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Issue No. 82

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ISSUE 82 | DISPLAY TO 31 AUGUST 2017 | www.asian-power.com | A Charlton Media Group publication

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SOUTH KOREA NIXES NUKE, COOLS OFF ON COAL KEEPING UP WITH THE INDONESIANS: WILL THE 35GW AMBITION BE MET FAST ENOUGH? THE ERA OF BATTERY-BASED ENERGY STORAGE IS UPON US NEW TOYS FOR POWER’S BIG BOYS


FROM THE EDITOR In Asian Power’s July-August issue, we delved into what actually made South Korea ditch both nuclear and coalfired power energy. When the new South Korean President Moon Jae-in stepped onto the stage during the closing of the country’s oldest nuclear power plant, he announced that no new nuclear plants will be built, making good on a campaign promise to take the nation down the path of a “nuclear-free future”. However, there is a concern that this new energy policy, which also involves huge slashes in coal power production, could leave the economy limping. Can the country make it past tough times?

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We also focussed on the Indonesian power sector. Experts say that the 35GW programme appears to be progressing, albeit slower than hoped. In addition, following years of under-investment, Indonesia’s production of renewable energy remains modest. Solar insolation in Indonesia is higher than most other countries. However, the current installed capacity is only around 85MW. Given the inch-by-inch progress and the burgeoning demand for power, will the government be able to hit its target and keep up with the Indonesians? This issue also features a sector report on the region’s hydropower sector. Overproduction will be a key concern for the Asian hydropower sector in the short to medium term as analysts say installed hydropower far outstrips demand in China and Southeast Asia. Start flipping the pages and enjoy!

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ASIAN POWER 1


CONTENTs

14

INterview 12 CEO MYTRAH ENERGY EYES 1000MW ADDITIONAL CAPACITY

FIRST

26

COUNTRY REPORT: Korea South Korea nixes nuke, cools off on coal

COUNTRY REPORT:INDONESIA Keeping up with the Indonesians: Will the 35GW ambition be met fast enough?

OPINION

06 Indonesia’s geothermal can’t pick up steam

30 Small modular reactors the way to go for Southeast Asia?

07 Low subsidies, tighter bottlenecks

30 Back to the future? – A shakeup in industrial solar

08 Hybrid systems’ hidden trap

32 Will Singapore’s power sector bear the brunt of its carbon tax?

10 Drones are the new toys for the big boys

32 Renewable Energy recipes II – feasible sites for PV projects

ANALYSIS 22 The era of battery-based energy storage is upon us 24 Why developers are increasingly attracted to solar park models 28 Is the Westinghouse dilemma a worrying omen for nuclear?

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News from asian-power.com Daily news from Asia most read

POWER UTILITY

Star Energy targets boosting geothermal capacity to 1200MW Star Energy plans to push its geothermal power production capacity to 1.2GW by 2028. Communication coordinator Hadi Kuwoyo notesthat they have already explored possible new geothermal resources in Lampung and Sulawesi. Star Energy’s production capacity is currently at 934MW.

POWER UTILITY

Vietnam inks deal on developing two 750MW CCGT power plants Vietnam has signed a series of agreements with GE for the development of the Vietnamese energy sector. GE has signed a deal with Vietnam Oil and Gas Group (Petrovietnam) on the development of two 750MW CCGT power plants.

POWER UTILITY

Indonesia’s PLN eyes tender for 4.6GW of coal-fired projects in 2017 It aims to ink the first batch of PPAs within June. Indonesian power utility PT PLN plans to launch tenders for twelve mine-mouth coal-fired power projects in Sumatra and Kalimantan in 2017. The company aims to sign the first power purchase agreements (PPAs) in June 2017 and to have all them settled by end-year, Enerdata said.

POWER UTILITY

Philippines’ energy agency plots sites for new power plants These are for the necessary 43GW power supply until 2040. The Philippines’ Department of Energy (DOE) has plotted “ideal” locations for new power plants that will be used to produce over 43,000MW of supply that will be needed until 2040.

POWER UTILITY

South Korea reverses energy policy to focus on natural gas, renewables It eyes lessening coal’s share to 21.8% by 2030. The new government of South Korea has unveiled a energy policy that shifts away from coal and nuclear and focuses on natural gas and renewable energies instead, according to Enerdata. Gas-fired generation should be raised from around 18% of the power mix.

REGULATION

China issues first green power trading certificates China has issued the first green power trading certificates before launching the green power trading programme, that will reduce the government’s subsidies for renewable projects as of 1 July 2017, according to Enerdata. There were 230,135 certificates.


CO-PUBLISHED CORPORATE PROFILE

Siemens’ supercritical steam turbine packs a punch for medium-sized power plants The SST-5000 series brings unparalleled operational flexibility for 350MW coal-fired steam power plants. technology that has been successfully proven in the larger applications is now being introduced in smaller applications,” he says.

Seamless interaction with power plants

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oal-fired power plants are scrambling to boost operational flexibility as more renewable energy sources gain a bigger chunk of the electrical power generation market. Siemens has rolled out a new range of supercritical steam turbines aimed at helping conventional plants maximise efficiency and improve adaptability. “Because the share of renewables is hard to predict and they generate steep load ramps, flexibility will be a major feature of all conventional power plants in the future,” explains Thomas Achter, steam turbine portfolio manager at Siemens. “Due to the higher cost of gas, simple cycle and combined cycle power plants had to confront these flexibility requirements in the past – and now coal-fired plants also need to provide flexible operation modes due to the growing share of renewables.”

A tried and tested solution Siemens first acquired expertise in working with high water steam cycle parameters from its experience with large steam turbine generators, particularly those in the in the 600-MW to 1,000-MW class. Known as the SST-6000 series, these powerful machines consist of at least of three individual steam turbine modules for high, intermediate, and low pressure. The experience regarding flexibility came primarily from the steam turbines used in the steam tails at combined cycle power plants and from the water-steam cycles at large steam power plants. Now, Siemens has brought the same powerful technology to smaller 350-MW plants. “In order to have a competitive solution in the 350-MW steam power plant market, Siemens decided to go with a two-casing steam turbine and an air-cooled generator. This package has a short overall length of less than 30 m and a low centerline to reduce the investment costs for the steam turbine building,” Achter explains.

State-of-the-art efficiency The large fleet of combined cycle power plants that initially needed to meet requirements for high load gradients and peak power is the second source of the knowledge transfer that was needed to introduce flexibility to steam turbines in the mid-size power range in the 350-MW class. With the SST-5000 series of steam turbine generator for ultra-supercritical SPPs, Siemens has benefited from its experience in both areas. “With regard to flexibility, simply delivering “steel and iron” for rotating equipment is no longer sufficient. The need for high flexibility requires an in-depth knowledge of all the plant systems involved,” Achter notes. He adds that these systems must be designed to interact seamlessly when a power plant is The new SST-5000 series is uniquely geared being planned in order to deliver high flexibility. for 350 MW plants, but it can also be designed Therefore, understanding the plant dynamics for for project-specific requirements in the range all related components is the key to participating of 200 to 500 MW. These supercritical steam in future energy markets. turbines boast a compact combined high- and Achter notes that in addition to the cost intermediate-pressure steam turbine module effectiveness of power generating equipment, with one two-flow low-pressure turbine module. increasing efficiency has always been a main “The knowledge of the highest parameters driver of technology development. “The greatest from state of the art steam power plants and efficiency is achieved primarily the fast loading rates from “The need for high by using the best blading and the combined-cycle power plants were combined in the flexibility requires an sealing design technologies, on ultra-supercritical SST-5000 in-depth knowledge of the one hand, and the highest possible steam parameters on series to provide the best all the plant systems the other,” he says. possible tradeoff between involved” “In order to meet the need flexibility and efficiency. for flexibility, in addition To round out the rotating to a careful component and plant design, package, Siemens has also added a pressurised customers can expect a digitalization 4.0 air-cooled generator with a water-cooled stator package that provides power diagnostics and up to 550 MVA,” he explains. unit control. The power diagnostics ensure From the standpoint of efficiency for mediuma high level of efficiency throughout the sized coal-fired steam power plants in the operating period. The unit control system 350-MW class, Achter notes that customers can optimizes the dynamic behavior of the entire expect comparable levels as those found in larger power plant,” Achter notes. applications in the 600- to 1,000-MW range. “The

Unparalleled operational flexibility ASIAN POWER 5


FIRST the private sector are unwilling to invest in exploratory drilling programmes without attractive feed-in tariffs to compensate for upfront risk. Kaushik Das, senior partner at McKinsey & Company, reckons geothermal energy is already competitive in several regions, but increased tariffs for geothermal and accelerating the issuance of licenses and permits will further incentivise upstream producers to invest. Sweetening the deal for renewables investors is critical for the country to tap into its large geothermal potential, reaching an estimated 27GW. Currently, installed capacity is only at approximately 1GW.

INVESTMENT HOTSPOTS SOUTHEAST ASIA

Tony Segadelli, OWL Energy

Asian Power spoke with Tony Segadelli, OWL Energy’s managing director, on where the investment hotspots are in Southeast Asia. Segadelli recently spoke in the Asian Power Utility Forum 2017 held in Singapore last April 25, 2017. He discussed the current projects his firm is handling and the industry issues he’s observed from the ground. What’s interesting now in the Asian power market and the investment activity in the industry? I see Myanmar is going to start off very soon. Banks are about to issue a tender for LNG, regasification, and CCGT. Indonesia is trying to work out what to do after it has issued regulations 10, 11, and 12. Cambodia is slowly building things--a lot of hydro being brought by the Chinese. Thailand has another round of solar coming up, there’s biomass and waste to energy, they’re very focussed on the renewables sector. Vietnam is starting to make all the right noises on renewables as well, but they’re probably gunning for more coal-fired power as they’ve recently imported more coal in the last quarter than what they’ve had in the other quarters, implying that they’re firmly focussed on the fossil side. And then, Philippines, there’s still a lot of coal being built at the moment. Solar has slowed down, but it has not stopped as there’s a lot of bilateral discussions going on so the future’s looking very bright for Southeast Asia at the moment. Given your experience as an engineering firm, what’s happening right now in the Japanese power market? There’s actually quite a number of solar companies gone bankrupt at the moment because it’s totally over-built. OWL Energy left because the market’s still in development phase, had a very saturated market. They built 10GW on 2013 and 15GW in both 2014 and 2015. They just can’t carry on building at the same rate that they were. Wind has not taken off in a way that it was expected to and biomass is likewise being delayed significantly.It’s a difficult market for the foreign companies to get in. In Southeast Asia, which country do you think has the most interesting opportunities for the investors? I would say that obviously Myanmar has huge potential. As for the other players Thailand is just going to continue growing and that’s not going to change. Philippines on the other hand will also continue to grow. Hopefully, Indonesia will solve its regulatory issues and investment opportunities will pour in in the next two to three years. 6 ASIAN POWER

Landmark geothermal projects still keep coming

Indonesia’s geothermal is losing steam INDONESIA

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hilst Indonesia possesses around 40% of the world’s geothermal reserves, development has not accelerated to full gear due to insufficient incentives to make the high exploration risks worth taking. The government has been offering incentives, but analysts say these are still not attractive enough for most developers. Regulatory and administrative hiccups further deter developers from undertaking projects, which could end up creating setbacks for the country’s commitment to reduce carbon emissions by 29% in 2030. “Recognising the potential, the Indonesian government has introduced various incentives to try to encourage development. If the relevant public authorities made full use of such incentives and implemented them consistently in a way that mitigated key private sector risks, they could make a real difference,” says Marius Toime, partner at Berwin Leighton Paisner. “However, political and bureaucratic tensions often get in the way of effective administration, and sponsors may be discouraged by exploration risks, complex regulations and inadequate feed-in tariffs.” Geothermal project developers must undertake significant capital outlays for exploration without a guarantee of profitable return, which is why many in

Kaushik Das

Marius Toime

Lost opportunity? Das reckons that even if Indonesia’s planned fuel mix is designed to achieve least-cost production by maximising the percentage of coal and gas in the fuel mix–the two are supposed account for up to 84% of total electricity production by 2017– there is an opportunity to increase the contribution of renewables, particularly geothermal, hydro, and biomass. Despite these issues, landmark geothermal projects are popping up in Indonesia such as the Muara Laboh geothermal project, a high temperature power generation plant. With commissioning planned in 2019, the project’s first phase will generate 80MW of emission-free electricity, roughly the same amount of energy consumed by 120,000 households. The project will also provide employment to 1,200 people and support local businesses during the 30-month construction period set to begin this year in the Solok Selatan region in West Sumatra province. Aside from geothermal, development for other renewables has its own set of challenges. Das believes solar, along with other renewables, is not yet competitive at scale and to achieve grid parity, but can be an economically viable option for distributed generation.

