Asian Power (January - February 2018)

ISSUE 85 | DISPLAY TO 28 FEBRUARY 2018 | www.asian-power.com | A Charlton Media Group publication

US$360P.A.

IS INDIA BURNING ITSELF WITH SOLAR AMBITIONS? CAN CHINA STICK TO ITS $360B BET ON GREEN ENERGY? GOVERNMENTS BATTLE BANKABILITY BLUES CHINA’S TRAFFIC LIGHT TO FLASH RED ON COAL

PHILIPPINES’ GBP TO POWER BIGGER ISLANDS

CEO JAIME T. AZURIN TARGETS EXPANDING TO THE PHILIPPINES’ BIGGER ISLANDS WITH THE FIRM’S RECENT 50% STAKE ACQUISITION

C2 ASIAN POWER

FROM THE EDITOR Asian Power’s first issue for the year 2018 lets you in on the pressing issue in India’s solar industry. The sector is bright and shining, but experts are afraid that players are getting way ahead of themselves as problems on lack of access roads, clean green lands, and proper land area demarcation hamper development of solar parks. Analysts can’t help but think: Is India hurting from a self-inflicted solar burn?

Publisher & EDITOR-IN-CHIEF Tim Charlton production editor Karen Lou Mesina Graphic Artist Elizabeth Indoy

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This January-February issue also tackles China’s dead seriousness in making its energy mix a deeper shade of green. China is not only intending to spend more than $360b on renewable energy resources through 2020 — which will create more than 13 million jobs in the renewable energy sector — but it is also moving forward on its commitments to cut back on coal generation by cancelling 103 coal-fired power plants in development.

We also interviewed the new president of Philippine IPP Global Business Power Corporation, Jaime T. Azurin. Find out what his objectives are and how he plans to lead the coal-focussed company amidst the rise of renewables.

Start flipping the pages and enjoy!

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ASIAN POWER 1

CONTENTs

16

CEO INterview GBP to explore bigger PH islands for ambition

10

FIRSTS China’s traffic light to flash red on coal

22

Sector REport Asia’s slow push for nuclear energy use

ANALYSIS

FIRST 06 Will the microgrid make it big in Southeast Asia?

26 Expensive electricity could be looming over Indonesia

07 Governments fight bankability woes

28 How Thailand plans to beat peers in renewables growth

08 Security woes with gas

OPINION COUNTRY REPORT 14 Is India hurting from self-inflicted solar burn?

18 China is dead serious on greener energy mix

30 Solar power development in Southeast Asia 30 Benefits of using Myanmar’s strategic environmental assessment 32 Water and PV plants: Why we may not be able to have both 32 Solar in the Philippines A bright future or dark skies

Published Bi-monthly on the Second week of the Month by Charlton Media Group 101 Cecil St. #17-09 Tong Eng Building Singapore 069533

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Co-published corporate profile

Toshiba’s H2OneTM is making the hydrogen energy future a reality for the industry The advanced hydrogen-based autonomous energy supply system is now providing round-the-clock, carbon-free power to Japanese hotels, train stations, stadiums and offices.

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ast year, when East Japan Railways renewed one of its stations to make it more ecofriendly, they selected Toshiba’s H2OneTM hydrogen system. Musashi Mizonokuchi Station, from which 80,000 people take the Nambu Line train every day, depends on H2OneTM to provide uninterrupted, off-grid energy supply in case of emergencies to light parts of the station concourse and its lavatories. On normal days, the H2OneTM produces hydrogen and generates electricity to lower consumption of main electricity. In winter, hot water from the system is even used to warm benches at the station. Toshiba’s H2EMS™ hydrogen energy management system also provides full control of overall operations, including hydrogen production and power generation and storage.

Since the past year, Toshiba’s flagship and most advanced hydrogen system has been rolling out in more locations and across industries in Japan.

Toshiba’s H2OneTM is about to be installed at the Tokyu Construction Institute of Technology, another milestone for the hydrogen energy system as it will be the first time it is being used as a “net zero energy” building solution. With the H2OneTM installed, the institute will move one

Hiroyuki Ota General Manager of Toshiba Energy Systems & Solutions Corporation

Generating hydrogen energy from renewable energy

Believing in the potential of its own product, Toshiba recently opened an integrated Hydrogen Application Center in Western Tokyo, built around the H2OneTM hydrogen power system that uses renewable energy to produce hydrogen, which is then used by fuel-cell forklifts operating in the complex.

The center serves as a showcase of carbon dioxide-free operations involving fuel-cell vehicles. To help manage the operations, Toshiba also developed and installed its H2EMSTM system, which has a new hydrogen demand prediction function that forecasts supply requirements for each fuel-cell-powered vehicle.

Carbon-free with renewables and hydrogen The center is then able to save precious space H2OneTM generates hydrogen energy from allotted for hydrogen storage. renewable energy, which Toshiba executives Ota said the beauty of H2OneTM is its flexibility, believe makes it a viable carbon-free option in a with most sectors finding use for its ability to world that is increasingly aware of and moving provide clean and stable energy from otherwise away from excessive carbon dioxide emissions. unstable renewable energy for “Today, the world faces “the beauty of H2Onetm the full 24 hours. “The system the serious issue of global is its flexibility, with can be deployed to locations as warming and carbon dioxide emissions. Many most sectors finding varied as hospitality facilities, governments and companies use for its ability to markets, ports and harbours, airports, bus terminals, and have pledged to do their provide clean and more,” Ota said. part to lower their carbon stable energy.”

“This is because Toshiba’s footprint,” said Hiroyuki Ota, fuel cell product line-up includes units that go up General Manager of Toshiba Energy Systems & to 100kW.” Toshiba’s 100kW pure hydrogen fuel Solutions Corporation. cell system powers refrigerators to keep flowers “As the hydrogen can be produced from and vegetables fresh in a wholesale market in inexhaustible water and can be stored long-term Shunan city in Yamaguchi prefecture, and it helps until electricity is needed, H2OneTM serves as a recycle hydrogen from Tokyo-based chemical good solution for communities and industries firm Showa Denko to provide electricity to a requiring a consistent and steady supply of nearby new hotel, Tokyu REI Hotel. energy, as well as environmentally friendly “With each new project and order won, Toshiba solutions,” Ota added. widens the scope of hydrogen energy and helps Hydrogen energy can enhance disaster to prove its potential as a real-world solution,” readiness of communities. Disasters bringing said Ota. “As the company continues to make down lifelines have left a deep awareness of advances, it looks forward to contributing to a the need for communities to take effective low-carbon future where hydrogen plays a crucial measures in response to emergencies and role in power generation.” disasters. step closer to becoming a zero emission building.

The Miyagi prefectural government also chose H2OneTM for its Rakuten Kobo Stadium in Sendai, the Tohoku region’s largest city. It is a 23,000-seat stadium and home field of the Tohoku Rakuten Golden Eagles pro-baseball team. On normal days, the H2OneTM will generate electricity to power the stadium’s display, and during emergencies, it will keep the regional radio station in the stadium in operation to provide essential information for disaster recovery.

