Ep77 Asia’s Energy Transition Outlook: Moving Faster Than the Policy Makers with Mike Thomas, The Lantau Group

Host Joseph Jacobelli welcomes Mike Thomas, leading energy economist and founder of The Lantau Group (TLG), for their annual review and 2026 outlook. Mike argues that we have reached a historic tipping point where solar-plus-battery hybrids are now cost-competitive with traditional gas and coal, often without requiring a premium for base-load-style power.
The conversation dives deep into the "strategic pivot" in China that has led to a global battery fire sale, the surge in data centre demand in hubs like Johor, and the counter-intuitive risks posed by government-run green energy auctions. Mike also highlights why Malaysia is currently the region's most "ready" market and explores the legal and regulatory "software bugs", such as "intertemporal equity", that must be fixed to allow the physical energy transition to keep pace with technological reality.

LINKS: Research From TLG.

ABOUT MIKE: Founding partner at The Lantau Group with over 30 years of consulting experience, focussing on the energy sector. He advises a wide range of energy sector stakeholders on strategic, regulatory, and competition matters; sustainability; market design and development; and commercial transactions.  Prior to co-founding in 2010, he headed the Asia Pacific Energy & Environment practice of a global consulting firm. Mike has an MPP from Harvard Kennedy School, and a BA in Economics from Carleton College. Within the Asia Pacific region, he has led many significant engagements involving the robust application of economics and analytics to a wide variety of business, policy, and regulatory challenges affecting the electricity and gas sectors. He works extensively with multinationals on sustainability strategies, focussing on the best options in different markets, and on the regulatory and policy changes needed to support increasing renewable energy contracting options.

HOST, PRODUCTION, ARTWORK: Joseph Jacobelli | MUSIC: Ep76 onward excerpts from Vivaldi’s La Follia, played by Luca Jacobelli.

Transcript

Episode Transcript

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Ep77 Asia’s Energy Transition Outlook: Moving Faster Than the Policy Makers with Mike Thomas, The Lantau Group

 Mike Thomas: [00:00:00] It's like stuff has happened in an order, at a pace that is challenging systems, not just, power systems, but the people, parts of the power systems. The human parts of the power system, to actually internalize that this has actually happened.

Narrator: Welcome to Asia Climate Finance, your front row seat to the policies, investments, and actors shaping climate, business and finance across Asia Pacific. Subscribe now so others find this essential guide to Asia's Climate economy and note the disclaimers at the end. Now over to the host, analyst, investor, and author Joseph Jacobelli.

Joseph Jacobelli: Good morning, good afternoon, or good evening, wherever you may be. Welcome to episode 77. Our guest today is Mike Thomas. Mike is one of the leading, or I should say, the leading energy economist in the Asia Pacific region. [00:01:00] Founder and head of TLG or The Lantau Group based in, uh, Hong Kong and operating throughout the Asia Pacific region.

Mike and I get together at the beginning of every year to talk about little bit on the previous year, but also the outlook for the current year and beyond. And today's conversation I thought was particularly interesting as we get into quite a bit of depth, uh, on a couple of, um, of issues. As always, please do email us with ideas, comments or anything. Our email address is at the top of the show notes. Enjoy the show.

 I really appreciate your annual predictions, well reviews of the of, of the year and, and predictions. So thank you so much for making it. 

Mike Thomas: It's a pleasure, Joseph. Always good. I look forward to this, and I try not to listen to the things I said in the past so that I don't find out how wrong I am. But it's always good to be thinking about [00:02:00] thinking about the future, so it's good. 

Joseph Jacobelli: Let me take my notebook. No, just kidding. Great. Where, where do I find you this time? 

Mike Thomas: I'm actually in Manila. They've had a sort of an NGO conference here today and on, on various ways that government, government assistance could work on energy transition stuff.

And just finished up and um, uh, I'm now, I'm all pumped to talk to you. 

Joseph Jacobelli: Great. Well, great to catch you. 

So looking at 2025 and, the, the business that TLG runs around, around the region, what do you think were, the, the key kind of trends that, that you, you picked up or the key things that people should, should be focused about?

Mike Thomas: Yeah, no, it's, it's a, it's a good question and it's been a really interesting, really interesting year for, for us sort of advising governments and private sector stakeholders and end users all, all kind of battling it out [00:03:00] for this whole energy transition pie. How do you slice it? Who, who do you serve it to?