Geothermal share of electricity generation in top 10 countries, latest year

Source: Earth Policy Institute


FIRST

Georgina Hayden

Bumpy ride ahead for a potentially strong market

Coal is still king for Vietnam

W

VIETNAM

hen Irish renewable energy developer Mainstream announced its 940MW wind project in Vietnam, it joined a number of renewable energy projects that are seemingly listed on the country’s nonpriority list. With Vietnam’s current energy policies, non-hydro renewables capacity will likely double over the next decade. Moreover, maintaining the low subsidies for wind power development will prevent the sector from reaching its full potential despite rich resources and keen investor interest. BMI Research expects non-hydro renewables capacity to increase from just under 400MW in 2016 to just over 850W by 2026, resulting in non-hydro renewables contributing less than 1% to

total electricity generation in the country by the end of the forecast period in 2026. By contrast, thermal fuels, particularly coal-fired power generation, should see strong growth over the same period. Georgina Hayden, head of power & renewables at BMI Research, reckons this underperformance and lacklustre growth projections for wind and other renewable energy sources can be attributed to low subsidies and higher government priority on coal. “Vietnam’s regulatory environment for renewables remains underdeveloped and the wind subsidies that have been introduced by the government have been widely criticised for being too low and not ensuring an attractive return on investment,” says Hayden. She reckons that when the tariff

was first introduced in 2011, investor interest in the market picked up, with the government registering 48 wind power projects for development. However, by the end of 2014, only three projects had been commissioned. Showing the strong potential of the sector despite the hurdles, some investors continue to plow large investments into Vietnam’s wind power sector. Mainstream Renewable Power is amongst the hopefuls who signed a cooperation deal to develop, build, and operate three wind projects. These include the 800MW Phu Cuong Wind Farm located in the Soc Trang province with an investment injection of approximately $2b, the 83MW Thai Hoa Wind Farm, and the 55MW Thai Phong Wind Farm located in the Binh Thuan province, with a combined investment injection of approximately $200m. Still, Hayden warns that “whilst renewables project announcements have increased in Vietnam over the past six months, our capacity growth forecasts remain conservative. Low subsidies on offer to developers and the government’s stronger focus on other power sources all form bottlenecks to growth.”

Vietnam’s planned installed wind power capacity

Source: Federal Ministry for Economic Affaris and Energy

the chartist: India is losing grip on solar tenders and auctions Whilst solar installations in India have picked up speed, tender and auction activity have Solar tenders and auctions in india from Oct been slowing down over the last couple 2016 to March 2017 (in MW) of quarters. According to Mercom’s India Solar Project Tracker, about 1.9GW of solar was tendered in 1Q17 (1GW of this was a retender) compared to 3.4GW in Q4 last year. There were1.3GW of solar projects auctioned in 1Q17 compared to 255MW in 4Q16. The slowdown in activity has been disconcerting for developers and manufacturers that have been positioning for higher levels of activity based on India’s solar installation goal of 100GW by 2022. “India needs to install 18GW of solar per year through 2022. The pace of tenders and auctions must pick up quickly if the government wants to meet its solar installation goals and show how serious it is,” Source: Mercom Capital Group says Mercom Capital Group.

Cumulative deployment of various renewable energy systems

Source: Mercom Capital Group

ASIAN POWER 7


FIRST

Hybrid systems’ hidden trap

Total market potential in developing countries

Chinese EPCs are turning to more ASEAN wind projects CHINA

INDONESIA

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hen energy storage provider Qinous announced that it will develop hybrid microgrids in Indonesia, industry experts had mixed reactions. For its proponents, hybrid power systems are the dream of the future, integrating traditional power sources with renewable power sources, but experts warn that it can turn into a technical nightmare. There is an array of technical challenges that must be overcome to ensure that present levels of reliability are not significantly affected when operating a hybrid power system, says Amit Gupta, chief of electrical capability group-Asia at Rolls-Royce Singapore Pte Ltd. Competitive participation first One key task is to design new market models that allow competitive participation of intermittent energy sources, and provide appropriate incentives for such investments. There is also a need to design appropriate demand side management schemes to allow customers to react to the grid’s needs. Countries like the Philippines also face an uphill battle when it comes to funding and site availability. Malin Östman, manager, project development, Wärtsilä ,reckons plant WATCH

Source: Frost & Sullivan

there is excellent potential for PVengine hybrids in the Philippines due to a good level of irradiation and widespread diesel use as a generating fuel, which supports their economic feasibility. But cost and availability of land remain major challenges to implementing solar PV and PV-engine hybrids across the islands. The rising complexity of hybrid systems should also keep operators on their toes. “The development of more storage technologies will increase the complexity on hybrid systems, and the control systems needed to manage these,” says Fernando Niggli, technical manager at DEIF Korea. He reckons that individual sources cannot operate if the integration with the other sources is incomplete. This only causes more problems, especially in the microgrid level of applications, and puts pressure on the industry to roll out better systems. “Microgrid needs continuous development of energy management systems to succeed,” he adds.

Christopher Osborne, Watson Farley & Williams

Asian Power caught up with Christopher Osborne, partner at Watson Farley & Williams in Thailand, as he explains the recent trends he’s been seeing with Chinese EPCs’ power projects. What projects are Chinese EPC contractors getting into recently? Where are these located? Recently we have seen Chinese EPC wind contractors entering into large utility-scale wind farm projects in Thailand and Vietnam. Each of the three most recent wind farms we advised on in Thailand had a capacity of 50MW or more and had Chinese EPC contractors, and Vietnam’s first utility scale wind farm (24MW) also used a Chinese EPC contractor. We are aware of Chinese EPC contractors wishing to enter the solar PV market, but at least in our experience we have seen wind projects develop at a faster rate than solar in recent years, and European EPC contractors with a long track record in solar still hold a dominant position.

Malin Östman

Taipower’s 100MW solar power plant

Mihama-3 reactor to run until 2036

EVN commissions Thai Binh-1 plant

Taiwan

JAPAN

VIETNAM

It will be the largest of its kind upon completion. Taiwan’s national utility Taiwan Power announced that it will build a 100MW solar power plant in Changhua County, central Taiwan. The site was originally intended for a new thermal power plant. It was rejected by Taiwan’s Environmental Protection Administration in 2016 due to environmental concerns. The company came up with the plans for the 100MW solar power project to avoid land-holding. Taipower will shell out around $205.8m for the project which will sit on the 152-hectare site.

Enerdata reported that Japanese power generation company Kansai Electric Power has decided to continue operating its 780MW Mihama-3 nuclear reactor for 60 years until 2036 after having secured approval from Japan’s Nuclear Regulation Authority to extend the operational lifespan beyond 40 years in November 2016. The company has released a schedule for safety improvement works, estimated at US$1.63b and due to be completed by late January 2020. Mihama-3 was commissioned in 1976 but has been offline since March 2011.

Vietnamese national power utility Electricity of Vietnam (EVN) has connected the 600MW Thai Binh-1 coal-fired power plant to the national grid. The project consists of two 300MW units that are expected to generate 3.3TWh/year, according to Enerdata. “It was developed by EVN, in partnership with Electricity Generation Corporation 3. Total investment exceeded VND 26,500b (US$1.16b), of which 85% were financed through a loan from the Japan International Cooperation Agency (JICA) and 15% from EVN,” Enerdata said.

8 ASIAN POWER

Are Chinese EPCs actively looking at markets closer to home? If so, what could be behind this? Yes. A few years ago, Chinese EPC contractors were actively pursuing projects in countries as far away as Africa, however much of the activity we are seeing presently is focussed on Southeast Asia. We have seen Chinese EPC contractors focussing on Thailand, Myanmar, and Vietnam. The shift has at least in part been prompted by a gap in the market for skilled contractors with experience in the wind sector in Southeast Asia. Wind energy is a relatively new sector for much of Southeast Asia and there is a shortage of engineers, contractors, and project managers in Asia with wind energy experience and the ability to provide banks and investors with certainty that the project will be completed on time and within budget. Developers are becoming increasingly sophisticated and are aware that the challenges and complexities of multi-contract project structures increase exponentially when factoring in the sheer physical size and engineering complexity of wind farms. Some individual components such as blades can be longer than 50 metres, presenting transport and logistics hurdles on a much greater scale than in the solar sector, and an EPC contractor without prior wind experience is likely to cause time delays and increased construction costs. Chinese EPC contractors are well placed to deliver their expertise in this sector to countries in Southeast Asia, which do not have much experience of their own, and which have shown an appetite for wind energy.


Co-published corporate profile

Powering up: How the world’s power plants fend off cybersecurity threats Cybersecurity attacks can be scary and serious, but modern defense systems are catching up.

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ast month’s widely publicized WannaCry ransomware attack was notable in its broad reach, impacting 100,000 organizations, including critical infrastructure companies. The WannaCry ransomware crippled utilities as well, including West Bengal Power Utility in Kolkata, India, which in turn affected over 800,000 households. As a vital component of a nation’s infrastructure network, power plants often operate with the highest and most technologically-advanced security levels. But according to digital technology multinational firm ABB, much of the risks and vulnerabilities faced by power plants are a result of the very same technological advances that allow them to operate in the first place.

call a HelpDesk. But imagine a plant operator, on nightshift, punching in an incorrect password and getting locked out of the control system that is critical to operating the plant. A significant time delay is not acceptable in real-time process plant environment,” Sen said. So how exactly can power plants effectively deter cyberattacks and prevent widespread damage and chaos? “Having a well-defined cybersecurity strategy can mitigate your risk of employee mistakes, system errors and targeted cyberattacks,” Sen noted, adding that this includes implementing a pro-active stance when it comes to creating a resilient security posture. “Security cannot be achieved with an installand-forget approach. It is an ongoing operational effort which includes a defined focus on securing people, process and technology,” Sen said. Further, end-users must be more discriminating and demand strict security features, while vendors, on the other hand, must be ready to provide them in their respective product offerings. “Security starts with vendors adopting a secure development method for industrial automation solutions, which include critical security controls out of the box. End users must insist on security requirements in their procurement. End user demand is an important signal to the market that they expect industrial automation products and services to be secure by design,” Sen added.

The cost of automation Some of the technological advances achieved in the power industry have been gained through connecting previously isolated control systems. Increasingly interconnected utility networks have provided utility customers with lower emissions, improved reliability and lower power cost. In contrast to 20 years ago, most plants have open industrial standards as well as ethernet and TCP-IP-based communication protocols. “These allow connectivity to external networks such as the office intranet and the internet. No doubt these changes in technology bring huge advantages from an operational perspective. However, they also introduce cyber The ABB Cyber Security Workplace security concerns, making industrial systems ABB, a pioneer in industrial cybersecurity, vulnerable to the same threats faced by IT was one of the earliest adopters of secure sector” said Arup Sen, ABB’s Vice President for development lifecycle in its portfolio, Marketing and Sales, Asia Pacific HUB, Power Sen explained. “ABB takes cybersecurity Generation and Water business. very seriously and fully understands the According to a study by the privacy, data responsibility to advance the security of control protection, and information security policy systems used in the power sector. Thus, ABB had research group Ponemon Institute, the crossembedded its cybersecurity solutions in each industry average cost of a product portfolio lifecycle, data breach in 2016 was $4 which starts from the very “Security cannot million, with 48% caused by beginning in the design be achieved with an malicious or criminal attack, stage, to development install-and-forget 27% due to system glitch, and maintenance stages. approach.” and 25% human error. Within ABB Ability™ With cyber threats DCS Symphony Plus, we mounting and executive leadership gaining developed effective non-invasive tools (the awareness of associated enterprise risks, power Cyber Security Benchmark, The Cyber Security industry executives have mandated measures to Fingerprint and the Cyber Security Monitoring systems and operations, applying traditional IT Service) that diagnose potential cyber security measures to enhance resiliency against risks, reduce them, give alarms and provide cyber threats. However, traditional IT security the support to safeguard control systems measures may not be enough, and unfortunately, investment.” Sen said. can even prove counter-productive in the In addition to addressing secure development “Operational Technology” space. “Traditional IT lifecycle in its industrial products, ABB has approaches present challenges when applied in developed tailored industrial cyber security industrial environments. For instance, when a offerings to work in critical infrastructure user is locked out of a work PC, they can simply environments without being disruptive to core