ASIAN POWER 3

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

POWER UTILITY

Enel Green Power’s 55MW geothermal project kicks off exploration phase Italian company Enel Green Power announced that its first geothermal project, the 55MW Way Ratai project in Indonesia, has entered exploration phase. In 2015, it signed a partnership with local company PT Optima Nusantara Energy and was awarded the rights for geothermal resource exploration to prepare for the project.

PROJECT

Equis gets approval to develop 1000MW Wandoan South Solar Project Equis Energy has received approval from the Western Downs Regional Council in Queensland, Australia to develop the 1,000 MW Wandoan South Solar Project (WSSP), one of the largest solar projects in Australia and the world.

4 ASIAN POWER

PROJECT

Development plan for 600MW gas power plant in Indonesia gets inked PT. Energi Nusantara Merah Putih (ENMP) has signed an agreement in Jakarta with the industrial tenants of the Bantaeng Industrial Park (KIBA), outlining the development plan for a 600MW combined-cycle power plant (PLTGU). The partnership is fully supported by the Government of Bantaeng Regency, South Sulawesi.

PROJECT

China’s wind power capacity to grow 40% to 290GW by 2020 In the National Energy Administration’s 13th five-year plan guidance on renewables development, it was mentioned the government plans to add 40GW of ground-mounted, utility-scale solar projects and 80GW of onshore wind projects in 2018-2020.

REGULATION

Chinese JV bags contract for 1285MW hydro project in Malaysia Sarawak Energy Berhad awarded the contract to China Gezhouba Group and Untang Jaya JV for the main civil works of 1,285MW Baleh Hydroelectric Plant in Malaysia. The contract includes constructing the dam on the Baleh River, along with the 204m high concrete-faced rockfill dam which will begin in October 2018.

PROJECT

Singapore’s installed solar capacity reaches 129.8MW Mercom Capital Group reported that the adoption of solar PV systems in Singapore has accelerated over the last three years with cumulative solar installations reaching 129.8MW in the first quarter of 2017, according to the Energy Market Authority.

FIRST he said. “It can make the most of available resources, and then transform your waste into free energy with biogas, which can be used for cooking, electrical production, and biofuel for mobility.”

IS COAL STILL KING? SOUTHEAST ASIA

Dr Bikal Kumar Pokharel, Wood Mackenzie

Coal’s dominance in Southeast Asia is predicted to continue for about 10 years or more. Dr Bikal Kumar Pokharel, principal power analyst at Wood Mackenzie, Singapore, said that in 2017, coal is the most economical source of fuel. “Coal will continue to be the most economical at this point. Fast forward to 2035 and solar starts to compete with coal at base load and battery can take over peak load,” he added. Find out more about his insights below.

What do you foresee with regards to capacity?

Total capacity in Southeast Asia will double in the next 15 years with equal share from coal and renewables in 2030. The share of thermal plants will marginally decrease but with declining domestic piped gas supply led by declines in Thailand and Indonesia, attractiveness of gas-fried plants have declined. Coal is displacing gas at base load and the trend is expected to continue.

However, share of generation from coal will be higher by two-folds than that of renewables in 2030. Share of renewables with hydro increases from 19% to 24% whereas share of non-hydro renewables increases from 5% to 11% by 2030.

Indonesia and Vietnam contribute to 67% of the incremental capacity growth in the next 20 years. Power tariffs vary significantly across the various markets and hence the attractiveness of renewables. For example, in the Philippines, power tariffs have been consistetly higher than Vietnam and Indonesia by more than two-folds.

What do you think of renewables as the “better choice” for baseload power?

Renewables and battery in Southeast Asia are still a costlier option compared to the conventional plants for both baseload and peaking operations.

By 2025, renewables will start to compete with gas at baseload but coal will continue to be the most economical option for baseload. Based on the LCOE forecasts, coal will continue to be the cheapest source of generation for the next 15 years or more and hence the investment decisions made in regulated and developing markets to meet the increasing demand will lean towards coal (in absence of carbon price).

Incentives will continue to drive solar growth in the Southeast Asian markets as extent of renewables growth need to factor in affordability of end-users. However by 2020, solar will start to compete with combined cycle gas plants at baseload and battery will start to compete with open cycle gas plants for peak load. Hence, the pace of renewables growth will likely accelerate.

By 2035, solar will start to become the cheapest source of generation for baseload operation.

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Simulation of REIDS in Singapore

Will the microgrid make it big in Southeast Asia?

W

SINgapore

hen visiting Singapore’s Semakau Island, located nine kilometers south of the mainland, one will find not only a landfill site but also a landmark project that could fasttrack microgrid development and adoption in Southeast Asia. ENGIE has partnered with Schneider Electric and Nanyang Technological University in Singapore to create a test site for a 2.8MW microgrid to come online in 2018. Called the Renewable Ene rgy Integration Demonstrator in Singapore, or REIDS, the Semakau project aims to develop a microgrid demonstrator that could improve energy access in off-grid areas and islands. It does this through an integration of various renewable sources - solar PV, wind, natural gas, diesel and li-ion battery - and storage systems. The success of REIDS will validate the value proposition of microgrids in Southeast Asia, a potential major market due to its higher population density and numerous island communities, said Peter Asmus, principal research analyst at Navigant Research, in a webinar in October.

Asmus explained that REIDS has one primary technological breakthrough: an algorithm for a virtual synchronous generator allowing for 100% renewable supply when sufficient renewable fuels are available. “This microgrid is capable of running at 100% renewable energy,”

Peter Asmus

$25b potential market If the REIDS project proves successful, ENGIE will use it as a model to roll out similar microgrids across Southeast Asia. Recognising the increasing financial and operational viability of microgrids as well as the need of developing countries to find alternatives to on-grid systems, Navigant Research forecasts the market for remote microgrids and nanogrids to exceed $25b by 2024. As of the first half of the year, Asia Pacific was the leader in total microgrid power capacity market share by region at 42%, followed by North America at 40%, Europe at 10%, and Latin America and Middle East & Africa at 4% each.

“If you look at all the different opportunities in the developing world, the most financially attractive opportunity, in general, are going to be a physical island,” said Asmus. “Islands are generally often of sufficient scale to make economic sense, and there is often a single utility.”

Another trend shoring up support for microgrids is global climate change-related extreme weather events, as seen in what happened in disasterstruck Puerto Rico. Asmus reckoned rebuilding efforts could essentially start on a clean slate and focus on microgrids rather than traditional grid infrastructure. Asmus echoed this assessment, warning that if the developing world, which includes most of the countries in Southeast Asia, follows the same pathway of developed countries, emissions would skyrocket and result in a high damage on the economy and environment.

This is where microgrids will play a vital role in meeting global goals on sustainability, economic development and climate change mitigation.

Projected annual stationary storage deployments, power capacity and revenue by region, emerging markets: 2016-2025

Source: Navigant Research

FIRST

Sharad Somani

Greenfield projects may not be the answer

Governments fight bankability woes

I

Southeast asia

f there was any doubt that Southeast Asia was serious about attracting larger investments to its power sector, one only needs to look at the workarounds governments in the region have been developing to address bankability issues - from Indonesia setting up an infrastructure guarantee fund, to Singapore’s exploration of take-out financing, to the rising trend of privatisation of assets. Analysts reckon that these efforts, combined with attempts by investors to recalibrate their expectations on project returns, are helping to open up the market for the kind of large-scale investments the region needs to reach its ambitious targets.