All of these things, and what does it taste like? And, and I, I think at the beginning of the year, well, over the course of this year, I think the thing that really began sinking into my head is that Solar's winning, and the battery part of the equation has really come forward. We, we did some work in late 2024 looking at solar hybrid.

And one of the, one of the first big ones in the Philippines, and it was, it was a close call. You could get certain you could get a high load factor with solar and batteries. You could get 7:00 AM to 9:00 PM base load power at a, at a competitive price. Depending on your views on gas prices or your per your preference for flat, predictable not [00:04:00] volatile.

But that was before battery prices actually collapsed further. I mean, there's always difficulty doing project projects have to have, the sites. Sometimes, you can't always get everything, but, but the basic story with batteries capacity in China created kind of a durable, shift factor.

And I, I think people are slowly catching up with that. And I want to come back to that. But that, that was a major, major, major factor. Sec second, security of supply came back into the conversation partly because we were getting more and more renewables systems around the world. And there was the, the, the, the blackout in Spain that people took a long time to sort of sort out exactly whose fault it was or why did, why was there a fault? What, what was the issue and is it renewables or is it just our understanding of the renewables and is it something in intrinsic or systemic or is it something that .

Oh yeah. Once you know something, you fix it and then you, you move on. You have like, western Australia with two, two gigawatts out of almost [00:05:00] four with rooftop solar, somehow managing the balance of system with 80 plus percent renewables on many days. But you know, the lingering question of have we pushed it so far that we need, we need to take a break, 

Mike Thomas: And then we came off, off, off of the, a couple of years of incredibly volatile fossil fuel prices settling down a little bit and, drill, baby drill came into the geopolitical equation, and then suddenly coal might be back on the menu and, for, for, for whatever reason, somebody could come up with, is it security of supply? Is it base load? Is it, something like that. So the, the people who worry have a lot to worry about, it's like . . If you're a policy maker, you're not a system expert, you're being told that this is pressing, up against the boundaries of what's possible. Stakeholders coming in and saying, you need to do this.

Then, then I, I think the bamboo bends a little bit and I think [00:06:00] 2025 been a year where people weren't sure which way it was going to go and, will, will there be more coal plants? Will there be gas as the bridge? Will it really happen? And then at the same time as all of this, as the data centre story, the AI story, sort of accelerated perceptions that demand growth is back, not just typical Asian demand growth, 3, 4, 5, 6% a year, depending on your country, but like maybe a lot more than that.

And can give you an example forecast from EMA on demand growth. Was a couple of years ago and only very recently, like this week or something like that, is it get revised. And it was all, I think premised on, on expectation of electrification and, and digitisation but it was consistently not met, below the forecast.

I know there are some countries that are above their forecast, but places which were already growing, maybe they got a little bit excited. So we're, we're still mm, we're still working [00:07:00] through, the emotional part of, of, of forecasting and, and, and we, we've always been a bit more sceptical on that.

So, it's kind of nice to see some, some, some sensibilities coming back. So you have, solar and batteries are really kind of a dominant pair. They really pair well. They, they just pair extraordinarily well. Just like what you can do with a solar battery pair in terms of creating load shapes for meeting industrial or data centre or, or manufacturing loads, with a high level of potential additionality is incredible actually. But what do you do with the rest of the system and, oh, I didn't mention wind, we'll come back to that. And then, this whole demand growth, is it there, is it not?

So, it's been a year where like. Things have quite big conversations have, have, have, have been started. And I, I think for 2026 now, if I just look a little bit ahead, I, I think people are still [00:08:00] digesting, do we have the sites, the grid and all that? But for solar, I think wind is actually becoming trickier.

Wind is typically more seasonal, so it's not really a battery pairing. It's got to find a flexible pairing. It's like wind and hydro in New Zealand. Wonderful pairing. Wind and gas, wind and natural gas in the United States. Wonderful pairing, really powerful pairing all the flexibility of gas and all of the, the variability of wind paired together to create a really nice mix.

But solar, wind, not so good. Sun does the same thing almost every day. . Batteries don't really. Do long duration adjustments. Even pump storage is not good enough for, for things like that. So you know, this whole, what do we do if we bring a lot of wind into a system? Does that guarantee that we have to have the gas to [00:09:00] offset that? And I think, the gas people are saying, well, yep, that's what we've been telling you. And the coal people would've ignored that and say, just need base load, which doesn't change anything about that dynamic. The solar people have said, you idiots, it's all about solar. So we're, we're, we're going to have a 2026 sort of, free for all.

