Pleased to say we have the CEO of CLP Holdings, Richard Lancaster, with us in our studios. Richard, it's always great to have you and to talk about the results. So the good news is you maintain your dividend. The bad news is you last nearly five billion Hong Kong dollars. And I'm just wondering whether this is a story where sometimes hedging is your friend and sometimes it's your enemy. Well, the good news is that most of these losses were
unrealized losses, so these were basically accounting losses. And you're absolutely right, Brian, that these results from hedging contracts which we have to mark to market at the end of a period. Prices in the price of energy globally has just skyrocketed over the past six months. So when you contract forward your contracting at the price at the time, when you mark the market at the high prices, then
you have to to make the accounting losses. But what it is showing is that energy is in short supply globally. That is putting tremendous pressure on on energy companies right through the value chain. And if you're in the business of buying fuel converting it to electricity and selling that electricity. It will inevitably put pressure on you. Yes, some of the losses that you have were on the hedging contracts held by Energy Australia. And you know, I can speak
from firsthand experience. Here was a very cold winter and there were blackouts and concerns of rolling blackouts as the winter continued. But none of those challenges have really gone away. Can you expect much improvements in the next half and half after that? We don't expect that energy the cost of energy will come down in Australia. We had a combination of unfortunate events. The weather, As you quite rightly
point out, it does affect energy. It affects energy demand, but also it with with so much renewable energy you on the system in Australia. Now if the wind doesn't blow, and if the sun doesn't shine, or if it rains too much as it did in the early part of the year, it can disrupt rail lines, which means that coal can't get from coal mines to power stations. So so whether it does have a compounding effect, um, we we don't expect that the price of energy will come
down in the near term. It is globally in very high demand. The recovery from COVID, just the challenges that supply chains are seeing globally, compounded by the Ukraine conflict, has has really put pressure on energy prices globally. Yeah, I mean we've seen oil prices come down a lot, but I mean, if you could speak more specifically to
call and natural gas prices, um, what's the trajectory there? Well, in if I just look at the Australian market, Australia is a global exporter of both coal and natural gas. It's a long way away from Europe where we're seeing shortages. But what what it is showing is that all over the world, demand for energy is exceeding supply, so that's putting pressure on prices. The price of coal and natural gas in Australia is four times today what it would
we would normally expect. And we've been doing business in Australia for around twenty years, so this is something that we have never seen prices at these levels. How long do you anticipate those prices remaining elevated. I do not see these prices coming down in the short term. We we are in a in a situation where supply chains cannot be an energy supply chains in particular, cannot be easily changed. We've seen a shift in the global supply
and demand. If if Russian gas is not flowing into Europe, then that gas has to come from somewhere else. If you can't get enough gas, then you have to shift to another fuel, and that's putting pressure on coal. So it may be a couple of years before we start to see relief in these in these prices. Let's talk a little bit about renewables. Um you've talked about getting some further exposure here in Hong Kong. What's the latest
on that on that particular project about offshore wind. That's part of our approach to decarbonize Hong Kong's energy supply, which is very much in line with government's policy to see Hong Kong achieve net zero carbon economy by twenty fifty. Offshore wind is a technology that we believe now is economic in Hong Kong. We have been quite successful in putting or encouraging solar panels on small village houses in Hong Kong, but that will only be a small part
of Hong Kong's energy mix. We believe that the combination of rooftop solar and solar and sorry and offshore wind could see Hong Kong getting somewhere between seven and fifteen perc if its energy mix coming from renewable energy. So this is an area that we think is an exciting development for Hong Kong. We have a site in the eastern waters of Hong Kong and we will be putting together a proposal for the Hong Kong government to consider in the coming months. Of course, an important part of
the puzzle for renewables is energy storage. Is the scenario that you're getting active in we are, and renewable energy is very intermittent in its nature, so it has to go with some form of storage. Battery technology is one, pump storage, hydro is is another. Hydrogen is another possible area of storing energy. So these are all technologies that we are very very active in. Richard, I want to ask you about overall demand out there, but I want to couch it a little bit in in You know
how difficult it's been in managing um. You know, you think of utilities as a very steady business. Scryption income the money is just coming in every month. Uh, But I want to I want to talk a little bit about the difficulties of that and when you try to gauge demand, are we heading for a global recession or are we okay? The world is becoming very unpredictable as we recover from COVID. What what we have seen in our business is that demand overall has been reasonably stable,
but the pattern of demand has changed considerably. Even just during the COVID pandemic, we saw a shift from people using electricity in hotels and restaurants to suddenly using them at home. So the pattern of of of of electricity use change considerably. Uh for for for us, it is a relatively stable market in that people need energy and
they use it when they when they need it. But but the supply chains and bringing energy into homes is a lot of work that goes on behind the scenes, and that's what we are seeing as a big, big challenge at the moment because those supply chains are all being disrupted. The patterns of energy use are changing, and so we we are having to be very adaptable to just to keep the lights on and to keep energy
as affordable as we possibly can. Very quickly twenty seconds, do you feel this crisis supply chain issues, changing perceptions around nuclear I think, so nuclear power if you if you look at it is carbon free. Uh, it is insulated from fossil fuel prices. It is a very stable price. So having nuclear power in your energy mix is a blessing. And where you can do it, and you can do it at scale and it can be affordable, then you should keep it in your energy mix, all right, Richard,
Always a pleasure. Richard Lancaster, CEO of CLP Holdings, the larger of the two electricity suppliers in Hong Kong,