Arup Sen, ABB

processes. For example, ABB Cyber Security Workplace is an integrated suite of security applications and tools for accessing and strengthening cyber protection. These include fingerprinting to gauge a control system’s security posture patch delivery to evaluate and apply software updates, and application whitelisting to ensure only approved software and processes are allowed to run. A combination of assessment and remediation services can be scheduled on a periodic or continuous basis, which include system hardening, patch and antivirus deployment and backup restoration. “Delivered as a scalable solution, Cyber Security Workplace, a part of ABB Power Generation Care enterprise level maintenance solution, can be phased in to meet your plant or fleet-wide security and compliance needs today while providing the platform from which to grow and expand as requirements evolve and change,” Sen says. Cyber Security Workplace’s security controls, in conjunction with a strong focus on people and process, help customers build a comprehensive security strategy, which substantively can enhance a power plant’s resiliency to cyber threats. ASIAN POWER 9


FIRST

Drones are the new toys for the big boys

renewables’ reality

SINGAPORE

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hen power utility inspection services provider Metalcare Solutions Asia launched a commercial unmanned aerial vehicle (UAV) school in Singapore, power utilities were amongst those who jumped at the opportunity. Drones are the new toys for utility owners and operators when it comes to inspecting power plants and even wind turbines. In late 2016, Singaporean startup SwarmX unveiled a collaboration with DNV GL to deploy drone docking stations to monitor wind and solar farms. It was a move meant to capture the growing market of renewable energy operators in Southeast Asia that are using drones to inspect their assets. Drone sales and services for wind turbine inspection is a booming business, with annual revenue expected to reach $1.6b by 2024, according to Navigant Research. Drone inspection is expected to increasingly complement current wind turbine blade operations and maintenance practices. For example, SwarmX’s fully automated drone docking station, branded as The Hive, enables companies to monitor production and performance of a wind or solar asset, prevent problems form occurring, and help respond if problems arise. “It is increasingly important for renewable energy providers to look beyond capacity to improve energy efficiency and asset

optimisation,” says Mathias Steck, executive vice president Asia Pacific at DNV GL – Energy. At the start of 2015, there were nearly 270,000 individual wind turbines operating globally, and each of these possess a set of blades constantly exposed to the elements and suffering wear and tear. Drones are playing a larger role in helping inspect turbine blades and ensure they are in tiptop condition. Game-changing solution? “Drone wind turbine inspections are a gamechanging solution for the wind industry, providing safer inspection techniques, faster turnaround times, lower operations and maintenance costs, and improved reliability,” says Ted Hofbauer, ABS group director of Renewables Business Development. “These inspections are ideal for maintenance and especially for emergency situations in which climbing is not possible,” adds Michael Singer, CEO of DroneView Technologies. The reliability and efficiency of wind turbines can be negatively affected by the condition of the equipment, which can experience wear and tear, fouling, erosion, and lightning strikes. “Current practices for inspections of blades have been made by climbing crews, which can be high-risk, costly, and time consuming,” Hofbauer explains. Jesse Broehl, senior research analyst with Navigant Research, agrees, saying,“Each individual wind turbine blade needs to be inspected at minimum once a year during a turbine’s average 20-year lifespan because blade deterioration can reduce a turbine’s ability to produce power at best and cause total system failure at worst.” He says drones provide quicker and less risky blade inspection than rope-based techniques, and can provide high-resolution images that are essential for operations and equipment maintenance.

singapore

Mike Thomas, The Lantau Group

Asian Power interviewed Mike Thomas, partner at The Lantau Group, about the realities versus expectations on Asia’s move to renewables. Is there a disconnect in Asia’s realities and expectations on renewables shift? With respect to renewables there’s not a whole lot of reality at the moment. There is still a big disconnect with what the policies could be and what they currently are, there are risks that are being difficult to manage with the various stakeholders. On the other hand, one of the bright spots is that this is one of the places where growth is more dramatic and the need to decarbonise is also thorough. So yes we have a real challenge right now matching the regulatory requirements with the commercial requirements without necessarily penalising the industry players who made the system work and reliable. In Singapore, when do you think will it start needing a new power plant? Singapore has developed an economic opportunity--it’s electricity requirement for a country whose GDP is falling down and it doesn’t have a significant amount of capacity at the moment. It has aspirations to introduce more rooftop solar. And when we look at the possible future growth rates, there is a very narrow growth. That’s a fact that people have not fully recognised yet in terms of commercial risk and policy implications.

China’s massive solar ambition dimmed by transmission challenges When China turned the switch on what is now the world’s largest floating solar farm, it was a clear message that the country is serious in turning away from coal. The new solar farm in Huainan sits atop a lake formed by a collapsed coal mine, as if taunting the coal-fired power industry. China apparently is getting aggressive on hitting its solar target of 110GW by 2020. Recently it completed a 200MW solar facility on top of a fish farm. This solar aqua-culture project spans 299.5 hectares and is expected to provide the energy needs of 100,000 homes. Unless China shifts from large scale power plants towards distributed solar, the massive amounts of solar energy produced may not reach the homes of its intended consumers. Only 16.6% of solar energy is produced at, or near, the point where it is used. The rest is produced by big solar arrays that pose problems the transmission to Eastern China — along the coast — where electricity is most needed. “The advantage of distributed energy — and the Chinese government knows this — to its 10 ASIAN POWER

big power plant counterpart is that it is installed on buildings and in neighbourhoods, providing greater efficiency from being close to the consumption site and not losing electricity over long transmission distances. They are also smaller scale and, in theory, easier to finance,” says Winston K.H. Chow, head of China Country Program at Global Green Growth Institute. Use of DGPV Because of this, China has mandated that 60% of their solar target be distributed generation solar photovoltaic (DGPV). Mun Ho, senior economist from Dale Jorgenson Associates, agrees that green growth should be incorporated into policy. “Although current efforts have been substantial, they have not matched the scale and complexity of the pollution problem generated by rapid economic growth in China. They have started down this path of reform, but the scale of the prob­lems requires greater efforts and some fresh thinking and experimentation,” he says.

Winston K. H. Chow

Mun Ho

Regional solar installation vs power generation

Source: NEA CEC CSCI RESEARCH


Mytrah Energy recently participated in the auction of interstate wind power projects conducted by the Solar Energy Corporation of India and won the right to construct 250MW of projects. The project will be constructed at Maniyachi in the Thoothukudi district of the south Indian state of Tamil Nadu.

Predee Daochai President Kasikornbank

Vikram Kailas CEO Mytrah Energy


CEO INTERVIEW

Mytrah Energy eyes 1000MW additional capacity CEO Vikram Kailas shares that in just six years, the firm has commissioned over 1,000MW of generation capacity across 18 wind power projects, and is planning to commission another 1,000MW of wind and solar next year.

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enewable energy is at its prime in India, given its government’s strong support for sustainability efforts. According to Prime Minister Modi, the country eyes buildling 175GW of generation capacity by 2022 and achieve 40% capacity from non-fossil fuel-based sources by 2030. Mytrah Energy is amongst the companies at the helm of this energy shift in India, as it aims to own and operate 3,500MW of renewable power in the country. Its wind portfolio energy capacity is currently at 1,000MW and places the firm as the group with the largest wind data bank, being the only IPP that has over 200 masts across the country. It has also recently popped the champagne on higher profits on back of completed construction of wind turbines. Asian Power caught up with Mytrah Energy’s CEO Vikram Kailas as he shares the firm’s plans of dominating the renewable energy sector. Please tell us about yourself. How long have you been in the industry and how long have you been with Mytrah Energy? I co-founded Mytrah Energy in 2009. My association with the industry dates back to 2006 when I started working in New York as an investment banker serving energy companies. When we started Mytrah Energy, wind power in India was primarily driven by tax breaks and was not considered a viable sector to set up a business in. We saw things differently. Here was a sector with no reliance on subsidies, no fuel risk, and lower project risk due to shorter construction periods compared to thermal or gas projects. So, despite having no prior operational experience, we were confident that we could build a scalable business in this space as long as we worked to a plan. My experience at these institutions has helped shape my outlook towards business and leadership. I learned the value of an empowered team that respects opinion. As a leader, I strongly believe that open debates on divergent positions lead to sharper, better-thought-out business decisions. I also believe in empowering people and delegating responsibility to them. What are your business philosophies? Mytrah’s success has been predicated on an imaginative, entrepreneurial business model that’s been turned into reality through focused execution. Mytrah is India’s first utility-scale renewable independent power producer, indeed the first start-up utilities company. Building such a firm required quite a leap of faith from all stakeholders – our investors, our early employees, our business partners, our lenders since such a model was unprecedented in the industry. That’s why it took four months and 300 investor meetings to raise our initial equity capital of US$80m. At Mytrah, we also encourage a multiplicity of voices. Building engaged and empowered teams is critical for a firm to succeed and I try to do my best to facilitate the process. I am conscious that my opinion shouldn’t be an overbearing part of processes I am involved in. You could say that I have learned to appreciate the power of the leader’s silence as a tool of empowerment. What are the biggest challenges Mytrah Energy is currently facing? The first challenge is maintaining consistently high standards across all business activities. In case of project execution, for example, this means timely completion of construction activities whilst staying within budget and adhering to global quality standards. In case of plant operations, this translates into maintaining our generation assets optimally thereby ensuring high machine availability levels, and so on. Second, the firm needs to consistently take a longterm view of things. We supply energy under power purchase agreements that can run up to 25 years. To be able to deliver on

its commitments consistently over such long periods, such an approach is not only recommended, it is a necessity. Third, the firm must stay abreast of the industry’s ever-evolving conditions. A couple of points can help explain this issue. One is the recent change in the mechanism used in India to award new wind power projects from a feed-in tariff to a reverse auction method. Another is the ongoing changes in project costs due to fluctuating input prices, changes in technology, and other factors. One needs to understand the impact of such changes to take appropriate business decisions, e.g., in an auction, the firm needs to have answers to questions like – does it involve assets in specific geographies? If yes, should one have different plans for different assets? Likewise, on the issue of project economics, it may seem like the current period is one of secular decline in costs. So, one could argue that continuing decline in tariffs is in order. But does this analysis stack up if one takes a long-term view of things? These questions can’t be taken on the fly, they require thoughtful review. What is Mytrah Energy’s biggest plan to date? What should the industry be excited about? Mytrah Energy commissioned over 1,000MW of generation capacity across 18 wind power projects in eight states within six years of its inception. The firm is currently constructing nearly 1,000MW of wind and solar projects and plans to commission them over the next year. The pathway for the secular growth of the Indian renewable power sector has become clearer with time. Whilst the target of 175GW by 2022 is a challenging one, the momentum gained by the industry is undeniable. The unmet renewable purchase obligation of close to 40GW and the supply gap expected to emerge from retiring old, polluting thermal assets should help sustain the momentum. Auction-based award of wind and solar power generation capacities is becoming the norm now. The recent auctions for wind and solar power generation capacities have seen wide ranging participation. With continued support from the Central government, we could see 15GW of capacity being auctioned out on a year-on-year basis. All of this shows that we are on the cusp of a very exciting phase of growth for the industry. What are the newest projects that you have as of the moment and what projects are in the pipeline? In the wind power space, Mytrah currently has 320MW of projects under construction, whose details are available in the firm’s Annual Report. The firm recently participated in the auction of interstate wind power projects conducted by the Solar Energy Corporation of India (“SECI”) and won the right to construct 250MW of projects. The project will be constructed at Maniyachi in the Thoothukudi district of the south Indian state of Tamil Nadu. It will supply power to the Power Trading Corporation (“PTC”) under a 25-year Power Purchase Agreement. The power will be injected into the Central Grid for distribution utilities with whom PTC will execute Power Sale Agreements. Mytrah has recently received the Letter of Award for the project from SECI and is working towards completing it within the stipulated 18-month construction period. The other project under construction project is the 70MW Aspari Extension project in Andhra Pradesh, another southern Indian state. In solar power, the firm is working on 500MW of projects across three Indian states – Telangana, Punjab and Karnataka. All these projects are currently under construction and are expected to become operational over the next few months. Apart from these, we have several other projects under various stages of development. ASIAN POWER 13


Country report: KOREA

How should the big move to natural gas and renewables be facilitated?