I think is where we're, we're coming out. 

Joseph Jacobelli: So, so starting to break down a, a few of the things that you mentioned, number one with, with solar and batteries. So I guess the major advent in not just 2025, but I guess the last two or three years is the price of batteries coming down now is, batteries plus something solar or whatever else makes a lot of sense in markets with liberalised markets where you have, peak and trough kind of periods in, in markets where, your kind of price is fixed as battery gotten to the level [00:10:00] where the solar cost plus the battery costs is still very, very attractive versus say, gas or coal, or are we still kind of struggling from, from that perspective?

Mike Thomas: I, I think we're, we're at the point now we’re going for 24 hour base load battery solar, it's possible at a small premium and that going somewhere so that you can get, you can get cost certainty for two decades. 

Joseph Jacobelli: . 

Mike Thomas: But if you really push it all the way to 24 hours or, or take 22 hours, you don't, use, even, even a gas plant has outages and things, so you never really get 24 for a megawatt.

You always have to do a little bit more than that. But yeah, this, it, it, it, it's getting very close, but this is the conversation we [00:11:00] weren't expecting to have right now.  I think that's the part. 

It's like stuff has happened in an order, at a pace that is challenging systems, not just, power systems, but the people, parts of the power systems. The human parts of the power system, to actually internalize that this has actually happened. . That we're at that point where 7:00 AM to 9:00 PM 7:00 AM 6:00 AM the 10:00 PM, the fat part of what has traditionally been the peak hours, you don't really have to pay a premium, and in some instances you don't have to pay a premium, and in some instances, the only reason you don't do it is you, you've gotten lured into maybe slightly lower gas prices that you can't be sure you're going to have forever.

And it wasn't just that long ago where the gas prices were for miles higher. So it's a very [00:12:00] interesting time, and I, I, people are not I, in my world, whether it's a market or a regulated, planned market things like diversity, things like, oh, we got to do a little bit of all of these things. Things like the terminology, the loaded terminology of "we need base load" or something that's. That's still in the equation. And I, I, I think it has to kind of filter some of that, some of it's happened so fast. That people don't believe it. They just don't believe it. It's kind of like the speed with which EVs show up in some markets.

Not, and then bam. So it's very interesting just getting the reality check on some of this. 

Joseph Jacobelli: And is there is, in terms of like 26. The next like five years. Do you see some markets on the kind of solar battery front growing more rapidly than others? That's the first part of the questions.

And the second part of the question is what are the [00:13:00] challenges to growth in those markets where it's not happening? 

Mike Thomas: So yeah, I, it's a really good question and

maybe I, I entered it in a maybe peculiar way. I, for, for, for people who've been following me on LinkedIn, they would know. That I've been somewhat critical, maybe increasingly critical of the way that some governments, particularly in Asia, which is where I follow most have been using large scale auctions and procurement processes to bring in bring in renewable energy.

The Philippines is a good example. And where there's, there's a market that's been operating for two decades. It's quite sophisticated. It's like, I say the energy IQ that's been built up in the having a competitive market with competitive players. Billions of dollars have been raised and spent and invested.

It's been a very investible market. Right. The, the major players are, have their funnels, private [00:14:00] equities been in involved, everybody's been involved in the market, . Until all of a sudden, the government decides we're going to run these green energy options, many. 1, 2, 3. We're up to the fifth one.

And they're large, right? Thumps on the market and to some extent they're just displacing things. So one of the challenges for solar and batteries is it's not like you're evaluating your project against the fundamentals. You're evaluating your project against what you think you'll be competing with, depending on what.

The central planning folks think should be in the next auction 

So, there'll be a wind one, there'll be an offshore wind one. There was a huge storage one that include pump storage. And so, in the Philippines, what was one of the leading places for the solar battery hybrid to start reaching parity, which was that I was saying earlier.

Now, [00:15:00] now I, I, I, I would be a little bit hesitant to say, well, you better wait and see because for the next three or four years, there's a lot of other stuff being pushed into the market through these, through these through these procurements. And what we're seeing doesn't necessarily align with what we would've said was the least cost fundamentals, so it's an interesting, interesting challenge. And I, I think similar. We, we see some similar concern in India, I'm told by my colleagues there, but we need you should really talk to you should really talk to them and get the skinny on India. But these things are delicately balanced.