The privatisation trend, in particular,

holds promise in the near to mid-term horizon, according to Sharad Somani, partner, global infrastructure advisory at KPMG, of the privatisation trend.

Drumming up investor interest “I think a lot of governments in the region, particularly Indonesia, has recognised that greenfield projects take a long time, and it’s a dampener on the spirit of investment by the private sector,” he said. “What they are proposing is they are offering a few projects from PLN or the road sector, all the sectors, effectively privatising existing assets which are easy to fund because you know the operational track record is immediately generating funds. And that to my mind will be a great opportunity for all

investors and lenders in the next three to five years.” Somani reckoned that the efforts by Southeast Asian governments to address bankability are far from perfect, but these are helping to drum up interest among investors who would otherwise completely write off the region due to red flags such as long project times and relatively high risks.

“I don’t think that’s a complete solution, but it’s a good start,” said Somani of the Indonesian Infrastructure Guarantee Fund. He reckoned that without the initiative, investors would be less comfortable to invest--a challenge that resonates across the region where “most of the projects don’t have a very well-defined path to development.” The Central Java IPP project in Indonesia, for example, took around five years from conceptualisation to financial close. “This is something which very few investors have an appetite to wait for,” said Somani.

If Southeast Asia were serious about attracting significant financing for larger projects beyond the usual line-up of export credit agencies, or ECAs, it would need to think out of the box - and some governments are doing just that, Somani noted.

5-year spending analysis by project type & status

Source: Industrial Info Resources

the chartist: JAPAN’S SOLAR INDUSTRY IS DIMMER WITH JUST 20GW PROJECTED TO COME ONLINE Japan’s solar power sector will expand at robust rates through to 2020 as a large Slowing solar will still dominate the sector backlog of projects supported by feedin tariffs come online. After 2020, BMI Research said that the transition to a reverse auctions system will slow growth, as the Japanese government looks to regulate capacity additions in order to reduce subsidy costs and support grid stability.

“We expect Japan to register robust solar capacity growth through to 2020 as a result of the implementation of a substantial pipeline of projects that benefit from a generous feed-in tariff support scheme.

Our forecast is that out of a 50GW backlog of such projects, only 20GW will actually come online, as most will not be able to take advantage of the FiT subsidies amid stringent government requirements and Source: BMI Research delays in development,” BMI Research added.

Solar in for a slowdown

Source: BMI Research

ASIAN POWER 7

FIRST

Security woes with gas

Has solar power stolen the energy limelight in Asia?

Thailand natural gas supply plan

ASIA

INDONESIA

W

hen ASEAN looks at its energy future, governments are filled with sweet dreams of gas pipelines connecting the ten member nations to address forecasts that the region will be a net gas importer by 2022 to 2029, according to regional estimates by the ASEAN Centre of Energy.

ASEAN is one of the fastest growing regions in the world, so the stakes are high to meet the anticipated spike in gas demand. Failing to bring its ambitious gas cooperation projects will likely hurt the bloc’s aspirations to sustain its economic growth, threaten its energy security and dash its hopes to provide power to millions still living off the grid. Hunger for gas is projected to come from the the five major countries in ASEAN - Indonesia, Thailand, Malaysia, Vietnam and the Philippines - which will account for more than 90% of the energy share in the region by 2025, said Pinto Anugrah, policy research and analytics programme at the ASEAN Centre for Energy, citing the findings of the 5th ASEAN Energy outlook 2015-2040 report.

Indonesia will account for more than one-third of the 916 MTOE total forecast for 2025, followed by Thailand which will account for oneplant WATCH

Source: Poyry

Michael Hideki Matsumura, The Lantau Group

fifth of the share.

To each his own in gas supply Given the lopsided distribution of natural gas resources in the region, ASEAN countries will naturally take on different gas supply strategies.

Anugrah said Indonesia and Malaysia, who hold more than two-thirds of the region’s natural gas resources, will become two of the major net exporters of gas, not only in the ASEAN but also globally. But even with Indonesia and Malaysia rising as major exporters, Anugrah said projections show production of natural gas across the bloc will not meet the anticipated demand in all of its scenarios. Currently, natural gas is the second largest source of energy in the region - a fact that will not change by 2040, so nations in the region are already trying to figure out how to satisfy the demand, especially given the challenge of having limited pipeline options and a supply that is expected to deplete in 15 to 20 years.

Asian Power caught up with Michael Hideki Matsumura, consultant at The Lantau Group as he discussed solar’s stellar place in the Asian power industry.

Pinto Anugrah

Equis Energy’s 47.5MW solar project

Meralco hunts for project partners

AGL junks coal plant for clean power

JAPAN

Philippines

japan

Equis Energy has commissioned three solar projects – ‘Shichinohe 1’, ‘Shichinohe 5’ and ‘Shichinohe 7’ – comprising 47.5 MW of generation capacity in Shichinohe Town in Aomori Prefecture, Japan.

In Aomori, Equis has 10 solar power plants operational and another under construction, with a collective energy generation capacity of over 170 MW. Additionally, in December 2017, Equis expects to commence construction on a new 36MW wind project. Equis has a local O&M center that facilitates maximum operating efficiency.

8 ASIAN POWER

Meralco is currently in talks with Asian firms as it looks for potential investors for the planned coal-fired power plant in Atimonan, Quezon.

The company has already secured funding for the 2x600MW facility and has achieved preliminary deals with eight banks for a Php107.5b (US$2.1b) loan.

“We’re waiting for PSA (power supply agreement) approval.

We’ve already come to an agreement with the banks but we need the PSA before we finalize the agreement,” according to Meralco chief finance officer Betty Siy-Yap.

AGL has outlined plans for Liddell Power Station beyond its announced retirement in 2022. The NSW Generation Plan proposes a mix of highefficiency gas peakers, renewables, battery storage and demand response, coupled with an efficiency upgrade at Bayswater Power Station and conversion of generators at Liddell into synchronous condensers. Graeme Hunt, Chairman of AGL said, “This plan demonstrates that old power plants can be replaced with a mixture of new, cleaner technology.”

Will solar overshadow the interest in gas?

Gas-fired generation has often been suggested as a natural complement to variable renewable energy as a means to offset the intermittency due to its quick start and flexible operation capability. Whilst falling solar panel costs facilitated by incentives have boosted installed solar capacity in many countries, interest in new gas fired-capacity has remained buoyant due to environmental considerations and current low LNG prices. Neither technology is displacing baseload coal in an economic manner in most Asian markets (for the time being), but the rising solar capacity and the continued development of coal capacity across many parts of the region appears to be squeezing the mid-merit and peaking market.

The capacity fuel mixes of countries are largely dependent on historical decisions made by authorities as well as country specific natural resource endowments, renewable, or otherwise. This is true of the Philippines as well where past decisions over the Malampaya gas field signifcantly altered the capacity and generation fuel mix of the country for years to come. Similarly, the introduction of feed-in tariffs seen in a wide array of countries is yet another example where policy decision have not only changed the capacity fuel mixes, but have also disrupted the traditional utility business model as can be seen in Germany.

Would you say the Philippines is putting a premium on gas over solar?