South Korea nixes nuke, cools off on coal

Will the government be able to take on the resistance from companies that will be badly hurt?

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hen the new South Korean President Moon Jae-in stepped onto the stage during the closing of the country’s oldest nuclear power plant, he announced that no new nuclear plants will be built, making good on a campaign promise to take the nation down the path of a “nuclear-free future”. However, there is a concern that this new energy policy, which also involves huge slashes in coal power production, could leave the economy limping. The plan to drastically reduce nuclear and coal power in the energy mix over the coming years will likely receive ample public and industry support with the right incentives. The biggest concerns,

Some experts are fearing that halting new coal-fired and nuclear power plant construction may threaten energy supply and push up electricity prices.

Energy generation by source South Korea

Source: EIA

14 ASIAN POWER

according to analysts, will be if the government can effectively handle the resistance from firms with stakes in the plants that will be nixed, and if it can quickly grow renewables from its current small base. The President’s pledges President Moon won the recent elections on a platform that pledged to lower South Korea’s dependence on nuclear and coal power, which he said posed risks to the safety and health of citizens. Support for nuclear plants, which provide around a third of the country’s energy, has waned in the past few years following the Fukushima disaster in Japan in 2011 and a corruption scandal in 2013 involving faked certificates on reactor parts. There has also been growing opposition towards coal plants due to rising air pollution levels. It was amidst this dissatisfaction that Moon offered a pleasant vision of a future South Korea: One that is more liveable and safer as the nation strengthens its natural gas sector and develops its renewable power sources. The new President can likely count on strong public support for his new energy policy, but there is skepticism among insiders on whether he can pull off the full pivot as promised due to foreseen corporate

resistance and economic disruption. “Some experts are fearing that halting new coal-fired and nuclear power plant construction may threaten energy supply and push up electricity prices,” says Enerdata. South Korea unveiled in June an energy policy that would, by 2030, cut coal-fired generation to nearly half or 21.8% of the energy mix from its current 40% and reduce nuclear to 21.6% from 30%. In contrast, the share of renewables, including hydropower, would rise fourfold to 20% from 5%. Enerdata says the plan to move away from coal and nuclear will be a U-turn for South Korea, but notes that the government could levy environmental taxes on both to facilitate the shift towards natural gas and renewable energy. Legal implications? The plan to phase out coal plants may not only induce economic sluggishness but also lead to a legal tiff. South Korean private-sector companies have already sunk more than $1b into building new coal plants and could file lawsuits in response should the government try to freeze the pipeline, says Michael Cooper from S&P Global Platts, citing an industry source. “Designed to meet rising demand for electricity from South Korea’s expanding


Country report: KOREA South Korea’s natural gas consumption, 2000-2015

Michael Cooper

Source: US Energy Information Administration, international Energy Agency

economy, including its industrial giants such as Samsung and LG, the coalfired plants are being sponsored by state-owned utilities and some private companies,” he adds. According to S&P Global’s PIRA Energy Group, South Korea was targetting to build a total of 20.17GW of coal-fired electricity generators over the years starting 2017 to 2022. The nation’s seventh electricity supply plan published in 2015 had specified that coal-fired power generation would grow from an installed capacity of 25.1GW in 2015 to 37GW in 2020, and then to 43.2GW by 2025. This would have merited a corresponding increased consumption of imported thermal coal to 120 million mt/year by 2020, from 80 million mt/year currently. “But obviously, those numbers are in doubt, with the new president’s desire to limit coal-fired power generation for reasons related to curbing the problem of air pollution in South Korea,” says Cooper. “Coal consumption underlies the country’s transformation into an industrial heavyweight. The president may face some difficult dilemmas if he moves ahead with curbing South Korea’s future use of thermal coal, as the fuel is closely linked to the country’s economic prosperity,” he adds. Not a maverick move Cooper, citing insider sources familiar with the thermal coal market in South Korea, says it is unlikely that President Moon will be able to completely halt the expansion of coal-fired power generation in the country. Instead, he says that a more likely scenario seen by insiders would be that the government will only look at the new coal plants but not cancel them, in consideration of how the latter action will hurt the country’s economic competitiveness. Analysts note that President Moon’s energy policy is not a maverick move but follows a trend sweeping across Asia:

A declining fascination with coal and a blossoming affair with renewables, the latter nurtured by advances in technology, from energy storage systems (ESS) to smart grids. “Moon’s policies, whilst newsworthy, are in no way revolutionary,” says Yulanda Chung, energy finance consultant at the Institute of Energy Economics and Financial Analysis (IEEFA). “In fact, they are entirely consistent with the technology-driven energy market transformation that is taking place globally and in Asia in particular.” IEEFA forecasts Japanese thermal electricity generation falling 2 to 3% annually over the next decade, whilst China’s coal consumption had already peaked in 2013. Taiwan, for its part, recently committed to focus investments in renewable energy and energy efficiency, targeting 20% renewables as part of its energy mix by 2025. India has also reiterated its commitment to a target of zero thermal coal imports by 2020. “Governments all across Asia are seeking to rejigger their energy economies toward domestic renewable energy for the simple reason that it is increasingly cheaper than burning coal. The sooner policymakers and companies face up to the reality of an export coal market in structural decline, the more they will gain from a transition to renewable energy that is gathering pace,” says IEEFA. Korea’s Renewables Shift As part of its new energy policy, the South Korean government revealed it will be investing KRW 42t (US$36.6b) to develop renewable energy industries and build an array of new renewable power stations. There has also been a pickup in new renewable projects, including a recent 97MW offshore wind farm at Saemangeum costing an estimated US$365m that will supply power to 62,000 households. South Korea may be determined

Yulanda Cheung

Helena Tillborg

to significantly increase its share of renewable power to increase energy security and reduce climate impact, but it faces several major challenges, including coming from a very low level starting point, says Helena Tillborg, analyst, head of office of science & innovation at the Swedish Agency for Growth Policy Analysis. “Besides technology and grid related aspects, there is the fact that South Korea is densely populated with limited areas to install wind power plants and solar power facilities. Furthermore, energy infrastructure development is also subject to protests from the affected inhabitants,” she says. Incentives for solar Last year, the South Korean government unveiled incentives to encourage solar power plant operators to set up bulk energy storage systems (ESS) facilities, granting compliant solar power plant operators with additional points on assessment of their renewable energy certificates (RECs). With these incentives in place and higher renewables investment, the Ministry of Trade, Industry and Energy estimates the additional demand for ESS will reach a combined KRW440b (US$391.6m) over the next three years until 2020. This will be in strong support to the country’s big switch to renewables. Strengthening support for ESS, which would then grant businesses relatively lower-priced electricity from renewables, is one of the ways the government can encourage businesses to support the new energy policy, says Tillborg. Poor households will likewise find it easier to embrace the transition by receiving energy vouchers. “The step towards market-oriented pricing is necessary to enable efficient energy use and energy security, but might be painful and jeopardise industrial competitiveness at a first glance,” she says. “The challenge for the government and its agencies is to overcome the first strong resistance and promote the opportunities smarter energy use can bring to the new and growing industry of Korea,” adds Tillborg.

South Korea total primary energy consumption by fuel type 2015

Source: BP Statistical review of world energy 2016 ASIAN POWER 15


sector report: HYDROPOWER

Yunnan’s capacity grew over tenfold

Let the rivers run: Asia’s hydropower sector is at the brink of overproduction Asia has been ramping up its renewables hydropower production following the Fukushima nuclear accident and the Paris Climate Change Agreement to the point of oversupply in the short to medium term.

I

f all the renewable sources were to stand on a podium ranked by their contributions in powering the world, hydropower will take the top spot, proudly ahead of wind and solar. Yet this dominance might become tenuous if Asian countries like China and India that are expected to lead hydropower growth in the next decades end up fumbling their potential. Analysts are sounding the alarm bells on possible overbuilding and underutilisation in China’s hydropower-exporting Yunnan province, and on the glaring structural weaknesses that have put Indian hydropower projects on hold. Hydropower is the leading renewable source for electricity generation globally, with installed capacity of 1,064GW in 2016, supplying more than two-thirds of all renewable electricity and nearly one-sixth of the world’s electricity from all sources, according to the World Energy Council. China is the undisputed hydropower leader with capacity of 319GW, while the United States is in second with 102GW and India notably in fourth with 52GW. Governments have been keen to lower the share of nuclear and coal in their energy mix due to safety and pollution concerns, respectively, while promising to invest billions of dollars to grow their renewables sector. South Korea, for instance, has targeted to increase its share of renewables, including hydropower, fourfold to 20% from 5% by 2030 with support from its newly elected President Moon Jae-in. But even as most of Asia begins tapping into their hydropower potential, all eyes will be on the critical trifecta: China, India and Southeast Asia. How these countries with interconnected interests navigate the tricky rivers of hydropower – from overcoming huge upfront costs for new projects, mitigating price risks that threaten long-term profits, to 16 ASIAN POWER

Research shows installed hydropower far outstrips demand in China and Southeast Asia.

planning for a regional energy market – will determine how large a role it continues to play in renewables. China’s oversupply woes Overproduction will be a key concern for the Asian hydropower sector in the short to medium term, says Darrin Magee, associate professor of Environmental Studies at Hobart and William Smith Colleges, pointing to research that shows installed hydropower far outstrips demand in China and Southeast Asia. China’s hydro boom has been concentrated on the southwest region where “steep rivers, narrow gorges, and heavy runoff combine to create a dam-builder’s paradise.” This has transformed Yunnan province into a “battery” that not only provides hydropower electricity to southern China but also for downstream neighbours like Vietnam, Laos, Cambodia and Thailand. Yunnan’s hydropower capacity has grown more than tenfold to 62GW between 2000 and 2016, surpassing that of entire countries like Russia and India (~49GW each) and nearing that of the US and Canada (~79GW each). Hydropower construction in Yunnan, a mountainous province, accelerated in the 1990s to 2000s in response to power shortages plaguing southern China and the subsequent rollout of supportive policies like “Send Yunnan Electricity Outward.” Road improvements and the creation of long-distance transmission lines enabled hydropower produced Yunnan to be funneled eastward to electricity-hungry provinces like Guangdong. In 2015, electricity production in Yunnan reached 262TWh, far exceeding the approximately 167TWh consumption within


sector report: HYDROPOWER Investment costs as a function of installed capacity and turbine head

World hydropower technical resource potential

Source: WEC

the province. Most of the surplus (93.5TWh) is exported to Guangdong province and a fraction (1.4TWh) is sent to downstream neighbours in Southeast Asia. Yunnan Power Grid has indicated an additional 95TWh were potentially available but not utilised, which Magee considers “a staggering amount of wasted electricity” comparable to the entire hydroelectric generation of 105TWh in mainland Southeast Asia. For Magee, this then begs the questions: With installed capacity at such a high point already, why is there a continued push for large scale hydropower development in the region? And can excess hydropower be used to displace polluting coal plants and reduce pollution? Thomas Hennig, researcher in the faculty of geography at the University of Marburg in Germany says it is important to understand the regional hydropower boom in the broader context of energy portfolios in China and mainland Southeast Asia. “From a macro perspective, Thailand, Vietnam, and Yunnan all have comparable electricity consumption,” he says. “Yet while demand in Thailand and Vietnam is driven by a broader industrial development, Yunnan’s is mainly driven by electricity-intensive industries such as aluminium and silicon smelters.” Hennig explains that Yunnan smelters that have built their fortunes on the rich non-ferrous metal deposits found in the province have a strong stake in hydropower, looking to take advantage of cheap electricity produced by plants during the rainy season. This has led to conflicting views on how to best utilise Yunnan’s hydropower potential. “Within Yunnan there is now a power struggle over the fate of its hydroelectricity,” says Magee. “Some actors, such as grid operators want to export power to other provinces and countries while others, such as local electricity-intensive smelters, want preferential access to it within the province.” Lower demand, higher production On top of this conflict, the growth of Yunnan hydropower will likely be stunted by lower demand within China and Southeast Asia. Guangdong is planning to scale up its nuclear power, more than doubling from 6.3GW to 16.3GW by 2018, making hydropower a tougher sell due to the latter’s inherent flaws. “Given the high utilisation rate of nuclear power (capacity factor) and lack of seasonal fluctuations, it will likely be seen as more reliable and less risky than electricity from hydropower facilities up to 2000 kilometres away,” says Hennig. Yunnan can try to divert more of its hydroelectricity exports to Southeast Asian neighbours, but Hennig forecasts growth in this area to be modest compared to Guangdong. “Those neighbours are developing their own hydropower sectors, often with investment and technical assistance from Chinese firms, both for domestic use and for export. Similarly, Chinese power companies such as Sinohydro and Huaneng are eyeing untapped hydropower resources in Bhutan, Myanmar