People do a project. The question is. What is the vehicle by which you, you bring that project to market and if that vehicle is independent of the fundamentals, you can get whatever you can support. Right. Long term contract for offshore wind, no problem. Piece of cake. But it may not be a thing we think is cheapest.

Joseph Jacobelli: I found a little bit confusing though, and [00:16:00] I'm going to be very simplistic here. So the whole idea beyond auctions was that you want to kind of like reduce long term the average price. Of whatever, solar or wind, whatever it is. Because, because costs, you know the costs are coming down. So, this year you do this auction at, at 30 cents and next year you do it at whatever you're hoping for 25 cents, whatever it is.

But now that solar and battery is relatively competitive with fossil fuels like you said, maybe a small premium whatever it is, but. We're pretty much there. We're not a 20, 30, 50% differential like we used to be. Right. Especially with, with a battery. So what's, what's the idea now behind having those auctions?

I mean, even, even in China, they used to have auctions. And even in China, they said, well. Okay. We've done the options now and prices of renewables is at a par or below [00:17:00] fossil fuels, so we don't need those options anymore. We just let market and let, let it let it compete. So what's, so am I missing something here?

Mike Thomas: I don't think you are. I think you're hitting the nail right on the head. I, I think this ties back to the first point we were chatting about, which is the speed with which. The technology, cost curves, whatever you want to say, have, have, have, have fallen, have outpaced, sort of standard operating procedures, standard perceptual what is my role?

What do I need to do? What do we need to do? And, and things like, well, we need a little of this, a little of that, all of the above. Solution has always been kind of a sensible approach. We don't know what it's going to be, so we're going to do this, but at this very moment. Right. It's like, not saying we shouldn't do some of these things eventually, but at this very moment, there's a fire sale on batteries.

[00:18:00] Right? . And it is like every fire sale, like the people who get up in the morning and run to the store and go to the sale, get it, and everybody who thinks about it later, they don't get it. And, and I, and that, that fire sale is really the product of China's strategic pivot to renewable energy and to some degree of excess investment.

But China didn't go into renewable energy, so to speak, to just dibble or dabble or, or puts around. They've, they've gone in there strategically. So if they've got excess generating capacity or production capacity, they're really going to unpivot from solar and batteries, or are they going to just plod their way through it, maybe even increase the rate that they penetrate by, by changing what they, they don't do the auctions anymore, but what they do is they start raising sector targets.

They say this sector needs to have a higher level of renewable energy and it [00:19:00] creates demand pull rather than supply push. So my, my, what we think coming across this is that it's not changing and it will take four or five years for that to really be absorbed and during this period of time.

One should try, if one can take advantage of it as much as possible, which might  mean rearranging, rearranging priorities on some of the other things. Because there probably will come a time where, where it rebalances. But you know, people say you got to be agile and nimble, smart. All these words that go with energy transition.

Energy transition is always a smarter time. It is a more agile time. It's more nimble time. Well, okay, what does that mean? It means you take advantage of what's going on in front of you, and you don't, you don't worry about your standard. So I think that's what's going on. We, we use the words, we don't live them.

Joseph Jacobelli: Yeah. I mean, but, but to be fair, I mean, I don't think it's an, it's an Asia specific problem. I think [00:20:00] that, governments, first of all understanding that the energy transition is, it's not something in the future, it's already happening. I mean, technically speaking it's already happened because we're transitioning.

Yeah. If you, you mentioned the, the new sales of EVs, not just, not just in countries like China, but in, in, in other, in other places as well. And then the, the problem is that the, the regulators government planners, et cetera, they just, they're just completely behind the curve.

They're typically behind the curve. On everything. I mean, if you look at FinTech is one great example, but when it comes to the energy transition, I think the difference is that if you don't take advantage of, of occasions, like now that there's a fire sale for batteries, like you were saying for energy storage you, you may kind of like, not necessarily missed the boat, but you missed a very, very good opportunity.

That's right. Going back to my original question, where do you see kind of in the next five [00:21:00] years, solar plus batteries doing quite well and where do you see those countries or juju, those jurisdictions where there are challenges? 

Mike Thomas: So I, I think Southeast Asia is a, is fertile ground for solar and batteries, which is sort of my professional domain where I've spent most of my professional life, certainly the entire group, has been Southeast Asia. And one of the characteristics that you'd look for, you'd look for a market where LNG is marginal fuel. 