The capacity fuel mix in each region in the Philippines has been quite distinct compared to other regions in the past. Luzon has had a relatively large share of gas-fired capacity, Visayas has had large amounts of geothermal, whilst Mindanao was traditionally dominated by hydropower. In recent years, large amounts of new coal fired capacity has been entering each of the systems. Presently, Luzon has just over 1/3 capacity in baseload coal, about 20% in each gas and hydro, and a fairly large 15% from oil-fired capacity. For some time, Malampaya gas and coal made up comparable abounts of baseload generation in Luzon, with Malampaya gas making up an even larger portion in the mid-2000s. However, as more coal capacity has entered the grid, coal has come to represent the lion’s share of generation mix at almost 50% in 2016, compared to 30% of generation coming from Malampaya gas facilities.

FIRST

China’s traffic light to flash red on coal

YTL’S $2.1B PROJECT

China

I

this traffic light policy is proving to be effective,” Varro noted. “The investment decisions taken in 2016, totalling a mere 40GW globally, signal a more dramatic slowdown ahead for coal power investment once the current wave of construction comes to an end,” he furthered.

There was also a decline in coal power generation investment in India. Varro said that this can be attributed to two factors: the financial difficulties of the Indian electricity sector and the increasing competitiveness of the solar power industry in India. “Questions are increasingly being raised about the economic necessity of new coal-fired power plants,” he stressed.

End of an era The makeup of investments in China exhibited a marked change in the past year, with a 25% decline in commissioning of new coal-fired power plants. Today, energy investment in China is increasingly driven by low-carbon electricity supply and networks, and energy efficiency. “The administration introduced a so-called ‘traffic light’ policy last year to prevent overinvestment in coal capacity. A year after, we can see that

New sources in the spotlight Coal’s loss is renewable energy’s gain, with renewable energy sources grabbing the lion’s share of funding in the past year. IEA’s report showed that investment in new renewablesbased power capacity, at US$297b, remained the largest area of electricity spending, despite falling back by 3%. Renewables investment was 3% lower than five years ago, but capacity additions were 50% higher and expected output from this capacity about 35% higher, thanks to declines in unit costs and technology improvements in solar PV and wind. “Renewables investment is doing really well. 85% of investments into RE went into electricity production, such as hydropower and wind power. The majority of spending is coming from both the government and the private sector, but there is still very little set aside for research,” Varro said. Spending on electricity networks and storage reached an all-time high of US$277b in 2016. China accounted for 30% of networks spending, driven by distribution networks and a significant expansion of large-scale transmission.

Another 13% went to India and Southeast Asia, where the grid is expanding rapidly to accommodate growing demand.

nvestors are no longer fired up about pouring funds into Chinese coal power plants, as money meant for new coal-fired capacity in China crashed to a capacity equivalent of less than 20GW of coal power in 2016. This is a far cry from an annual average of 50GW from 2011 to 2015 and 80GW in 2006 to 2010, said Laszlo Varro, chief economist of the International Energy Agency. “This century so far was the century of coal, especially in China and India.

This age of coal investment is now coming to an end—or at the very least, it is coming to a pause,” he added.

Total energy investment worldwide in 2016 was just over US$1.7t, marking a 12% decline on a year-on-year basis. China remained the largest destination of energy investment, taking 21% of the global total. Meanwhile, energy investment in India jumped 7%, cementing its position as the third-largest country behind the US.

MALAYSIA

Tan Sri Francis Yeoh, YTL Power International Berhad

Asian Power talked to YTL Power International Berhad’s CEO Tan Sri Francis Yeoh about the company’s largest projects.

Tell us about the company’s most stellar power projects to date and where they are located.

At present, we are constructing the first oil shale mine mouth power plant with a capacity of 2 x 235 MW (net) utilising the circulating fluidised bed boilers (CFB) technology in the Hashemite Kingdom of Jordan. The project is located at Attarat um Guhdran which is 110 km south-east of Amman. At a total investment of US$2.1 billion, it is the largest private sector project in Jordan to-date and is expected to meet 15% of Jordan’s annual electricity demand. Attarat Power Company (APCO) which is the project company has entered into a 30-year Power Purchase Agreement (PPA) with the Jordanian national utility and single buyer, NEPCO for the sale of the entire electric capacity and net electrical output.

The other project we are currently developing is in Cirebon Regency, West Java, Indonesia. The 2 x 660 MW (net) coal fired power plant will utilise state-of-the-art ultra-supercritical technology. The project company, PT Tanjung Jati Power Company has executed a Power Purchase Agreement (PPA) with PT PLN (Persero) in December 2015. We are always on the lookout for new opportunities in generation whether it is bidding for existing assets or investing in new projects.

Equis Energy to shell out US$1.18b for 1,000MW solar project in Australia When a recent Climate of the Nation survey showed that a whopping 96% of Australians wanted renewables as the country’s primary energy source, renewable energy project developer Equis Energy swooped in with a business opportunity. It’s popping the champagne now as it recently secured the approval from the Western Downs Regional Council in Queensland, Australia to develop the 1,000MW Wandoan South Solar Project (WSSP), one of the largest solar projects in Australia and the world. WSSP will involve a capital investment of approximately A$1.5b (US$1.18b).

Construction of the project is expected to begin in 2018, and will begin delivering power in 2019.

The project, covering 1,424 hectares of land, will be connected to Powerlink’s Wandoan South substation, and will have the ability to add battery storage when commercially feasible. According to Josh Carmody, Equis partner and head of Australia, this will allow energy to be stored and will facilitate the generation of power into the evening. “The WSSP project will incorporate up to 3 million solar 10 ASIAN POWER

PV panels and have a generation output of approximately 1,800,000 (MWh/year), collectively supplying power equivalent to the annual needs of 255,000 homes, and saving over 1.7 million tonnes of CO2 annually compared to same generation from coal fired power,” he said. He, however, declined to comment on Equis’ partners in the project and on project financing.

Going 100%?

With Australians clamouring for renewable energy sources, Andrew Blakers, director of Australian National University Centre for Sustainable Energy Systems, said that in a scenario of 100% renewable energy provision in which wind and solar provide 90% of annual electricity, the additional cost of balancing renewable energy supply with demand on an hourly basis throughout the year is modest: US$19-23/MWh. “Levelised cost of electricity of renewables of renewables is almost certain to decrease due to rapidly falling cost of wind and PV,“ he said.

Josh Carmody

Most preferred energy soucrce

Source: The Climate Institute

RefReshing Life with gReen eneRgy China Resources Power Holdings Co.,Ltd. (CR Power) was founded in August 2001. The Company is among the most efficient and profitable integrated energy companies in China. It also acts as a flagship company listed in Hong Kong for China Resources Holdings Co.,Ltd.(CRC),which is a Fortune 500 company.

Its business primarily covers thermal power, wind power, hydropower, photovoltaic power generation and distributed energy.

CR Power was listed on the Main Board of the Hong Kong Stock Exchange on November 12,2003 (stock code: 0836.HK). In March 2004, CR Power was added to the Hang Seng Composite Industry Index (Utilities) and the Hang Seng China-Affiliated Corporations Index.

In May 2005, CR Power was included into the Morgan Stanley Capital International (MSCI) China Index. On June 8, 2009, the Company formally became one of the constituent stocks of the Hang Seng Index (Blue-chip stock).