Source: Based on Kaldellis and Kondili

Darrin Magee

Asok Dasgupta

Aditya Valiathan Pillai,

Opangmeren Jamir

and Laos,” he says. But Hennig explains that Yunnan’s oversupply woes is part of China’s long play in hydropower: Exporting its hydropower planning expertise. “Plans for regionwide power grids linking Association of Southeast Asian Nation states will facilitate transmission of electricity across national borders, even if the financial arrangements for such transfers prove more complicated. And because hydropower output can be changed almost instantaneously it can effectively balance the increasing share of intermittent renewable electricity sources on grids,” he says. India’s slow flow If overproduction is becoming a concern in China, then the reverse is the case in India where there is a desperate thirst for more hydropower. India’s economy is one of the fastest-growing in the world requiring an increasingly enormous amount of energy, which has led the government to start tapping into its rich hydropower potential, says Asok Dasgupta, president of the Independent Power Producers Association of India. Thermal sources still dominate India’s total installed power generation capacity with a 69 percent share, nearly five times the share of hydropower, which is at 14%. Non-hydro renewables is at 15%, while nuclear power is at %. Dasgupta says the northeastern states of India will hold the key to India’s hydropower growth, particularly Arunachal Pradesh and Mizoram, which have abundant and still untapped potential at an estimated 50,000MW and 4,500MW, respectively. Unfortunately, hydropower projects have been slow to complete in both states. In Arunachal, Dasgupta says hydropower projects under construction have been shunned by several private companies. Meanwhile, in Mizoram, only 30MW – or less than 1% of its potential – of hydropower projects are currently in the planning and construction phase. Hydropower projects in Arunachal have been riddled with challenges – namely, a poor transport infrastructure, a poor transmission system and local political gamesmanship – so most private power developers have chosen to sit in the sidelines. Other private power developers in Arunachal also cannot handle the heavy stress brought on by the projects to their balance sheets. This has placed the burden on completing the projects to the public sector. Aditya Valiathan Pillai, program officer at The Asia Foundation says the high up-front construction costs of hydropower is one of the key reasons that has deterred private capital and put several government projects on hold. In India, new hydropower installations can cost between two and four times the price of thermal power depending on the projects, and solar is even cheaper. Long gestation periods and strong opposition have likewise driven up prices and risk of hydropower projects. But if India overcomes the growing pains in its hydropower sector, then it will be in great position to ASIAN POWER 17


sector report: HYDROPOWER TORN BETWEEN RAPID DEVELOPMENT AND ENVIRONMENTAL OBLIGATION

Total installed hydropower costs rangers by country

Given these challenges, Dasgupta recommends India to start building suitable road and rail connections to the northeast for the transport of equipment and materials to build hydropower projects. It also needs to develop an adequate transmission network within India that can handle the additional electricity load in the future. The government should also change the classification of “renewable source” as defined according to the Ministry of New and Renewable Energy. Dasgupta argues that, at present, renewable source only pertains to hydropower projects of up to 25MW capacity, so expanding the definition to include hydropower projects of all capacities will allow projects to take advantage of incentives and cheaper financing. “The provision of these incentives will serve to make hydropower projects more bankable for the private sector, and hence sprout greater private investment in the sector,” says Dasgupta. “If India’s central and state governments fail to take these steps, the full use of northeast India’s hydropower potential will remain elusive.”

Source: IRENA, IEA, Black & Veatch

benefit from its uniquely strategic role in the emerging regional cooperation on electricity trade. “India’s geographic position at the center of the region makes this a vital effort in linking it to other South Asian countries, and linking South Asian countries like Nepal and Bangladesh to each other through India,” says Pillai. Energy trade Member countries of the South Asian Association for Regional Cooperation have already signed a landmark framework agreement for regional cooperation on electricity trade in 2014. This prompted India to release last year guidelines for crossborder electricity trade that it hoped would introduce “greater transparency, consistency, and predictability in regulatory approaches” in South Asia “Though countries in South and Central Asia suffer from chronic mistrust, there is evidence of pragmatism in energy cooperation,” says Pillai. “A gas pipeline connecting Turkmenistan, Afghanistan, India, and Pakistan, for example, has recently seen the benefits of political momentum at the highest levels, though beset by local security concerns. Recent moves in South Asia toward the creation of an energy market should be seen in this light.” “Energy trade creates interdependence, which is a somewhat reliable predictor of further openness in interstate relations. The intensity of interdependence is amplified by the fact that energy security is a crucial factor in state-citizen relations across South Asia.” Pillai adds that the Paris agreement on climate change has played a significant role in pushing not only the West, but also emerging markets to prioritize carbon emissions mitigation. It is in this climate of accelerating momentum for countries to shift to a greener energy mix that regional electricity trade can flourish. “Hydropower from the Himalayas in Nepal and solar power from Rajasthan could meet demand in Bangladesh or Sri Lanka, reducing their dependence on coal and oil,” says Pillai. “Seen through an economic lens, this injects an element of rationality to often costly investments in energy generation; electricity surpluses can be traded and deficits met across the geographic expanse of South Asia.” For Dasgupta, India’s aspirations in establishing a transnational supply of electricity to neighboring countries will require the country to solve the domestic challenges in Arunachal Pradesh and Mizoram that have stalled more than a dozen hydropower projects currently under construction. Five notable factors are keeping India, as well many developing countries such as Nepal, from realising the full potential of their hydro resources. Dasgupta says hydropower projects are more expensive, involve large logistics requirements, raise complex challenges in land acquisition and local population displacement, require new or upgrades of transmission line to evacuate power, and entail proponents to address critical environmental concerns. 18 ASIAN POWER

The government should also change the classification of “renewable source” as defined according to the Ministry of New and Renewable Energy.

Balancing development and environment protection The challenge for India will be in finding the right balance between the need for rapid development and the necessity of protecting the environment, says Opangmeren Jamir, research assistant at the Institute for Defence Studies and Analyses. India currently takes a haphazard approach to undertaking hydropower projects, which no less than the Comptroller and Auditor General of India had found to routinely bypass standard procedures, including for environmental impact assessments and public hearings, in a report it presented last March. “Every stakeholder needs to contemplate the impact that hydropower dams would have on the environment, and also the potential impact of climate change on dams, both before and after their construction,” he says. Jamir reckons that many countries have embraced hydropower as they attempt to mitigate climate change, lower airborne pollution as hydropower plants replace coal plants, and comply with global standards and agreeements. But even though hydropower is indeed a clean source of energy, it can bring serious negative impacts on the climate that should not be overlooked. He cites a research paper by Philip Fearnide that found hydropower dams located in tropical regions generate more methane than those located in temperate zones. Another study led by Bridget R. Deemer, on greenhouse gas (GHG) emissions from 267 large reservoirs around the world, more than 80 per cent of methane emissions come from water storage reservoirs created by dams, contributing almost three times more to global warming compared to carbon dioxide, although methane in the atmosphere stays for only a short while compared to carbon dioxide. Asian nations will also need to start Factoring in the impact of climate change in evaluating hydropower projects not merely as an environmental necessity, but also to determine financial feasibility. Jamir says climate change can alter river discharge, which in turn impacts the availability of water resources, water regularity and hydropower generation. “Major rivers like the Indus, Ganga and Brahmaputra are fed by snow and glacier melt. But the retreat of glaciers in the Himalayas is likely to alter the pattern of river flow, resulting in the disruption of hydropower production. A one per cent reduction in the flow can reduce electricity output by roughly three per cent,” he explains. “Moreover, one cannot ignore the economic risks of investing in a hydropower project under the prevailing conditions of climate change. Bhutan, which boasts of a hydropower potential of around 30,000 MW, has invested enormous capital in the same in recent years, but is likely to face an economic risk on the returns in the years to come, apart from environmental risks. The social impact of large dams by way of population displacement and loss of income from farming and livestock should also not be overlooked.”


CO-PUBLISHED CORPORATE PROFILE

Providing good engineering solutions

Powering on along with Southeast Asia’s energy markets OWL Energy continuously provides quality and reliable industry advice in a changing region.

E

ven as power projects across Southeast Asia continue to grow and diversify, power engineering consultancy firm OWL Energy is showing how it is not just able to keep up with the changes, but is also proactive in helping clients keep abreast with industry developments “We are all about providing good engineering solutions in a service oriented manner to the client regardless of whether the project is a billion dollar project, with multilateral financing including the IFC / ADB, or if it is a small study to decide where to put the next ash pond,” says Tony Segadelli, managing director, OWL Energy. Clients constantly praise the breadth and depth of OWL Energy’s capabilities whether they be in fossil or renewable energy and the full project cycle capability, he also notes. “Whereas global companies have many layers of bureaucracy, OWL is lean and enthusiastic to the extent that even I am actively involved in project delivery.” Further, Segadelli adds, “Even our expat staff have been in Asia for decades and our strong network of engineers means we can quickly bring in outside expertise as required, covering technology experts, environmental consultants and market analysts.” Early victories OWL Energy has bagged notable wins in the first half of 2017. “Our largest success has been in taking over a distressed solar project and providing detailed design, procurement support and construction supervision from the engineering, procurement construction (EPC) contractor to get the project back on track,” shares Segadelli. “We have also diversified in terms of technology, and are now working in various capacities on hydro, battery storage, solar, biomass and waste-to-energy projects

within the region.” Clients for these projects have ranged from the large utility/global independent power producers (IPPs) to large conglomerates that have never looked at the power industry before and see it as a good market to enter, Segadelli also notes. For example, OWL Energy was engaged by a company in the Philippines that owns restaurants, mines and bookstores which has significant cashflow, and was looking at LNG facilities to invest in. In Myanmar-based projects, they are helping local companies and global entities as they seek to explore this developing market, to select the viable projects and then focus on their development. “One area that has changed in the last 12 months is that I am traveling a lot more. Singapore is a destination I often visit because there are a lot of regional investors and lenders there. However with ASEAN being 50 this year I will be celebrating by visiting all 10 countries,” he adds. For the remaining half of the year, OWL is looking to further increase its presence around SE Asia. In Thailand, for instance, the focus is shifting to combine intermittent and baseload supplies. In the Philippines, OWL will be expanding their abilities to provide project services to operating plants, those requiring repowering, and to the smaller hybrid systems that are becoming more economic as technologies combine to offer cost-effective alternatives to the traditional diesel generators. Myanmar requires all forms of power generation including coal and solar, while Cambodian initiatives for the company will be largely focused on solar. Short-term future plans mainly involve continuing the company’s

Active involvement is a priority

strong engineering capability, flexibility and service focus. OWL Energy will also focus strongly on investment hotspot Myanmar, where they have some strong early wins including Lenders’ Engineer on the first IPP projects to be truly project financed. “On the technology front we will be focussing on tackling technology developments, such as battery storage, as they are introduced in the region,” says Segadelli. Agile and nimble He is unfazed with observations on the strong consolidation in the engineering consulting sector at the moment. Even in the presence of global monoliths, OWL strives to aim for quality projects, client service, and undeniably strong record in seeing projects from start to finish. “OWL is all about focussing on being a local power engineering consultancy with a global outlook and reach. We are ISO9001 accredited, unlike most local firms,” says Segadelli. Further, their senior management team all come from the large consulting companies and understand the importance of having a business that is focussed on meeting clients’ needs at the right time all the time. Segadelli points to this as one of the company’s strengths and advantages over other firms.“Too often the large companies spend most of the time ‘doing business with themselves,’” notes Segadelli. “We have few layers of management and even I regularly perform project work and have a direct relationship with our clients.” For OWL, this means that when a client asks it to do a task or negotiate a contract, the company does so in a manner that facilitates getting the real work started immediately and providing a product that meets the client’s requirements. “We are the owls,” says Segadelli. “Agile and nimble.”