Joseph Jacobelli: . 

Mike Thomas: Or domestic gas that's depleting and therefore anticipating supplement by LNG. So you look at, look at the Malaysia, Thailand, you look at the Philippines, you look at, it's always struggled a little bit with gas, but you know, it's, it's, [00:22:00] it's, there aren't too many choices between A and B.

So all of these markets, different as they are, have a very similar incremental forward outlook in terms of avoided cost, in terms of, of and, and they all have fairly like Malaysia's, equatorial and high industrial. So it's a fairly flattish load curve. 

Mike Thomas: So you, you, you, we wouldn't just put, you'd put solar in to displace some gas, but as soon as you can put solar and batteries together and you start flattening the, that, that solar and spreading it into the evening Malaysia has a fairly significant evening peak cost. So, when we, when we look at, say, generation planning. We can start to see solar hybrids being competitive in a, in a, in a market like, [00:23:00] like Malaysia. At a, at, at a reasonable, at a, at a, at a reasonable pace faster than the Malaysian national Renewable Energy Roadmap would posit that roadmap, I think, really doesn't have that much solar coming in until the 2030s. But it was written a couple of years ago. So the only thing that's really changed since then is that solar has gotten cheaper and batteries have gotten cheaper still.

So, I think it's just a matter of, like you said, catching up. Right. And Malaysia's got also the data centre tensions for, for Jahor and other parts of the, the, the, the country where there's quite a lot of potential demand growth and it has been making some really, really positive and interesting moves towards, I wouldn't say full marketization but certainly opening up routes to market.

So my view, our view is that with a few little tweaks to open that up, [00:24:00] you'll start seeing a lot more demand for the certainty, lack of volatility. And, and, and the reasonable, reasonable cost of, of, of green additional renewable energy. So, has all of the attributes that you, you, you would like.

So, I, I think Malaysia's poised, probably has the stronger transmission system to take that, even though there's a lot to be done, Vietnam's a little bit trickier. Sites and transmission are, are, are less, less clear, less, opaquer. And that kind of really takes it to the impediment, the other leg of the stool.

Why do not, these things happen quite so fast as you'd like, and some of it is just the process by which you gain the certainty that you need to have. That your site is developable, that the power can be evacuated, accommodated, not curtailed, things of that sort. . And that part of the information equation, there's [00:25:00] those, there's still too many secrets held and there's too, too many processes to, to go through, to be sure and, and maybe not quite enough practice on how you set the charges of who pays for what.

So again, it kind of comes down to the regulatory side. Yeah. And 

Joseph Jacobelli: mm, do I, I guess one, one of the principle challenges has been, and again, this is not just specific to Asia, but you know, grids, I mean, in Europe obviously, it's the green modernization side of things, wherein Southeast Asia especially, it's kind of like building the grid, which, because you don't, you just don't have enough capacity.

What, what's your views on, what, what happened in the last couple of years in terms of grid development and how do you see developments, how do you see the trend over the next, three, three to five years? Are you, do you still think that those hurdles are going to be there? Or, or, or the signs, hopeful signs? 

Mike Thomas: Well, let's, let's break this down a little bit. Why [00:26:00] almost any regulated utility formally, officially regulated utility. The grid part, the regulated part is. Usually put under some kind of, I'll call it asset based regulation, in Malaysia it's called incentive based regulation.

In different markets it's called something else. But at the end of the day, somebody approves an asset base, you earn return on it, and you recover it. So immediately in any market like that, any, any place where the regulatory regime is, is working. Maybe not running at high speed, but it's working. The, the incumbent or the, the, the grid company or the whoever's responsible has a built-in incentive to bring projects, to get them done.

So it's not like somebody's sleeping and not thinking about this. They're people thinking about this pretty hard, because that's where [00:27:00] the money is. So what happens next? Well, tariffs have always been a sensitive point throughout the Asian countries we work with, particularly the domestic tariffs, and in a com country, like Malaysia is a good example of one where the domestic tariff has generally been below cost for, for, for a long time.

Despite even very recent significant tariff reform, you know that work is not done, so you build this huge potential grid. If you build it, will they come, right? Because if the, the, the costs go in. But if the megawatt hours don't also come in, the numerator and the denominator get out of balance, right? So then you've got upward tariff pressure, and what we observe, of course, in, in most of these regulatory regimes, the way that you recover that money is you, you, you put it in the [00:28:00] rate base.