As at 30 June 2017, CR Power’s total assets amounted to HK$210.5 billion and its attributable operational generation capacity amounted to approximately 37GW. It covers 27 provinces, municipalities and autonomous regions. For the ninth consecutive year, CR Power was named in the Platt’s Top 250 Global Energy Companies and listed in Forbes Global 2,000, ranking 75th and 646th respectively.

Since its establishment, CR Power has been a strategy-driven enterprise, and saw a fast and solid development in the past decade due to its clear strategy and efficient execution.

In the next five years, CR Power is going to focus on green energy development, greatly enhance the mix of clean energy, develop highquality thermal power, optimize coal assets, and actively tap into the electricity retail business.

CR Power is also searching for opportunities in overseas energy markets and cultivating new profit growth opportunities by extending its value chain.

CR Power looks forward to working with stakeholders hand-in-hand and implementing the responsibility, as well as pursuing of “Refreshing Life with Green Energy”, so as to establish CR Power as an excellent and sustainable international energy company.

Website: www.cr-power.com

CO-PUBLISHED CORPORATE PROFILE

500 MW mobile power plant PT. PP (Persero), Tbk endorsing Indonesia brighter.

P

T. PP (Persero), Tbk, established in 1953, is a state-owned company which founding father engaged in the provision of building and civil construction services. Our business lines are: construction, which include buildings and infrastructure; property and realty, investment, and Engineering Procurement and Construction (EPC).

The PP EPC Division, reflecting the company’s diligence to grow, has been in a noticeable occurrence in the EPC Business of Indonesia.

Established in 2011 as an EPC & Investment Division, EPC has been awarded 23 projects which is mostly are power plants.

As a State Owned Company, we feel a strong urge to take part in providing excellent development to the whole nation. Therefore our activities starts from the construction of Downstream Gas Supply Industry facilities (e.g.

Pipelines, CNG/LNG Processing Plants and Terminals), until the EPC of Power Plants, as our synergy to Government’s 35.000 MW Electricity Masterplan. Within 7 years we have generated 2700 MW in total amount in Indonesia with various owners such as PLN, Indonesia Power and Krakatau Daya Listrik.

The long series of energy problems in Indonesia finally has ended by Mr. Joko Widodo. Energy problems appeared by the shortages of electricity at many places in Indonesia and this problem has been answered rapidly by PT PP EPC Division which committed to actively involve to the Fast Track Program that Government initiated.

Cooperation between PT. PLN Batam, as a subsidiary company of PT. PLN and also the owner of the MPP Project, and PT. GE Operation Indonesia, as the main contractor, PT PP EPC Division had a chance to be the EPC Contractor to accomplish the MPP Project that scattered in 8 locations within 6 months after effective date.

The scattered locations with 6 months project period time has uniquely challenge for PT PP EPC Division. This challenge has been interpreted by PT PP EPC Division with precise management 12 ASIAN POWER

strategy by establishing the Centralized Project Management.

By using Centralized Project Management, the Engineering and Procurement demands in 8 locations covered easily and effectively.

Furthermore, by using GE Gas Turbine type 2500 Gen 8 and several auxiliaries with module based accelerated the assembly of construction become more efficient and the Fast Track program that PT PP has been involved, its marked by Mr. Joko Widodo statement on inauguration ceremony of the mobile power plant in Mempawah, West Kalimantan. Other power plants that will begin operations include Jeranjang-Lombok and Air Anyir-Bangka, each with a capacity of 2x25 MW; Tarahan-Lampung and Pontianak with a 4x25 MW capacity each; Balai Pungut-Riau and Paya Pasir-Medan, with 3x25 MW capacity each and Suge-Belitung and Nias, with a capacity of 1x25 MW each.

Safety, Healthy, and Environment SHE becomes a focus management in its implementation. Safety, Healthy, and Environment (SHE) is one of the aspects that is very considered in this project, either by the owner of this project, clients or project team. All project teams participate and commit on the implementation of Work Healthy safety and Environment in accordance to the standard of OHSAS 18001. The application of K3L system is applied to all aspects of work during the project.

SHE induction is performed to all new employees and guests who enter the area of project. The purpose of SHE Induction is to inform the applicable rules of SHE and danger potentials existing in the area of project.

Work safety is the priority so that this commitment should be maintained by the team and almost every morning the team conducts tool

GE TM2500, Fast Track built within only 6 months

by PTPP in Jeranjang, Lombok 50 MW

box meeting to share about aspects that should be noted in order to achieve a safety work.

To maintain the quality of work and schedule, the team routinely conducts a weekly meeting to find a solution towards problems occurred in the project. And every discussion will become a mutual deal to maintain the quality and target to finish the work.

Working with a partner of international company to achieve a quality standard and a high safety international class. It requires the team project to be able to give a distinctive satisfaction.

Pre-job safety meeting is a form of communication between supervisor and workers before starting a job. In pre-job safety meeting, it will be explained by SHE and supervisor about the working procedures and the possibility of danger risks that might be experienced by the workers if the procedures fail to be implemented well during the job. This material has been prepared by supervisor before starting the job in form of Permit document to Work, Work Method and JSA (Job Safety Analysis).

With all disciplinary implemented in the field, GE party is also amazed with the performance of EPC PT PP Division where it is shown by 4.2 Million Man Hours Of Free Lost Time Injury Charter.

Cooperation relationship with all stakeholders (external) is also important to be maintained in the context of easiness of coordination and communication. Support from all parties becomes important key in the completion of every obstacle, problems and challenges that exist in the progress of the project.

“Mobile Power Plant GE TM2500 and PT PP (Persero), Tbk. brings fast power to Indonesia.”

Country report 1: India

Projects are being rushed but infrastructure is not ready for these

Is India hurting from self-inflicted solar burn?

The sector is bright and shining, but experts are afraid that players are getting way ahead of themselves as issues on lack of access roads, clean green lands, and proper land area demarcation hamper development of solar parks.

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hen you ask project developers tasked with building India’s solar parks what their most pressing challenge is, most will point outside their window to the vast tracts of undeveloped land with inadequate roads and other essential infrastructure.

Execution blunders continue to hamper the country’s attempts to build solar parks and other promising solar PV projects.

“Project developers are citing issues including lack of access roads, clean green lands, and clear demarcation of land areas in these solar parks,” says Priyadarshini Sanja, managing director at Mercom Capital Group.

Most policies are wellintentioned with topdown goal setting, but the problem usually is on the execution side.

Installed capacity under captive model only (MW, n=21), by year

Source: Bloomberg New Energy Finance 14 ASIAN POWER

There has been a push to build dozens of solar parks in India but this has been saddled by delays relating to poor infrastructure support, says industry insiders. These delays threaten to increase project costs and decrease profitability for solar parks.

Are solar parks problematic?

Solar parks — one of the pillars envisioned to usher India to a more secure energy future — accounts for 20GW of the 100GW of solar capacity that India is targetting by 2022.

