Since it opened its Singapore office last year, McDermott Will & Emery has made a number of high-profile lateral hires, including energy expert Clarinda Tjia-Dharmadi, a former global power industry group co-chair at Latham & Watkins, as its Asia transactions head. Tjia-Dharmadi talks about how the energy space in Asia has evolved in recent years, and what that means for today’s energy lawyers.
ALB: Congratulations on your appointment. What are your professional priorities for the coming months?
CLARINDA TJIA-DHARMADI: I am very pleased to be joining a dynamic team of industry-leading talent, with particular strength in opportunities surrounding the energy transition. My immediate priorities will be to connect my clients with McDermott’s global platform, foster a service excellence culture in the team, and be opportunistic about growing and expanding the team in the Asia Pacific region.
ALB: What are some of the ways the energy space has evolved over the course of your career, and do you have any predictions for how it may continue to evolve?
TJIA-DHARMADI: Energy projects have over the years evolved from greenfield developments to include brownfields, M&A, and restructuring. New players have emerged over the year, most prominently in the aftermath of the Asian economic crisis, when the American and European developers, along with their financial backers, pulled out of the market, leaving the region ripe for Japanese, Korean, Chinese, and local players to dominate. The energy mix has also evolved based on the changing forces of economic, environmental, legal, political, technology, and social factors.
The region has pivoted towards new and renewable energy quicker than anticipated. Coal’s outlook is down. The investor pool is shrinking fast – financial investors do not like it, and strategic investors are shying away, as are banks. Gas-to-fire and renewables are on the rise. Large conventional power projects have been moribund in the last two years as Indonesia has grappled with the rise of national interests in the new 49/51 structures but with Jawa 9 &10 now closed, these are expected to start moving.
For renewables, Japan Korea, Thailand, and the Philippines were the first waves, but these have slowed down. Indonesia has in the past struggled with renewables due to vested interests (coal and gas) blocking meaningful regulations that would support renewables, and solar has been slow. However, the renewables sector is going to blow wide open in Indonesia.
It is already starting to get active in the C&I space as developers get the benefit of a discount on PLN’s rates, and they are green. Renewables will also reach critical mass with the new mega renew-able projects for export to Singapore that is cooking. There will also be wind in Vietnam (Although the grid needs upgrading because too much in the way of renewables means intermittent power supply and that is hard on the grid).
The pool of big-name strategic investors is also shrinking. The core, like some of the Japanese trading houses, remains. There is a new and emerging set of developers which I like to refer to as “new baby strategics.” They are mainly focused on renewables. Many of this emerging group of smaller yet growing developers have roots in private equity. Then there is also the emergence of funds and financial investors who do not want to take the usual sponsor risks and want exit strategies. These include a few traditional private equities, investors, focus funds, and newer entrants like pension funds.
ALB: Have you observed any interesting areas of work since the advent of COVID-19?
TJIA-DHARMADI: The COVID-19 pandemic is the first crisis of its kind with unusual implications for the energy industry. For example, many oil majors had already pledged to reduce carbon emissions before the pandemic, but many of them, such as Shell, Total, and BP have strengthened their ambition by announcing a net-zero target by 2050. You also see similar trends in the aviation and the shipping industries. As the pandemic recovery plans emphasize long-term support for the energy transition, there is a growing concern about Scope 3 emissions, which cover the lifetime carbon impact of all products and services. If regulators start making decisions based on the overall carbon impact, the entire energy value chain will be impacted. There is also a growing preference for low-carbon investments that involve green finance due to an emphasis on health and environmental matters as well as the impact of green regulations and government carbon targets.