And then you depreciate it over time. 

Joseph Jacobelli: Right, right, 

Mike Thomas: right. And so at the beginning, it's not depreciated, so it's the largest number and you multiply it by the WACC, so you get the most cash back from the customer. The most collection, the most tariff pressure is in year one. 

But you may not have grown into it in year one.

Transmission is step change. You build a huge new line to a new re resource field ahead of demand. So the upward tariff pressure is amplified by the fact that you, you don't build it continuously, you build it in lumps and then you grow into it. And I think people are still getting their head around that.

And that raises then the question of, oh, oh, if that's what we have to do, if those are the not bite-sized morsels, but they're big hulking things that we [00:29:00] absorb. Do we really want to put them through the regulatory regime the way we've always done? Or do we want to charge the data centres?

And so we've seen Malaysia came up with a high a, a data centre tariff, which is unusually high. Okay, so what you see then is, well, that slows the process down because now, now, now, now it's more expensive. So the demand may not come in, but the grid may not be built. The, so I, I, I, again, you, you, you, you put all those things together.

This is not a high speed system, it's, it's, it is more of a, of a whack-a-mole. Again, where you, you, you're, you're, you're banging one thing and then something else pops up. And this is not an Asia thing. This, we see this everywhere. Some systems are going a little bit faster, but nobody's happy.

Nobody says, oh, we figured this out. I think. I, I, [00:30:00] I think the best you can do is get everybody kind of complaining equally. And maybe you then you've kind of made it. But this is this is the, this is 2026, for us, is looking for a lot more at grid charges, wheeling charges in what I call "intertemporal equity", trying to figure out, how you get the charge to the time. Planning if you build it, will they come versus get them to commit before you build, sequencing having more agency. The customer can do whatever they want, but they've got to pay for certain things. It's like we open the channel, but we put more responsibility so people can go put their money where their mouth is.

A lot of regulatory reform for the next decades. It's going to be what I. What, what Stephen Colbert called "truthiness". it's like how do you get commitments to line up? How do you get risks to go to the right place? We're, we're, we're far from that. So I think it's going to be interesting.

But now as much as I think the fundamentals of like solar and batteries [00:31:00] are tremendous that doesn't guarantee that it can all happen that fast. Mm, 

Joseph Jacobelli: I mean, it's not, it's not, it's not a new problem. And, and I mean, no, we'll be talking about grid buildup since I mean, I, I love it now that people are finally talking about the uh, ASEAN grid, which was a hot topic when I started my career in 1990.

And now in 2025, finally there may be some sparkles or some sparks happening here and there. Talk a little bit about wind. What, what, what do you see? Is there still lots of opportunities there? I mean, 

Mike Thomas: I mentioned earlier about wind that anything that is. Weather related or weather influenced or intermittent or, or unscheduled or anything like that, it needs to pair with something, 

Joseph Jacobelli: .

Mike Thomas: You can bring a certain amount into a system overall and it basically pairing with the [00:32:00] systems. Preexisting flexibility and as soon as you reach some point, you've got to add some flexibility to continue that pairing process. So what is the flexibility that pairs best with wind is a question. I think too few people really ask, I'm not against wind, I'm just saying that what are the kinds of technologies that people talk about sometimes for the future?

Well, they think, they talk about bringing coal back because of base load. That's not flexible. They talk about bringing nuclear and that's all fine, but that's not flexible. You talk about hydrogen, well that's flexible, but very expensive. So wind, wind has a role to play for as long as there's flexibility in the system to accommodate it, but once you reach a certain point, some markets are going to really struggle because the wind blows in the wrong season. So peak [00:33:00] demand, hottest temperature least wind. Not a great situation because you've got to find something. Now that could just be gas, and I think that's where the gas bridge is, but that, that creates a limit to the sort of decarbonization pathway.

And I, I think that's not a 2026 struggle, uh . But it, it will become one for. For long-term decarbonization pathways, right? If you say, I want to plan to get, or this is how I'm thinking about getting to zero by 2060, then we put a lot of garbage at the back end. To try to but to mix. But it doesn't all, doesn't all, all, all fit.

I, I, we're starting to get that sense in some of our work through, through our mind. So just, just trying to square the, the circle of, of how all of these things fit together in a least cost way. When, say a client wants [00:34:00] a strategic perspective of like, what technology should we be then, but. Malaysia would be a wonderful place for wind if there was wind.