“We have few layers of management and even I regularly perform project work and have a direct relationship with our clients.” ASIAN POWER 19


Country report: INDONESIA

Official projections can often look “aspirational”

Keeping up with the Indonesians: Will the 35GW ambition be met fast enough? Indonesia’s most recent FiT for solar and wind was announced in 2016, but only lasted for a few months. Current requirement for RE projects are to beat PLN’s average cost of electricity, and it’s not even enough to beat marginal cost.

I

ndonesia pledged to reduce emission by 26% in 2020 in its Intended Nationally Determined Contribution (INDC), where the government shifted its policy from coal to more environmentfriendly gas generation. If implemented, demand for gas would increase to support the shift in the generation mix. What impact would this have on other energy players and what regulatory changes must be done? Will this affect Indonesia’s energy targets? According to Stefan Robertsson, principal at The Lantau Group, the lack of policy or regulatory framework Energy mix in 2015 (actual and 2025)

Source: MEMR 20 ASIAN POWER

The lack of policy or regulatory framework supporting Indonesia’s targets should not be deemed as the only problem in the industry.

supporting Indonesia’s targets should not be deemed as the only problem in the industry. Sometimes, he says, official forecasts are part of it too. Official projections and targets can often look ‘aspirational,’ and/or are long term with no definite framework how these can be achieved. Secondly, retail pricing policies can impact fuel mix. Few Asian countries have robust “cost pass through” regimes. “Regulated retail tariffs with less clear cost pass-through and/ or result in low/subsidised tariffs tend to creates disincentives for offtake of higher cost generation. Third is that wholesale pricing regulations can be a problem. Not every MWh of electricity is created equal. There is often only a single 24/7 base load tariff, and if the benchmark for wholesale pricing is base load power, than the outcome will favour base load power,” he says. Another point is that there is not enough government support for upstream, which will make downstream electricity targets hard to meet. Lastly, there is not much regulatory support for renewable energy (RE) to begin with. In

Q2 2017 there is almost no regulatory and policy support for RE anywhere in SE Asia. Lacking in regulation Policies and regulatory framework for RE in SE Asia are lacking. In Malaysia, 450MW of solar projects awarded through bidding in 2016, and a second round of solar bidding is planned in 2017 with 460MW quota. In Minor Mekong, there is no feed-in tariff or developed RE schemes. In Vietnam, existing wind feed-in tariff (FiT) i.e. US$ 7.8/MWh is too low to generate interest. No solar FiT exists, despite the country having plenty of prospective projects. New solar FiT and revised wind FiT have been imminent for a long time. In Indonesia, most recent FiT was announced in 2016, but only lasted for a few months. Current requirement for RE projects are to beat PLN’s average cost of electricity, and not even enough to beat marginal cost. Restrictions on hiring foreign workers are also in place. The Decree No.31/2013 issued by MoEMR is leading to a tighter scrutiny of foreign


Country report: INDONESIA of the Netherlands, many Indonesians consider the availability of cheap energy a constitutional right.

Installed power capacity and electricity generation in 2015

Stefan Robertsson

Agung Wiryawan

Source: MEMR

worker permits, as the government tries to encourage the hiring of more Indonesian workers. This could lead to businesses finding it harder to find the relevant skill/expertise that require specialized knowledge, like the oil & gas industry. Creditworthiness of off-takers are also on the line. Gas off-takers may include companies which rely on government subsidies due to government imposed regulated prices below market prices (such as PLN and PIHC). Like PLN projects, developers and suppliers may need to secure Letters of Guarantee from the Ministry of Finance. There is also a public perception that gas is more dangerous than liquid fuels, hence there appears to be some hesitation for consumers to convert to gas. Agung Wiryawan, director at PwC, discussed that in 2015, Indonesia had approximately 55.5GW installed capacity of power plants which generated 228TWh of electricity. Demand for electricity in Indonesia is expected to grow by around 8.5% p.a. in the next ten years. The Government projected that demand will reach 457TWh by 2025. Updates on renewables The 35GW programme appears to be progressing, albeit slower than hoped, so a new regulation was enacted to accelerate the development. Presidential Regulation No. 4/2016 was issued to address various issues affecting power project development in Indonesia (especially 35GW programme). In November 2016, Rinaldy Dalimi, member of the National Energy Council, said that unless PLN could expedite the financial closure, it was unlikely that any more than 20GW would be achieved as it took around 36 months to build a power plant after the financial issues were settled. As of December 2016, only 0.5GW of the 35GW has reached the Commercial Operations Date. Under the Government’s future plan, fossil fuels are expected to continue to play a dominant role, but an increased focus on

renewables. “Despite the risks in the new regulations, there are also opportunities to deploying renewables.In the past fuel subsidies, low electricity tariffs, complex regulations, legal uncertainties, logistical challenges and extensive cheap coal resources deterred potential renewables investors. Following years of underinvestment, Indonesia’s production of renewable energy remains modest. Solar insolation in Indonesia is higher than most other countries. However, the current installed capacity is only around 85MW. The MEMR plans to add 5,000MW of solar power capacity by 2019,” Wiryawan says. To support the 5,000MW target, several programs and regulatory frameworks have been introduced: Develop Renewable Energy for Villages Program (Program Energi Terbarukan Listrik Desa) with a target of electrifying 10,300 villages by 2019; a capacity quota of 500 MW of solar power to be offered in 2016; developing regulations for hybrid PV, ongrid PV and rooftop PV; and developing a quality standard for solar panels and expert resources. Logistical problem “The estimated potential of wind energy in Indonesia has historically been regarded as relatively small, primarily due to the relatively low wind velocity. The exception is in the eastern islands, where wind velocity can reach a sufficient level to power small-to-medium scale wind turbines. As of mid-2016, a total of 215MW geothermal capacity was added. Despite this achievement, the Government has not reached its target of installing an additional 270MW capacity,” he adds. Since Indonesia is so well endowed with energy resources, energy security is often perceived as a logistical problem rather than one involving trade-offs and political choices. According to Xander van Tilburg, senior expert at the Energy Research Centre

Xander van Tilburg

Energy security “Arguably, it has brought positive developments such as economic growth, social mobility and access to energy, mainly through subsidising energy consumption: the country has a long history of setting retail prices below market rates or even below cost recovery levels. However, in recent years, fuel and electricity subsidies have become such a burden on the national budget that they are affecting funds available for infrastructure, education and social welfare,” he says. The current phasing out of energy subsidies exposes customers to higher and likely more volatile prices for fuel and electricity, whereas this was previously ‘buffered’ by the state budget. Gustya Indriani, assistant consultant at the Oxford Policy Management, added that so far, the population has accepted this move, but this is likely to have been due to the low oil price in recent years rather than support for climate action. “There are concerns that the population will turn to violent protest and demand reintroduction of subsidies when oil (market) prices increase,” he explains. Existing efforts to keep up with energy demand emphasise expansion of coalbased power supply and are likely to lead to a surge in energy-related emissions. International consultant Santiago Villaveces-Izquierdo notes that currently ‘only’ 26% of national emissions come from the energy sector, but it is expected that energy will overtake the land-based sector as the largest source of emissions to account for 50% of total emissions by 2030. “As part of its pledge to the Paris Agreement on Climate Change, Indonesia has the ambition to reduce its GHG emissions by 29% by 2030 (and up to 41% with international support). One-third of the emission reduction is supposed to come from the energy sector, which many consider highly ambitious,” he says.

Fast track programmes: Additional capacity by plant type (2015-2019)

Source: MEMR ASIAN POWER 21


Analysis: BATTERY STORAGE

Battery systems can address multiple market needs

The era of battery-based energy storage is upon us Battery storage is set to jump-start the clean energy transition whilst at the same time disrupting the traditional utility business model.

I

n a series of tweets in early March, Tesla founder, CEO and Chairman Elon Musk made a dramatic offer to help address the issues bedeviling South Australia’s electricity grid: he offered to install 100MW of battery storage within 100 days — or the system would be free. This led to talks between Musk and South Australia’s Premier, and with Australia’s Prime Minister Malcolm Turnbull. At the time of writing, it was unclear whether the offer would be taken up, and there are serious questions as to whether such a system would be an appropriate solution to the blackouts plaguing the Australian state. But the attention that Musk’s offer generated is testament to the increasingly important role that battery storage, at scale, is playing in modern electricity systems. Storage technology is the vital missing element in the struggle to enable the transition to clean energy, allowing grids to accommodate ever-growing volumes of intermittent generation and transforming the economics of renewable energy systems. But, along the way, the growth of battery storage promises to transform power markets, accelerate disruption of the utility business model and challenge regulators to rethink how they oversee generation, transmission and distribution. The growing penetration of batteries is, essentially, a solution to a problem that dates back to the construction of the first electricity grids. “The electricity supply 22 ASIAN POWER

The electricity supply chain is the longest supply chain in the world with almost no ability to store the product.

chain is the longest supply chain in the world with almost no ability to store the product,” says Matt Roberts, executive director of the Washington, DC-based Energy Storage Association (ESA). “That means we have scaled everything to meet the absolute peak of demand — it’s an incredibly costly and inefficient way to build a network.” Storing surplus power The inability to store surplus power (beyond the limited capacity of older storage technologies such as pumped hydro systems) is becoming a more pressing problem with the greater penetration of wind and solar technologies. Solar output, whilst relatively predictable, dips in cloudy conditions, whilst local wind speeds are hard to predict with confidence more than a few days into the future. In addition, thermal power plants currently

play an important role in balancing generation and load to maintain the frequency of power grids within a constant range, which protects electric equipment. Renewable energy generation is unable to provide the on-demand balancing power needed for grid stability. This means that battery systems — predominantly, to date, using the lithium-ion technology seen in electric vehicles — have multiple uses, and multiple market needs they can address. “The opportunity for battery storage exists in all areas of the utilities value chain — in generation, transmission and distribution, as well as on the consumer side, behind the meter,” says Manish Kumar, managing director of Arlington, Virginia-based AES Energy Storage, an arm of power company AES Corporation. Thomas Christiansen, Associate Director at EY in Stuttgart, Germany, describes a hierarchy of applications that will become progressively more commercially attractive as battery costs fall. Islanding uses batteries alongside renewables in isolated grids, displacing expensive small-scale fossil fuel generation using diesel or fuel oil. Grid balancing provides short-term supply (or demand) to keep electricity grids in equilibrium, and helps to reduce the need for investment in transmission and distribution networks. Peak shaving reduces demand for expensive power from the grid at peak times. As batteries get cheaper, it becomes economical to use them for energy load shifting, charging the batteries when grid power is cheap and discharging them when it is expensive. These techniques become economic first for commercial users with high peak charges but moderate overall use, followed by large industrial users with high energy demand. The behind-the-meter market pairs on-site batteries and renewable systems, allowing both commercial and industrial and domestic users to consume more of the power they generate by, for example, using stored solar power into the evening. From EY’s “Renewable energy country attractiveness index,” May 2017 issue

Global cumulative energy deployment by application (GWh)

Source: Bloomberg New Energy Finance, EY


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Analysis: SOLAR PARKS

Developers are being lured by project viability

Why developers are increasingly attracted to solar park models

Availability of land and power evacuation at lower costs are the prominent reasons that render solar parks as the preferred model for developers.