Currently, there are 34 solar parks planned across 21 Indian states, all of which have received in-principle approvals. In these solar parks, projects aggregating 20GW will be set up, and the Ministry of New and Renewable Energy (MNRE) is even considering increasing the capacity to be developed at solar parks to 40GW. Under the guidance of the MNRE, in some states, the Solar Energy Corporation of India (SECI) has formed joint ventures with state renewable energy agencies to construct these solar parks. State nodal agencies are also the implementing agencies in locations such as Arunachal Pradesh, Assam, Gujarat, and West Bengal, amongst others. Meanwhile, the National Thermal Power Corporation

(NTPC) is overseeing the construction of solar parks in Andaman and Nicobar Islands. However, delays relating to infrastructure and site preparation have hampered project development for some solar parks — and these are not isolated occurrences. “The issues around solar parks are typical to the Indian solar sector,” says Raj Prabhu, CEO of Mercom Capital Group. “Most policies are well-intentioned with top-down goal setting, but the problem usually is on the execution side.”

One major criticism levelled against the government is its rush to auction projects in these parks even before completing land acquisition formalities. This has brought headaches to project developers who end up winning bids but then find that infrastructure is not ready for them to start construction. In the Pavagada, Charanka, and Kadapa solar parks, bidsubmission deadlines for tenders have been reportedly extended repeatedly.

“The government is in a hurry to invite tenders even before they have completed land acquisition which ends in a delay of four to five months before the auctions happen. Developers, meanwhile, are paying for park infrastructure that is non-existent,” says Sanja. “Much of the infrastructure is being built parallel to project construction and will be complete

Country report 1: INDIA Annual capacity additions in India’s renewable energy sector (MW)

Priyadarshini Sanja

Source: Bloomberg New Energy Finance

when projects are close to completion, which doesn’t help the developers.

After paying steep park fees, developers are having difficulties to build parts of the infrastructure.” Developers argue that delays and additional incurred expenses seriously affect project costs and profitability, especially if they end up having to clean the land, build roads, and wait for power to be evacuated after commissioning. Whilst the bidding process is transparent and the promised infrastructure is ideal for international investors, these nuisances can be quite a burden for solar park project developers.

But government officials argued that development of solar parks is in its early stages and whilst the process is not perfect, state nodal agencies are working hard to resolve issues when they arise.

“Solar parks are huge projects and these problems are minor when you look at the capacity that will be achieved. It has just been two years since we ventured into solar parks,” commented an SECI official.

No solar parks in just a few days The MNRE has reportedly requested that the Principal Secretaries and the Chief Secretaries of State Governments take up necessary action for speedy implementation of solar power projects so that solar targets are achieved on time.

MNRE is also conducting regular review meetings with state governments and solar park developers to keep projects on track.

“Solar parks cannot be completed within days. A lot of planning is required — problems will come up but we are here to handle them,” commented an MNRE official. The development issues surrounding solar parks have increasingly attracted attention as India faces the triple energy challenge — meet the growing energy demand, cut down on pollution, and connect more than 300m people to the power grid.

Ramping up renewable energy production has emerged as one of the

Raj Prabhu

solutions to this triple energy challenge, which is why the government has set the target of building 175GW of renewable energy by 2022 — primarily solar and wind, says Shantanu Jaiswal, lead analyst for India at Bloomberg New Energy Finance. At the end of FY2016, India had 42.6GW of installed renewable energy capacity, excluding large hydro, which represents 14% of total generation capacity. “2016 is on track to become the best year for renewable installations,” says Jaiswal. “The sector is not only drawing Indian firms but also foreign utilities.

Power generation companies particularly from Europe and Asia are increasing their presence through greenfield investments or acquisitions.”

“PV is rapidly emerging as the king of Indian renewables,” Jaiswal adds, pointing out that the sector saw an impressive 59% CAGR in the last four fiscal years to reach 6.8GW installed capacity at the end of FY2016. Solar still represents only 2% of grid-tied generation capacity, but it is growing twice as fast as wind and coal on the back of federal and state-level auctions.

King of Indian renewables Solar power is also being installed in almost all states across the country, unlike wind power which is focussed in the southwest of the country. The more distributed nature of solar has become a key advantage over other renewables, helping alleviate transmission bottlenecks and bringing generation closer to the point of consumption.

Led by solar, India’s share of renewable energy in the total capacity mix has been ramping up to 14.1% in FY2016 from 12.5% in FY2013. “We believe that this percentage will keep on increasing, as India adds renewables, coal, and some hydro capacity,” says Jaiswal, given that renewables are already having a higher growth rate in the country, with a cumulative CAGR of 15%, surpassing the 12.5% for coal power plants.

Shantanu Jaiswal

Another encouraging trend is the rise in investments in utility-scale projects after the government announced the target of having 175GW of solar, wind, and biomass installed by 2022. Jaiswal reckons asset finance has grown by nearly 60% to $10.5b in FY2016 from $6.6b in FY2014, with solar obtaining the most investment in the last financial year. “Despite this strong position, the renewables sector needs to accelerate its pace even more to meet the government targets,” argues Jaiswal.

If execution and financing issues are addressed, India stands to become a global force in solar energy, argue analysts. The country has one of the world’s highest solar intensities and boasts of low-cost manufacturing, and solar energy is one of its most substantial and rewarding opportunities, says McKinsey & Company.

More fund is still needed The analyst estimates around $100b asset finance is needed during 2016 to 2022, including $30b in equity capital, if India is to reach its goal of 135GW of utility-scale renewable energy by 2022. The country will also need to figure out how to reduce financing costs considering it currently has the highest cost of capital in the AsiaPacific region.

To raise the next $100b of asset finance, capital markets must play a bigger role. This will mean the growing prominence of green bonds, both domestic and offshore ones, and already the market is seeing their use to raise debt or refinance projects. On the equity side, infrastructure investment trusts should start to gain traction. “The idea is that investor interest is protected and developers can quickly recycle equity in large commissioned projects by selling it to long-term institutional and retail investors seeking lower, but more stable returns,” says Jaiswal. “These structures have started to attract interest and could be crucial for the estimated $30b equity that the utility-scale projects need.”

Capacity installed since FY2013 (MW, n=26), by year

Source: Bloomberg New Energy Finance ASIAN POWER 15

Now that we have established baseload power plants in highgrowth areas in the Visayas such as Cebu and Iloilo, we have always been keen on expanding our footprint outside of the region. A key development in 2017 was setting up our presence in Mindanao by acquiring a 50-percent stake in Alsons Thermal Energy Corporation (ATEC).

Jaime T. Azurin CEO Global Business Power

CEO INTERVIEW

GBP to explore bigger PH islands for ambition CEO Jaime T. Azurin targets going out of the Visayas region as its home base, and expanding to the Philippines’ bigger islands with the firm’s recent 50% stake acquisition in the Alsons Thermal Energy Corporation in Mindanao.

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efore joining Global Business Power, Jaime T. Azurin’s career was focused on finance and investment banking. He was the assistant vice president in Solidbank Corporation from 1993 to 2000, and eventually moved to First Metro Investment Corporation (FMIC) as vice president-project finance Division Head. This role exposed him to infrastructure projects, particularly those in the power industry. Find out more about his journey into energy and his future plans for GBP as the new president in this exclusve interview with the Asian Power.

What were the previous positions you held that led you to being the CEO now? How did these experiences help you be the leader that you are?

