $320 million of project finance debt, and found equity buyers for the $450 million project in Enel Green Power and DIM. And all without government grants.
It is one of a number of large scale solar projects proposed for South Australia, but the first to actually begin construction.
“That’s the difference with some of the others,” Concannon told RenewEconomy in a telephone interview on Tuesday. “Some of them have had lots of publicity, but are going nowhere. They don’t even have grid approvals.
“But with us, there are no “ifs” and no “buts”, it is definitely happening. We’ve done that deliberately (to keep a low profile) – Port Augusta has had a number of false dawns.”News of the Bungala project comes as a big wind project, the 212MW Lincoln Gap, located 15kms west of Port Augusta, signed a power purchase agreement with electricity retailer ERM, with construction likely to begin later this year.
On prices, Concannon says that solar is currently “viable” in the mid $70s/MWh, and believes that within a few years, the combination of solar and storage will be “way under” $100/MWh, making it even cheaper than gas-fired generation. (He recently said the combination of solar and storage was already cheaper than gas power).
That, he says, will bring major changes to the grid. “I have no doubt that it (battery storage) will be the future, but I do think there is a lot of other stuff that existing plant can do.”
South Australia is already nearing 50 per cent wind and solar, but Concannon does not see any major threat to grid stability or reliability.The new plant, he says, will be designed to provide FCAS – even at night, after the sun has gone down. “What a number of people don’t realise is that you can design ancillary services for solar plants to operate at night time.
“We can draw in power from the grid at night, and use the inverter technologies to regulate voltage, and that helps stabilise the system, even when the sun is not shining.”
Unlike battery storage in households, which he describes as mostly “passive” and focused on converting the output of solar panels from DC power to AC power so it can be put into the grid, utility-scale inverter technologies are able to shape voltage and current very quickly and in a very flexible manner. Modern wind farms are also using the same technologies.
“The inverter changes phase between the voltage and current … inverters can pull the current in, and change the phase to what grid wants.”
Concannon, a power engineer, says it is a tricky subject to try and explain, but says a lot of the articles he has read in the media – about wind and solar not being able to provide grid services – are wrong.
“Some of the articles I have read in the press are wrong. It is a tricky area, but what you can get with fast-acting inverter technology – they can definitely assist in managing the grid. They can react on frequency, in particular, much faster than gas and coal-fired plants.”
Reach has a 1,000MW solar pipeline, with the remaining project focused around NSW and Victoria. And the former executive of a major fossil fuel focused company is enjoying the focus on solar
Concannon left the “big corporate” world after a family illness and says he “personally felt that large-scale solar was something I could do on a start-up basis.
“The risk allocation was right. I couldn’t say that I had been totally green for the last 25 years, but I did have experience in bringing complex structured deals, and could figure out how to make solar competitive with wind, and how to do it without grants. We are pleased we have done this with no taxpayers’ money,”
Origin Energy chief Frank Calabria also stressed the importance of big solar in Australia, and particularly South Australia, as a counter-balance to wind energy as the shift to renewables accelerates.
“Energy markets around the world are in transition and Australia is no different,” Calabria said in comments on Tuesday. “We must make sure our energy supply is secure, as Australian homes and businesses rely on it. At the same time, we must make sure energy continues to be affordable as we move Australia towards a cleaner supply.”