I

ndia’s Solar Programme has set-up an ambitious capacity addition target of ~100GW of solar capacity addition by 2022. Of this capacity, ~40GW is expected to get installed under solar rooftop segment and balance has come/ is expected to come in the form of grid connected solar capacity (with ~3.4GW already installed at time of policy formation as on March 31, 2016). Of the total ~60GW, ~40GW is expected be commissioned under various state policies and rest i.e. 20GW is expected to be added under Solar Park model. The recent competitively bid tariffs based on reverse auction in the range of Rs.2.44-3.30 (US$0.038-US$0.051)/ kWh signifies major improvement in cost competitiveness against both alternate renewables as well as conventional sources of power. CARE Ratings believes that the ‘Solar Park’ model has emerged as the preferred model for Independent Power Producers (IPPs) with key embedded features like desired economies of scale for capacity addition at a single location; upfront land availability; accommodative timelines of 18 months for commissioning of projects (v/s 13-15 months in National Solar Mission programme (NSM)/ state policies); project PPA with features such as state government guarantee for the contracted capacity by state utility; “Deemed Generation” compensation mechanism in case of non-availability of grid, and; evacuation infrastructure 24 ASIAN POWER

The recent competitively bid tariffs based on reverse auction in the range of Rs.2.443.30/kWh signifies major improvement in cost competitiveness against both alternate renewables as well as conventional sources of power.

with shared power transmission costs and other project related infrastructure, which shall reduce overall cost for the developers. Project viability Nonetheless, from credit perspective, the viability of these projects would be critically dependent upon the availability of elongated tenure of financing (~17-18 years) from CoD at competitive rates and the ability to contain both Photo Voltaic (PV) module and Balance of System (BoS) costs within the budgeted levels. During FY15-FY17, solar tariff bids have reduced by ~46%1 with the recent lowest bid in the Bhadla Solar Park (250MW) of ~Rs.2.44/kWh. The recently bid tariffs below ~Rs.3.0/ kWh indicate aggressive bidding by developers who assume sustained availability of low cost of equipments, cheaper and elongated financing options

and shorter construction periods (6-8 months). Such assumptions ride on thin margin for error in terms of sustainable returns for the developers. Further, with increasing competitive intensity, the element of aggressive bidding can potentially deter the achievement of financial closure for the bid capacity. Further, there is clear shift towards capacity addition mix with the total renewable capacity addition 12.5GW v/s 10.2GW conventional capacity addition in FY17. Due to faster capacity addition in the last 5 years, the share of renewables has increased from 14% to 21% at FY17end in the overall installed capacity. India’s solar capacity addition target of ~100GW by end of 2022 looks ambitious primarily on account of lack of meaningful power demand pick-up in the next 2-3years (by FY20)due to: incremental demand addressed by underutilised thermal capacity (running at 15 year low average annual PLFs of 61%); increasing focus on Demand Side Management (DSM, i.e. energy efficiency measures); and availability of already signed PPAs with NTPC by DISCOMs for 23GW during FY17-FY20. Further, solar roof capacity is also lagging the target capacity additions and installed only 1GW by Mar-17 (v/s ~40GW target capacity installation target by 2022). The solar park is a concentrated zone for developing solar power generation projects, by providing the developers an area that is well characterised, with suitably infra- structured facilitating permitting process thereby minimising the risk of the projects. Upfront availability of land and power evacuation along with other common infrastructure at lower costs are the prominent reasons that render Solar Park as the preferred model for developers. Further, the recent Rewa Ultra Mega Power Project (UMPP) bid documents have been structured in a manner so as to optimise the construction, operation and off-take related risks thereby aiming to improve bankability of the projects. From “Solar Parks: A new ‘Sunrise’?” by CARE Ratings.

MNRE Year-wise solar capacity addiction target (GW)

Source: Solar corporation of India Ltd. (SECI), CARE Ratings


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analysis: malaysian nuclear energy

Recognising nuclear as a long-term solution

Malaysia can’t make its nuke dreams happen The sector still lacks the economic competitiveness and has to battle with public acceptance.

R

apidly industrialising Malaysia has a long history as a nuclear player but it is yet to convert its 45-year relationship flirting with the idea of harnessing nuclear power into a functioning, operational industry. Despite recent positive overtures from the IEAE, Malaysia has pushed its expected date to roll-out an operational NPP back to 2030. Nonetheless, director-general of the Malaysian Nuclear Agency, Dr Mohd Ashhar Mohd Khalid, explains that the current non-existence of an operational plant does not mean that Malaysia does not already have a nascent industry. “Nuclear industry involves both power and non-power applications.” The Malaysian Nuclear Power Corporation is under statutory mandate to develop a nuclear power programme, whilst

There are issues and challenges in ensuring the success of this programme, namely public acceptance, knowledge and human resource management, amongst others.

Share of nuclear power in generation mix

Source: IAEA 26 ASIAN POWER

Nuclear Malaysia (the agency that is headed by Dr Ashhar) and other relevant stakeholders are working together to support the programme in various ways according to their roles and functions. “There are issues and challenges in ensuring the success of this programme, namely public acceptance, knowledge and human resource management, financial and industrial infrastructure readiness, safety and security, waste management, legislation, regulatory, et cetera,” says Dr Ashhar. To address these challenges, he adds, IAEA has provided practical guidelines for newcomer countries to adopt in planning such a big task. This has assisted major stakeholders carry out their roles. Dhana Raj Markandu, head of nuclear power project development at the Malaysian Nuclear Power Corporation agrees with his senior nuclear colleague. “More information can be disseminated to the public regarding the advantages and limitations of all the various sources of electricity currently being used and the role that each of them plays. This will help promote greater appreciation the various factors to be considered for electricity generation, namely economics and affordability, security and diversity as well as the environment.” Despite the Malaysian government’s claim that it hopes to generate figures close to 5%

economic growth this year, low fuel prices are hampering the energy-generating powerhouse’s ability to expand according to Dhana. “One of the challenges faced is the apparent lack of economic competitiveness of nuclear energy in the current environment of low fossil fuel prices. In this context however, the solution is to recognise that nuclear energy is a long-term option and that it is impossible to predict the volatile costs of fossil fuels on that timescale.” According to Dhana, the adoption of nuclear energy, along with the deployment of other (renewable) energy sources, should be viewed from the parallel perspectives of decarbonising the energy sector and diversifying the national energy mix. As with most elements of the nuclear debate, the long-term outlook must prevail. Where do we go now? Whilst the dual challenges of overcoming negative public perception and low fossil fuel energy costs exist, Dr Ashhar is adamant that Malaysia can take the lead, at least in the region, regarding alternative applications of nuclear technology. “More countries are expressing interest and planning to use nuclear energy for electricity generations in the future including the use of nuclear technology


analysis: malaysian nuclear energy Comparison medium & high income countries

Dr Mohd Ashhar Mohd Khalid

Source: IAEA

for non-power applications which will present great opportunities.” In terms of nuclear power generation, scaling down in order to reach the goal of going nuclear sooner rather than later, seems to be the name of the game. The progress of small modular reactors is an interesting development to keep an eye on in the coming years due to their flexibility in deployment and reduced capital costs compared to the current fleet of large plants. “We believe that, subsequent development of nuclear energy will be dominated by development of Generation IV reactors and small modular reactors. Small modular reactors in particular based on current reactor technology are also planned by most vendors,” says Dr Ashhar. “We expect that in five years’ time, the industry will continue its steady pace of development,” adds Dhana. “All four units currently in construction in the United Arab Emirates would be operational, whilst there should be significant progress in the development of the projects in the United Kingdom and the restarts in Japan, among others. These would provide positive indications on the role of nuclear energy towards building a low carbon future.” The way forward Analysts are keen to see how new developments and innovations to be incorporated into current generation III/III+ designs will perform under operational conditions. Most of the designs are either still under construction or have only just come online in recent months (as of March 2017). Dr Ashhar adds, “[I expect] the lessons learned from the Fukushima incident and safety issues to be incorporated [into new] technology. Vendors might also integrate and advocate open communication for stakeholder engagement [in the future].” Overcoming public misperceptions regarding nuclear power may in fact start with the better understood and

less demonised applications of nuclear. Says Dr Ashhar, “Whilst the public has some difficulties in accepting nuclear power; radiation technology and nuclear applications (other scientific applications such as in manufacturing, medical, agriculture, environmental) that support progress and development provide good assistance in overcoming the safety concerns raised by nuclear power.” His suggestion that nuclear and radiation technology can help to enhance various industries and make significant contributions to social and economic development may be the path forward for the power industry’s goal of ultimate acceptance. Irrespective of public acceptance, nuclear power may be an unavoidable reality and, at the same time a saving grace for Malaysia’s future. Malaysia’s current energy mix is significantly reliant on fossil fuels, namely coal and natural gas. Nuclear energy could be a potential option for large-scale low-carbon baseload electricity generation in Malaysia post-2030. “However there is yet to be a definitive decision on the matter,” concludes Dhana. “Any future use of nuclear energy should be considered in parallel with the deployment of indigenous renewable energy sources as well as the implementation of energy efficiency initiatives in order to effectively decarbonise the electricity sector.” 1MDB-CGN The mercurial nature of the Malaysian nuclear energy landscape leaves much to be discussed. If nothing else the purchase of 1Malaysia Development Bhd’s power assets by government-controlled China General Nuclear Power Corp has raised questions regarding Malaysia’s sovereign power independence, and at a time when relations between the two nations have been strained. Kuala Lumpur-based Edra Energy (1MDB’s power assets) is the nation’s second largest power producer. CGN plans to list Edra and ironically,

In terms of nuclear power generation, scaling down in order to reach the goal of going nuclear sooner rather than later, seems to be the name of the game.

the sale might bring some stability to the Malaysian power market and a boost to Malaysia’s equity markets, at a time when scandal-swamped 1MDB has other challenges to focus on. It seems too that the Chinese intend to get the job done with Edra Energy (now a full subsidiary of China General Nuclear Power) signing a 21-year power purchase agreement with Malaysian utility Tenaga. However, the deal marks the first in which an independent power producer has signed an agreement with a fully foreign-owned entity Exciting but worrying Wishing to remain anonymous, one senior Malaysia nuclear official explains his reasons for both excitement and concern at CGN’s intrusions in the delicate Malaysian power environment. “Economically, the deal is very positive for our power sector and will certainly provide an indirect boost to our nuclear industry, due to incoming Chinese expertise. Our concern however, is political. Energy, not just nuclear, is a fundamental industry to this nation and we need to keep any foreign political influence under the guise of commercial deal-making from taking hold in check. Our further concern is that our government is maintaining perhaps too much neutrality regarding deals which greatly affect our national interest.” Due to competing national interests, exporting ownership of nation’s essential facilities is always a politically risky business. Some elements of Malaysia press are even suggesting that CGN overpaid for Edra in the nearly US$2.3b deal by about 10%, giving life to the implication that future Chinese influence and control of other power assets may have been bundled into the deal. This would certainly not be the first time shady backroom deals involving Malaysia SWFs and development corporations have escaped into the public domain. Could the bailout of 1MDB be payback for favourable arrangements for the Chinese with respect to certain major infrastructure projects? With reports from Simon Hyett

Do you agree with the plan to construct nuclear power plants in Malaysia?

Source: From Nik Hanis Mansor & Nor Ezreen Ahmad---A Plan for Nuclear Acceptance in Malaysia

ASIAN POWER 27


Analysis: WESTINGHOUSE a domino effect in terms of spiraling costs and contractor delays. So much was this the case that Westinghouse became embroiled in costly and time-consuming litigation with its lead contractor and then, believing that such action would lead to a solution, bought-out the contractor, which in turn led to further protracted litigation concerning the terms of the take-over.

It was a comedy of errors

Is the Westinghouse dilemma a worrying omen for nuclear? Bankruptcy is an ugly word for any corporation, but that may not be case for bankrupt business’ industry as a whole.

S

urvival of the fittest is a founding principle of the natural world, yet it is equally applicable to the corporate world. The failure of Westinghouse Electric Company and the associated problems intrinsic to its parent organisation, Toshiba, may actually lead to a paradigm shift in the operations of competitor vendors, lead to a much needed improvement in market share for the surviving vendors, provide important intelligence on how to avoid a similar corporate calamity and direct surviving vendors on technology choices. Westinghouse is one of America’s most historic corporate names. Formed 131 years ago by inventor and entrepreneur George Westinghouse, the company was born toward the end of America’s coming-of-age and industrialisation and at the beginning of - and became a major player in - the electrical revolution. George Westinghouse’s alternating current electrical system ultimately defeated American icon Thomas Edison’s direct current system, and is the system that we rely on today for the most fundamental of daily activities requiring electricity. Westinghouse remained a leader in power-generation throughout the 20th Century and a leading nuclear power plant developer into the 21st Century, with one competitor vendor giving a nod to Westinghouse’s AP1000 pressurised water reactors as “revolutionary”. In the Asian context, where nuclear markets (except Japan) are still developing, AP1000 reactors 28 ASIAN POWER

Westinghouse expects to continue working on the reactors as bankruptcy proceedings go on, but the utilities may abandon the plants or seek another firm to build them.

promised cost-effectiveness and relative simplicity in operation. George Westinghouse’s corporate offspring had a bright 21st Century future ahead of it. That bright future has not been realised. In February 2006, Japanese giant Toshiba bought Westinghouse, crowding out rival bidder GE (Edison) and remains an 87% shareholder in what is described as a “business unit” of the parent. In March,, Westinghouse filed for bankruptcy following the financial failure of two promising AP1000 projects in South Carolina and Georgia. In short, changing regulatory framework. The bugbear of many in power infrastructure design and construction, the strike of the regulator’s pen can send project feasibilities tumbling into the red. The vicissitudes of the United States regulatory matrix caused

Projects were doomed by regulatory burdens

“Comedy of errors“ “It was just a comedy of errors,” says a commentator close to the deal, who requested anonymity. “We were watching Westinghouse try to lift itself out of quicksand by its bootstraps. However, it must be said that regulatory changes are make or break in certain sectors of this industry and the regulatory changes that set-forth this disaster were a blow from behind for Westinghouse. Many of us fear such uncertainty.” The projects were doomed by unpredictable regulatory burdens, litigation and derivative litigation that was never to end well, and now according to analysts, the two AP1000s will cost nearly double the original budget – earlier this year, perhaps the final nail in the coffin prior to the March bankruptcy announcement, Westinghouse declared a write-down of over US$6b. According to The Economist, Westinghouse wants to stay its course on the two projects, but other stakeholders may have different ideas. “Westinghouse expects to continue working on the reactors as bankruptcy proceedings go on, but the utilities may abandon the plants or seek another firm to build them. Korea Electric Power might take over, but Westinghouse’s steep losses may keep it away.” There may be a light at the end of the tunnel for the embattled organisation as Westinghouse had secured an $800m loan allowing the company to reorganise, possibly be sold or perhaps even shake off eventual bankruptcy altogether. With reports from Simon Hyett


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OPINION

VICTOR NIAN

Small modular reactors the way to go for Southeast Asia?