Joseph Jacobelli:  Right, right, right. It is. 

Mike Thomas: Let's talk there is really, but if there were, the conditions otherwise are perfect because there's a lot of gas, there's a lot of gas flexibility, a lot of flexible CCGTs, so that if you could save money on the molecules by using the wind, that probably is at parity, but there's no wind in the Philippines, wind can take advantage of hydro and gas. It's just question of when will we hit the limit? So un we're not there yet, but until we do, we have more. So onshore wind in the Philippines is actually very attractive. And I lived in New Zealand for 10 years and wind was, was, I was always amazed when I moved away from New Zealand.

I left my [00:35:00] heart there, but I moved away that no one else was doing wind. And then I realized it was because the wind and the hydro were the, were, were such, such a year, they were early stage positive, dynamic. So I like wind. You just have to find systems that can accommodate either the seasonality or the need for balancing. 

Joseph Jacobelli:  One, one last area I really wanted to explore is, so we talked about data centres and, and, and the demand side of the data centres. In terms of what makes them attractive, especially for some countries is the, and for the for the investor is corporate power purchasing agreements.

Because, at least you, you, you fix the price. The country knows how much income is coming in. The data centre knows exactly how much you're going to be paying for the energy. So everybody should be, should be, should be happy. How are we doing on the corporate power purchasing agreement fronts? I mean, corporate PPAs are, are we [00:36:00] seeing kind of like improvements or are we still seeing challenges?

Mike Thomas: Improvements. I, I think that's fair, but it's a little bit tricky. This kind of ties a little bit to my point about green energy auctions or things of that sort. The corporate PPAs, if that's the main channel that's available they can be negotiated. They can be run as tenders. There's a whole different way, a range of ways in which corporates can identify, work with, solve problems, avoid problems by working with different partners and,

coming up with solutions and unlock, unlocking and unleashing quite a lot of innovation and creativity at the leading edge of the corporate PPA world and creating some fairly standard products for the, the less leading edge the, the fast followers. But then you, you, if you play it on [00:37:00] top of that or great energy options or something, then.

All of a sudden, it's like, well, well maybe we wait a little while because the prices are going to be lower or maybe the deal isn't going to be so good because it really depends on the tariff structure. Right? But some of these auctions have to be re the cost of them have to be recovered in part by charges that are on top of everything else.

Joseph Jacobelli: . 

Mike Thomas: And, and, and they may or may not be avoidable. So here you have a, a, a customer who is willing to do, do the green thing, do the contract and all that. But then they're kind of, maybe the opportunity is for something, but now they're paying for a fee, but they're not actually controlling their, they don't really have agency over there, over there, over their contracting, so they can't really do what they want.

They kind of have to, so I, I think we're in this unsettled period, but the instruments, the, the routes to market, we, we do routes to market [00:38:00] analysis for, most of Asia now. And, and that gets just every quarter we put out. Updated subscription, information on all these things. And it, that section of our, our reports just grow in detail.

So, so, we're, we're excited about that. But it was growing with slightly clearer forward look. Like that was the big game. That was the thing that, that was the, but now all these other things are happening too. And I, I think it's a little bit murkier now, but they're, they're nimble.

They don't like one market. They go to the other one. . And we're seeing, we're seeing more activity in China. China's become a much more interesting market with the fall in the solar and the batteries and the, the great push that green, green contracting is now the thing, . If you want to so, so, so, so we're, it's, it's a continuously moving full push. 

Joseph Jacobelli: Got it. Looking at the kind of [00:39:00] last section of this this great, great, great, great discussion, Mike.

Is 2026 and beyond. What do you see in terms of being the one or two major trends, and I think we have alluded to a couple of them already, but in 2026 and beyond.

Mike Thomas: I think, I think it will finally, but maybe a little bit too late that, a sharper focus on solar batteries would be a good thing because you've, there's certain problems, certain sites, certain things, but once you've zeroed in on one, one technology or one technology bundle, you, there's certain problems. It's like, what do we need to know about batteries?

How do they actually integrate? What information is required? Batteries are treated like loads when they charge from the grid. Is that sensible? [00:40:00] So you know, there's, but if you're focusing on that, then you probably can solve those problems because you've, you've focused on it. So I, I think by the end of 2026, there may be a little bit of regret we got there a little bit too late.

