More Info from KPO

Dear all,

Back on 23 Feb 2017 I emailed Mr. Tim Horgan at Kalina Power seeking his comments about two events that I thought could potentially affect some of Kalina Power’s markets.  These events were:

1. USA president Donald Trump expressed an intention to withdraw support from the Paris climate change agreement, and
2. Sinopec’s Oilfield Service Corp unit announced large losses.

Tim replied on 7 March, having been delayed by extreme busyness “in a good way” at Kalina Power.

The following are my questions and Kalina Power Ltd’s answers.

Question 1:

Donald Trump has expressed an intention to withdraw support from the Paris climate change agreement.  An article suggests that “defection…could weaken the pact, potentially leading other nations to defect.”  A USA defection weakens the compelling consensus and political imperative of climate change action.  Won’t other potential global backsliders now be perceiving a competitive political advantage in continuing to pollute, or a competitive threat in not doing so, encouraging them to weaken their commitment to technologies like the Kalina cycle?  Have any policies or negotiations supportive of Kalina Power orders in potential customer countries been recently frozen or downplayed?

Tim's answer:

No significant impact to date and I can't say it has been much concern to us. We are too small a company to address all the significant markets opportunities and territories we could service now and are certainly not reliant on one market. That said we have had recent and significant interest in the US and I don’t believe the Donald will impact that. Key points to remember are Kalina does not need subsidies to provide very attractive returns that save end users significant money compared to buying off grid. This is due in part to the virtually free energy sources (waste heat) that it uses. Further many emerging markets (such as China) are desperate to reduce pollution not due to global concerns regarding  climate change but because the localised pollution is so incredibly bad it significantly lessens the quality of life and health. In large swathes of China the smog is extraordinary and you cannot see the sun for weeks on end.

Further I would be very surprised if Canada, the EU, Japan and many other signatories will be swayed in their significant commitment to Paris due to the actions of the US.

Question 2:  

An article dated 19 February 2017 has reported a massive loss by Sinopec’s Oilfield Service Corp unit. The article says that this “has greatly exposed the weakness of China’s ‘national champions’, including rigid management, high debt ratios, redundancy and making social responsibility a higher priority than profitability.”  Has Sinopec frozen commitments to social responsibility, such as Kalina waste heat power generation, ahead of possible reforms to Sinopec?  Do Kalina Power managers suspect this will happen?

Tim's answer:

On the contrary Sinopec has earmarked significant funds to developing Electricity efficiency as well as Geothermal and we have seen no sign of an abatement of their commitment in this regard. Almost certainly due to the reasons outlined above regarding localised pollution.

My comments:

Note the bit saying "we have had recent and significant interest in the US".

Cheers

Grav