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ost-Fukushima, nuclear energy remains a strategic option to address energy security and decarbonisation for developing economies, especially those in the ASEAN region. However, a Fukushima-scale accident occurring in ASEAN could lead to severe trans-boundary impacts to several ASEAN members due to close geographical proximity. ASEAN members are generally lacking in experience with nuclear energy albeit varied developments in nuclear safety, policy, and human infrastructure. The trans-boundary impacts due to a severe nuclear accident could cause catastrophic consequences in the region. With the lasting memories of Fukushima, the construction of large-sized reactors has become a highly sensitive and much disputed topic in ASEAN. The emergence of small modular reactors has somewhat revived the expectation of nuclear energy in the region. SMRs are conceived to be factory-made, selfcontained, user-centric, and transportable such

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ichael Graetzel of Switzerland, is announced as the winner of the 2017 Global Energy Prize for his “transcendent merits in the development of low cost and efficient solar cells”. The Global Energy Prize is the world’s leading prize for advanced energy research awarded annually and he will be honored as this year’s laureate with a nice gold medal (and the US$693,000 is a nice touch too). The announcement had all the trappings of typical of a big media release as well. However, like many prestigious prizes though, is it only a look down a nostalgic past – or for the solar industry, is this a sign of going back… to the future? Memory lane Especially in the case of this year’s award, in the solar field, Michael Graetzel is renowned as the creator of the “Graetzel cells” which revolutionised solar energy research 20 years ago. The fall of the Berlin Wall,dial-upinternet,solarPVat$9millionpersolar panel MW. Looking back, it’s rather unbelievable how much development there has been in the solar energy field, much less the transformation of renewable energy overall. Global solar capacity went from less than 200MW to over 300GW today with even more expected with commercialization of production and implementation now becoming quite commonplace. Solar is no longer a tech curiosity, it is an industrial sector. Whilst the field of solar energy has since boomed, it has however, moved on as well, with his direction 30 ASIAN POWER

that they can be batch-produced for on-site assembly. Standardisation and modularity can allow for cost reduction through repetition and batch production so as to offer better assurance over completion time and cost control. Most of the SMR designs are based on the mature and commercially proven pressurised water reactor (PWR) technology. Passive safety Many designs have further incorporated the element of passive safety taking advantage of natural forces, such as convection and gravity in the event of emergency. Some SMRs can be fitted into a ship or a barge as floating or marine SMRs (such as the KLT-40S and ACPR50S) for electricity and heat production. Some advanced SMR designs are conceived to conform to the Generation IV technology, such as the high temperature reactor pebble-bed module (HTR-PM) and molten salt reactors (MSRs). One HTR-PM unit is currently

under construction at Shidao Bay Nuclear Power Station as an industrial demonstration project in China, but no confirmed timeline for the construction of demonstration MSRs has been reported as of June 2017. Changing competitive landscape The developments in SMRs can potentially alter the competitive landscape of the clean technology market in Southeast Asia and the rest of the developing world. SMRs are baseload technologies that can be added incrementally as individual power modules when the demand for electricity increases. That allows for significantly reduced upfront capital commitment as compared to building a large-sized reactor and improved flexibility and reliability in micro-grid planning as compared to the intermittent solar photovoltaic or wind power. Marine SMRs can be connected to an onshore utility grid and turn into a virtual landbased nuclear power plant. The concept of a virtual land-based nuclear power plant can significantly increase the flexibility in siting requirements and can potentially relieve the user country from the responsibilities of managing a physical nuclear power plant and a nuclear fuel cycle. Regardless the advantages, SMRs are nuclear reactors that require meticulously formulated regulatory and policy framework to ensure safety and security. At the moment, only half of ASEAN have established nuclear research programs and regulatory frameworks on nuclear safety.

WILLIAM BYUN

Back to the future? A shakeup in industrial solar in the Graetzel cells having been since somewhat sidetracked. Graetzel cells are dye-sensitized thinfilm technologies which conceptually separate the functionality of silicon in providing the electrons and also the electric field to separate the charges and create a current, by having the dye-sensitized part provide the electrons and the semiconductor provide the transport. The main production industry, especially in China, has moved on along traditional silicon solar cells development and efficiency gains in their refinement. Current trends even point to conversion efficiencies approaching the respectable high teens and sufficient to engender massive production and implementation scale up to take place. China in particular, has gone down such path as the practical means to drive industry scale and it may be a sign of sector maturity that we think of silicon solar as being a respectably traditional industrial sector now. Remembrance of things past?

Meanwhile,researchandworkhasquietlycontinued along the Graetzel cell lines and efficiencies, stability and production sensitivities have also been quietly addressed and improved. In particular, the fertile nature of the Graetzel cell research field has led to a very recent surge in perovskite material based solar cells (PSCs) that have revolutionised the whole field of photovoltaics, with practical efficiencies reaching over 22% efficiency in 2016 from a start of 4% in 2009. Also, perovskite based Graetzel cells also open up a range of consumer convenience due to their flexibility and range of colors for instance in building structures, even transparent cells for use in window glasses. Traditional silicon solar cells only came in black too – with peroskite, clear, rainbow, tutti-frutti, whatever colors and shapes may be opening up. Whilst “standard” solar production has been scaled in traditional silicon, the new tech startups are starting to cluster in these Graetzelderived perovskite material thin-film technologies.


OPINION

GAUTAM JINDAL

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Will Singapore’s power sector bear the brunt of its carbon tax?

arlier this year, the Singapore government announced that it will impose a tax on greenhouse gas emissions (GHG) from 2019. The tax amount, which is yet to be finalized, will lie in the range of S$10 to S$20 per tonne of carbon dioxide equivalent (CO2e). The imposition of a price on carbon emissions is key to the overall strategy of achieving Singapore’s emission reduction target under the Paris Agreement on climate change. Singapore ratified the Paris Agreement in September 2016 and committed itself to the reduction of its GHG emissions intensity; measured on a per dollar GDP basis, by 36% as compared to 2005 levels by 2030. This is on top of the pledge Singapore made at the Cancun climate conference in 2010, whereby it committed itself to reduce its emissions by 16% as compared to a business as usual scenario by 2020. For most countries that have committed to ambitious emissions reduction targets, power generation is generally the largest source of their

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ontinuing my series on recipes for procedures to support Asian countries in developing Renewable Energies, I am going to address the feasibility of sites for PV projects. One may think that it is obvious that some sites are not feasible: mountains, wetlands, rocky outcrops, coastal lines, water catchment areas and others. However the question then becomes are such types of sites really not feasible? Let us start by the basic ingredients, which can also be used as a check list. No need to go further if you cannot find the one before: power evacuation, orientation and area, slope, soil type, and access . It may strike some of us as odd, but the top selection criteria for a site for PV projects is the power evacuation. No generation project exists without transmission, so make sure that you have identified the transmission lines that are nearby, their capacity and the substations to where they are linked to. Some thumb rules: 33 kV lines: maximum 25 MW for a single circuit and 50 MW for double circuit; 132 kV: maximum 80 MW for a single circuit and 160 MW for a double circuit; 220 kV: maximum 180 MW for a single circuit and 360 MW for a double circuit. For all cases an overshoot of around 10% is possible for short distances, anything below 10 km. This is also not a big problem since solar rarely will be generating the maximum AC nameplate capacity, which again allows the cables/conductors to be stressed for some short periods of time. It is important to get the right and accurate figures from the local transmission company or run 32 ASIAN POWER

emissions, and a key sector targeted for initial action. For example, the US’ Paris pledge is largely dependent on its “Clean Power Plan” which establishes targets at state level for emissions from power generation. Similarly, China’s 2030 target relies on substantially reducing its coal consumption along with increasing the share of natural gas and non-fossil sources in its primary energy supply. Singapore on the other hand, faces a unique conundrum. It already generates over 95% of its electricity from natural gas powered F-class combined cycle generators. The remaining share comes from “must run” waste incineration plants, embedded co-generation plants, and peaking generators. Additionally, as an alternate energy disadvantaged nation, Singapore’s only option for renewable energy is solar power, which is unfortunately limited by space constraints and concerns over its intermittent output. As a result, Singapore must achieve the bulk of its reductions in emissions through the improving

of its energy efficiency in the industry sector and to some extent, from the building and transport sectors. However, despite mandating businesses to develop energy efficiency improvement plans and offering financial incentives for the implementation of energy efficiency projects, overall efficiency levels improved by only 0.6% in 2015. Thus, the need of the hour is to expose the environmental costs of GHG emissions to consumers, so that this cost can be factored in to their energy usage and investment decisions. This will make the business case for investing in energy efficient equipment and reducing energy usage, a more attractive one. The government has indicated that it intends to apply the carbon tax to businesses that emit more than 25,000 tonnes CO2e annually, which would encompass approximately 30 to 40 large emitters, some of which include power generators, refineries, and other manufacturing units such as chemicals, pharmaceuticals, and semiconductors. Which brings us to the question – will Singapore’s power sector bear the brunt of the carbon tax despite having invested in best of class turbines, that run on the cleanest fossil fuel available, without costing the government a dime in fuel subsidies? Singapore operates a competitive wholesale electricity market whereby generators are expected to offer generation capacity at their short run marginal costs (SRMC). In the current electricity supply & demand situation, the marginal plant is usually a natural gas combined cycle generator, and thus determines the market clearing price.

Agostinho Garcia

Renewable Energy recipes II – feasible sites for PV projects

some simulations of the transmission lines under the expected temperatures of the location. The numbers provided before may be optimistic for very hot locations with ambient temperatures beyond 45 to 50ºC. Second part are the grid substations. There are two checks: existing bays for connections or free space to add them and the existing transformers in case the power generated is intended to be stepped up due to limited local consumption (typically the case). Matching the capacity When you have understood that a certain capacity can be evacuated by the transmission lines nearby and accepted by the substation and that adding a bay or using an existing bay is possible and that enough transformer capacity is available or they agreed to add capacity, you may proceed to look at the site. The size or area of the site should match the capacity to be evacuated, but here look for as much land as you can and then if necessary choose

within the available land. Use 2 hectares per MW, but understand that the right number is not “one size fits all”. The footprint depends on the latitude of the site. The sun will cast shadow on the next row of modules and that will tell you how close or how far the modules can be. This clearly depends on the tilt of the modules which is directly linked with the latitude of the location. Next issue is the efficiency of the modules. The same area of module may yield, for example, from 300 to 360 Wp and that tells you that with the same area you could have 20% more of installed capacity. So 2 hectares per MW allows several efficiencies of modules including some thin film or also up to a high latitude of 40 to 45º. The orientation of the land is also very important. Is it towards south or north? Earth is tilted 23º in relation to the sun axis which means that below 23º north and above -23º south the Sun will actually come on both hemispheres. The lower it is and you split between north and south is 50% If it is really low, like below 10º the north south orientation is not that important, but try to choose a flat area.


Asian Power (July - August 2017)  
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