We should have started some of these fixes earlier. That, that's my most optimistic view because I kind of think, well, we we're going to turn the boat around just slow. I, I, I think on security of supply New Zealand's been going through a quite a bit of, of deep thinking within the power sector of what constitutes firming because their gas supply has been become less certain.

And the question is, do you bring in LNG importing infrastructure, but you don't really need it? Say when there's a wet year, we only might only need it when it's a dry year, but it's not a dry year that often. So how do you, what is the, I, I think when people think [00:41:00] about the nuance of gas infrastructure firming, they'll get stuck a little bit.

I think that, that that'll, so there may be a little bit of a pause while people sort of process the complexity. And then I think the whole siting permitting grid thing it's going to be with us for a little while, but in Asia we are, we're not prepared. 

Mike Thomas: There, there isn't, there isn't 20 years of markets or 30 years of markets.

There aren't necessarily processes consultations. Data's not that public. You want to understand curtailment risk in Korea. You want to understand curtailment risk in Vietnam. Those are, those are tricky because that information's not really there. So, so I think the other part of 2026, I hope, is that we may not solve the problem, but we will start sharpening the focus on, on these other enabling factors.

We can't just keep, build, build, build. [00:42:00] We've, we've actually now got actually kind of look at the software and see if it's got any bugs and fix them before we put another feature on it. . I, I think that's really what I'm hoping 2026 will be for several of our, of our markets at a time where they say, well, yeah, maybe we slow down a little bit and we, we fix a few things and then we, we gear up gear up more, focus on the fundamentals, so to speak.

Joseph Jacobelli: Ju just one last very, very quick question. Over the past few years, Vietnam was the surprise market, quote unquote because, there wasn't really, frankly, a lot of hope that you'd see an acceleration and all of a sudden you, you saw that acceleration. I, and I'm fully aware that Vietnam has got a lot of Vietnam specific.

Challenges and struggles, et cetera. But if we, if you were to look at the next, few years do you see another Vietnam in the, in the region, like another country, which would [00:43:00] surprise which may surprise or has got a good chance of surprising? 

Mike Thomas: Oh, I am always optimistic on, on, on Malaysia. A few markets in ASEAN, few countries in ASEAN have the energy cards that. Malaysia has, it has land, it has a robust grid, has a really strong security supply, culture, thinking. . . It has a lot of gas dependency, huge amount of gas dependency. Has export and import and in his crack things, corporate renewable energy supply scheme, CRESS, which supports PPAs with corporates, but they haven't quite got across the line in terms of like [00:44:00] slam dunk. . Much of it is that things have been designed and they've been built and they've been given names and they've been given purposes.

But if you're an investor looking at it, you also need to project it into the future. I have a 20 year contract. I need what is going to happen to the system access charge under CRESS for the next 20 years, and that type of information isn't yet. Nobody can tell you what it's going to be, but you, if you, if you knew more about what was in it or what was supposed to be in it, you can form your own view.

You never know what coal prices are going to be for the next 20 years, but you, you form a view about your understanding of coal markets, right? You don't necessarily know, so I, I think those kinds of things. But if, if any of those were, or enough of those were to be cracked, then, Malaysia’s poised.

We've seen private equity go in, we've seen new deals, we've seen so it's, it's, it's my, yeah, it's, it's the most ready and not, [00:45:00] not as, not as, not as big of a pop as Vietnam was in its heyday, but, Vietnam kind of always, it's just sort of an exceptional situation. But Malaysia's got a lot of potential.

Yeah. 

Joseph Jacobelli: Got it. Well, listen, Mike, once again, thank you so much for spending your evening with the Asia Climate Finance Podcast. Really appreciate your time and wish you and TLG a fantastic 2026. 

Mike Thomas: Thank you, Joseph and the Asia Climate Finance, and, and, and everybody out there.

Really appreciate the opportunity. It's always a great fun time. Always talk too much. Say too little, but there you go. With the energy transition, there's just a lot of stuff going on. Thanks. 

Joseph Jacobelli: There is, there is. Thank you. Thank you so much. Thanks. 

Mike Thomas: You bet. Cheers. 

Narrator: Please note that the Asia Climate Finance Podcast is provided for educational purposes only and does not constitute investment advice. Any information discussed should not be relied upon for [00:46:00] making investment decisions. Listeners should always seek advice from a suitably qualified and authorized investment professional, the views and opinions expressed by guests of their own, and do not necessarily reflect the views of their current or former employers or of the podcast host or producers.