Prior to joining the banking industry, I worked with Benguet Management Corporation as an executive assistant to the president and head of corporate planning. In 2006, I joined GBP as Chief Finance Officer. In 2013, I was appointed Deputy OfficerIn-Charge to the President, before being appointed President in 2017. My expertise as an investment banker proved to be instrumental in securing muti-billion peso loan facilities to finance the company’s expansions throughout the years. The US$583m (Php30b) loan we secured for the construction of the 3x82MW coal-fired power plant of Cebu Energy Development Corporation (CEDC) and the 2x82MW coal-fired power plant of Panay Energy Development Corporation (PEDC) was then the country’s first and largest peso-denominated long term fixed rate loan facility for an infrastructure project and was entirely funded by local institutions. Until then, the biggest syndicated peso loan only amounted to P5B, and most of the country’s biggest infrastructure projects were funded by dollar-denominated loans.

As head of business development and commercial operations, I have also helped expand the company’s operations. From 185.5MW in 2003, we have now grown our capacity to 854MW— a four-fold increase in just a span of 15 years. I have also helped our commercial team secure long-term power supply agreements to contract our capacity.

What are the biggest industry challenges GBP is currently facing in generation and how do you plan to overcome these?

One of the biggest challenges confronting not just GBP, but also the entire industry is the evolving government and regulatory landscape. Government regulations influence energy market dynamics as well as the development of new projects, so changes in policy have far-reaching implications. This is best illustrated by the temporary restraining order issued by the Supreme Court on the implementation of the Retail Competition and Open Access (RCOA). The TRO has halted the mandatory migration of large consumers to RCOA. Another is the implementation of the Renewable Portfolio Standards (RPS) and the Green Energy Option as mandated by the Renewable Energy Act of 2008. Under RPS, distribution utilities must source a portion of their power supply from eligible RE producers, while under the Green Energy Option, endusers must have the option to choose RE as their energy source.

All these are happening even as the FiT allocation for various renewable energy sources have begun to expire—for solar and wind projects, FiT ended in March 2016 while for biomass and run-of-river projects, FiT expired on December 31, 2017. We now see a potential gap in policy—on one hand, we might see a rise in demand for RE due to the RPS that requires end-users to source energy from RE, but the expiration of FiT might hinder development of future RE projects that may help meet the

potential increase in demand.

What is GBP’s biggest plan to date on the generation side?

What should the industry be excited about?

Now that we have established baseload power plants in highgrowth areas in the Visayas such as Cebu and Iloilo, we have always been keen on expanding our footprint outside of the region. A key development in 2017 was setting up our presence in Mindanao by acquiring a 50-percent stake in Alsons Thermal Energy Corporation (ATEC). ATEC is the holding company for all baseload coal-fired power plant assets of Alsons Consolidated Resources, Inc. (ACR) located in Mindanao. Our entry into Mindanao has given us a platform for growth in the island, which will enable us to explore its largely untapped energy market. Our business development team, meanwhile, has also begun exploring various opportunities—we are in the pre-development phase in Luzon (through Global Luzon Energy Development Corporation) in line with our goal to establish presence in all three island groups, and we are actively studying various opportunities into the renewable energy sector.

What are the newest generation projects that you have?

Our newest generation project was the completion of the 1x150MW coal-fired power plant expansion of Panay Energy Development Corporation (PEDC) in Iloilo. We built PEDC’s third unit in response to Iloilo and the region’s growing demand for energy. The expansion plant commenced commercial operations on January 26, 2017.

Our partnership with Alson’s Group has enabled us to establish footing in Mindanao through Saranggani Energy Corporation (SEC) and San Ramon Power Inc. (SRPI). SEC began operating its first unit with 105 MW capacity in April 2016 while the second unit is being constructed. SRPI, on the other hand, is in the predevelopment phase of a 105MW baseload coal-fired power plant in Zamboanga City. Mindanao is a particularly exciting frontier because its electricity market is still in the infancy stage and its interconnection with the Visayas grid is in the works.

What do you think is the Philippine’s biggest energy problem at the moment and how should this be addressed?

Government regulation and policy still remains the most crucial aspect in the success of the energy sector. For one, the suspension of the commissioners of the Energy Regulatory Commission (ERC) has created uncertainty among industry players, and many stakeholders have been awaiting resolution to this matter.

The continued operations of the ERC, as a regulatory body, is important to the smooth functioning of the entire sector. Power supply contracts must be approved by the ERC, and without approval, developers might not be able to secure financing to fund their operations and/or expansion. Banks usually require ERC approval to show the developers have secured contracts for the projects.

There is, of course, the suspension of the implementation of RCOA, which has stalled the mandatory migration of contestable customers to RCOA. Without this, the full intent of EPIRA cannot be realized and a truly competitive energy market cannot emerge with so many regulatory barriers hampering the implementation of the law. On one hand, we have a rapidly expanding economy that posted 6.7% growth in 2017, which is one of the highest growth rates in Asia. On the other, we have an energy sector on a wait-and-see situation due to regulatory gridlock, which might hamper prompt response to the country’s energy demands.

ASIAN POWER 17

Country report 2: China

Could China trump the U.S. in the renewables race?

China is dead serious on greener energy mix China is taking a leap towards becoming the undisputed renewable powerhouse of a low carbon-consuming world.

W

hen China recently announced that it will spend $360b over the next four years to build up its renewable energy sector, the country was making a bold statement pinning the majority of its economic hopes on the growth of this burgeoning sector. Analysts reckon this latest push for renewable energy investment comes at a critical time when the U.S. is signalling a shift in policy direction away from renewables, possibly giving China less competition in the space. The Chinese economy is also yearning for lower carbon emissions, greater energy security, and more jobs — all of which may be generated by a wellsupported renewable energy sector.

Leading the global expansion

Source: BMI Research 18 ASIAN POWER

The Chinese government’s plans lie in a rebasing of the economy in favour of electricity, with power supplied by local coal, shale gas, locally built nuclear power stations, and renewables.

Nick Butler, visiting professor at King’s College London, suggests there are two closely related policy objectives that are driving the energy strategy for a renewable investment of this scale: reducing dependence on imported supplies and creating a modernised economy that boosts employment. Butler reckons that even if China can pay for imported energy, there is a question on whether the leadership under President Xi Jinping wants the country to become more dependent on foreign suppliers, given the central importance of energy within the economy.

China must employ a population with 7.5 million graduates a year and compete not just with advanced industrial nations such as the U.S. and Germany, but also with low-cost emerging economies such as India. By increasing renewable energy investments, the country is seen to be creating a strong pillar to reconstruct its employment base. “Having managed the transition from a predominantly agricultural economy to one based on heavy industry, basic manufacturing, and construction, China must develop a more complex economy with a rise in services, consumption, and higher value added,” says Butler.

“China wishes to be one of the world’s great industrial powers and has realised that low wages alone cannot achieve that,”

he adds. “The Chinese government’s plans lie in a rebasing of the economy in favour of electricity, with power supplied by local coal, shale gas, locally built nuclear power stations, and renewables such as wind and solar power.”

Lower-carbon energy mix As China adjusts to a more sustainable energy demand growth and slowing economic expansion, the country has begun shifting towards a lower-carbon energy mix, with coal being displaced by lower carbon alternatives. “China’s energy mix is likely to change significantly over the next 20 years, driven by its changing economic structure and a policy commitment to move to cleaner, lower-carbon fuels,” says BP in its Energy Outlook 2017 report.

