US faces uphill battle in Asian energy market

April 9, 2013 | By Travis Mitchell

The U.S. energy market is full of potential and growing daily. But Asia -- and China in particular -- looms even larger for U.S. energy companies interested in raising their businesses to the next level. Asia's booming population requires reliable energy generation and a heightened focus on energy efficiency and renewable sources. But while the region is primed for expansion, U.S. companies face a number of challenges to tapping this new market.

A view of Shanghai, China, part of the expanding Asian energy marketplace. Credit: iStock.

An uphill battle for opportunity

According to projections from the International Energy Agency, the potential for U.S. exports to the global power sector market will be about $14.6 trillion between 2012 and 2035, with Asia representing the largest sector. Energy analysts agree that obtaining a piece of this pie requires shrewd strategy and doggedness.

"U.S. companies looking to grab a piece of the smart grid market in China face an uphill battle, especially companies who do not already have a large footprint in China," Jason Rodriguez, CEO of Zpryme, told FierceEnergy.

The deck is often stacked against outsider participants, especially when it comes to China. National organizations, such as the State Grid Corporation of China, have regulations in place that promote domestic manufacturing and limit entrants from abroad. There are also a lot of incumbent participants in the Asian marketplace, which means U.S. companies must find a competitive advantage if they want to make a mark.

There are, however, ways that savvy energy companies can overcome these roadblocks. One of the best tools is to foster personal relations and maintain strong company interest in a country. Both of these methods can greatly improve chances for success abroad.

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According to projections from the International Energy Agency, the potential for U.S. exports to the global power sector market will be about $14.6 trillion between 2012 and 2035, with Asia representing the largest sector.
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"You develop that knowledge, you adapt that knowledge and you have good partners." said Ben Foster, senior vice president of operations at Optony, a solar research and consulting firm that helps U.S. companies navigate the Asian marketplace. He added that relationships are key to surmounting the challenges of the marketplace.

"The connections that you have with key decision makers are very, very important and it's really the only way to get things done," he said.

U.S. policies support Asian energy investments

It's no surprise it takes a while to build these relationships and understand the processes of doing business in foreign countries. Thankfully, there are a number of policies and agencies in the U.S. that are helping U.S. energy market players make a splash.

"From my own experience, I know there's a lot that the U.S. government does offer to help, especially small- and medium-sized companies, get into new markets," said Lorraine Hariton of the U.S. Department of State, during last month's EnergyBiz Leadership Forum.

Hariton touted the benefits of the State Department's Direct Line program, which connects U.S. foreign ambassadors to businesses through conference calls and webinars and often focuses on energy and infrastructure issues in the Asia region. The goal is to help build the relationships that are so critical to doing business and becoming competitive abroad and help businesses understand the policies and quirks of foreign markets.

Zpryme's Rodriguez highlighted the U.S.-China Clean Energy Center (CERC) as another important policy engine. The CERC was established in 2009 and has dedicated $150 million to support clean coal, smart buildings and EV development. Rodriguez estimated that boosting CERC funding would be a beneficial way to make it easier for U.S. energy companies to be competitive in China.

Along the same lines is the U.S.-Asia Pacific Comprehensive Energy Partnership (U.S.-ACEP). This program has made available $6 billion in export credit and project financing for U.S. companies to implement energy-related projects in the region, according to Deputy Assistant Secretary Julia Nesheiwat, who works in the Department of State's Bureau of Energy Resources.

The goal is a radical transformation of Asia's energy market, she said.

"Beyond that, we must assist our regional partners in their commercial energy choices, especially on natural gas, that advance U.S. economic interests, and which will drive global gas prices in the next decade," Nesheiwat wrote in an email to FierceEnergy.

The policy program aims to achieve this through four investment priorities. These include: renewable and clean energy; power markets and interconnectivity; supporting the emerging role of natural gas; and promoting sustainable development, specifically related to rural electric and energy-efficiency projects.

U.S.-ACEP also has support from the U.S. Department of Energy, the U.S. Department of Commerce, and other financing agencies.

Even with these proactive initiatives, it's going to remain a challenge to grow U.S participation in the Asian energy market.

"Given the growth trends in consumption in the Asia-Pacific region, it will remain a challenge to ensure that sustainable and renewable technologies are integrated into countries' energy mixes," Nesheiwat wrote.

"Promoting viable renewable, hydro, and geothermal energy projects throughout the region will remain a challenge from both a financing and policy perspective, but will prove critical to the region's energy security and sustainable growth needs," she said.

http://www.fierceenergy.com/story/us-faces-uphill-battle-asian-energy-market/2013-04-09