BP forecasts the share of coal in China’s energy demand will fall from around twothirds in 2015 to less than 45% by 2035, and that much of this reduced share will be replaced by renewable energy sources, nuclear, and hydroelectric power. The combined share of these fuel sources in China’s energy mix is expected to rise to over 25% in 2035 from 12% in 2015.

As the future of U.S. energy under the Trump administration becomes uncertain, China is moving forward with its renewable energy plans and the country could be well on its way to

Country report 2: China JinkoSolar manufacturing capacity (MW)

Ian McClenny

Nick Butler

Source: IEEFA, JinkoSolar Q3 2016 Earnings Presentation

become the global leader in this frontier, says Paige Leuschner, research analyst at Navigant Research.

“President Trump’s past claims that climate change is a Chinese hoax and suggestions of the U.S.’ withdrawal from the Paris Agreement could create a space for China to take on a leadership role in clean power,” she says. “While the country still has a long way to go to prove its commitments to the environment, in the past few years, it has made significant progress in terms of reducing its emissions, curbing coal generation, and ramping up investments in renewable energy resources. China has shown potential in its ability to lead the world toward a low-carbon future.”

103 coal-fired plants were cancelled Leuschner further notes that China is not only intending to spend more than $360b on renewable energy resources through 2020 — which will create more than 13 million jobs in the renewable energy sector — but it is also moving forward on its commitments to cut back on coal generation by recently cancelling 103 coal-fired power plants in development.

These actions should help curb the growth of greenhouse gas emissions and reduce the air pollution that hangs over cities like Beijing.

With China’s global renewable energy expansion, the world’s second-biggest economy is positioned to lead the world in clean power investment, says Tim Buckley, director of energy finance studies, Australasia at Institute for Energy Economics and Financial Analysis. “The extent of China’s domestic investment in renewables has surpassed all expectations, with the resulting technology development and economies of scale driving down costs to the point where renewables are exceeding grid parity in an increasing number of market segments,” says Buckley.

Electric vehicles and energy storage are also playing a larger role in shaping

the energy future of China that is less dependent on oil imports and creating more jobs, according to analysts. Buckley notes that the number of electric vehicle sales are growing, with China pushing ahead of both the U.S. and Europe in 2016, and the government has set a target to have 40% of the local car market electrified by 2030.

Ian McClenny, research associate at Navigant Research, says China has policies in place that promote the development of alternative fuel vehicles, which is driving up electric vehicle sales.

The central government started granting subsidies for electric vehicles in 2013, and the value of subsidies has decreased annually since then. In addition to the subsidy, the central government has also waived the vehicle sales tax. Additional subsidies in China can be found predominantly at city governments such as Beijing and Shenzhen, allowing a oneto-one matching subsidy for consumers and effectively doubling the national electric vehicle purchase subsidy.

“The battery energy storage industry in China goes where the government steers it. Though the effect of policy and demand-side incentives varies by territory, the country seems to have a clear plan on what role storage will play in its clean energy future,” says McClenny.

Nuclear expansion Along with renewables, China’s nuclear expansion is expected to pick up pace over the coming decade as coal continues to lose share in the country’s power mix despite provincial resistance, says Georgina Hayden, head of power & renewables at BMI Research.

In 2016, China’s nuclear power expansion gathered pace, with government data suggesting that nuclear capacity totalled nearly 34GW by end-2016, up from around 26GW in 2015 — the most nuclear capacity brought online by any country last year.

She reckons China’s nuclear sector will

Paige Leuschner

continue to expand rapidly, with nuclear capacity surging to almost 100 GW by 2026, increasing by an annual average of 10.8% between 2017 and 2026. This will eventually make China the largest nuclear market globally by capacity, marginally larger than the U.S. “We have long-held a bullish outlook on China’s nuclear sector and the country’s huge pipeline of reactors that are planned, proposed, or under construction supports our growth forecasts,” says Hayden, pointing out that the government aims to have 58 GW of nuclear capacity online by 2020-21, and 150 GW by 2030. “Although coal will remain the dominant fuel source in China’s power mix, we expect alternative fuels such as nuclear, renewable energy, and gas to gain prominence over the coming decade,” she adds. Hayden expects coal’s share in the power mix to gradually fall to just under 54% by 2026, from roughly 70% currently.

A more exciting prospect is that after expanding its own domestic nuclear sector, China may be able to develop the expertise to export nuclear capabilities and nuclear technology abroad. Hayden reckons the country is already largely self-sufficient in terms of reactor design and construction, and Chinese nuclear companies are already securing international contracts to develop new nuclear capacity, for example, in Pakistan, Argentina, and the United Kingdom.

Chinese nuclear companies also have sufficient financial firepower to take on the significant capital costs involved in developing new nuclear reactors.

Recent developments have financially bolstered domestic nuclear companies such as the merger between China Power Investment Corp. and State Nuclear Power Technology Corp., as well as the tie-up between China National Nuclear Corporation and China General Nuclear Corporation to develop the Hualong reactor, which has helped them expand domestically and export Chinese nuclear technology abroad.

China’s share of global renewable capacity growth, 2015-2021

Source: IEEFA, IEA World Energy Outlook 2016 ASIAN POWER 19

sector report: NUCLEAR

Stronger government push for nuclear

Asia’s slow push for nuclear energy use Nuclear power programmes across Asia are once again slowly gaining steam, driven by a mix of waning public outrage and urgent necessity, but safety concerns remain a potent dampener.

J

ust after the Fukushima Daiichi nuclear disaster, Indonesians were asked whether nuclear power plants (NPPs) should be in the country. The votes back then were roughly split between supporters and oppositionists, but time seemed to have allayed some of the fears from the accident. In a 2016 survey, more than 75% of Indonesian respondents believed NPPs should be in the country. Other glimpses of this confidence rebound can be observed across the region, especially as nuclear power promises an economically sound solution for the growing energy needs of emerging Asian nations even as resistance remains strong, led by the likes of Taiwan and Vietnam.

Indonesia has shown a resurgence of public support for nuclear power, says Dr Taswanda Taryo, principal researcher of PTKRN-BATAN, Serpong, citing a recent survey where 4,000 people were directly interviewed and 77.5% agreed that NPPs should be available in the country, up from 75.3% in 2015 and from around 49% after the Fukushima accident occurred. The results of the survey, which has been done since 2009, suggests that majority of Indonesians want NPPs and have shaken off their reservations as the years have passed.

The spike in public confidence can be attributed to a stronger government push for nuclear power in recent years. In 2014, the government created a nuclear energy outlook and established the Government Decree No.79 that clearly states that Indonesia needs 115GW of power by 2025, more than double the existing electricity generation of 52GW. To fill in the gap, the government is supporting the development of new energy and renewable energy, including solar, geothermal, micro-hydro, biomass, and nuclear. “The advantages of nuclear is that it is green, very competitive, and able to provide a bigger power of electricity,” says Taryo.

Despite swelling public support for NPPs, there are several 22 ASIAN POWER

The spike in public confidence can be attributed to a stronger government push for nuclear power in recent years.

major challenges related to infrastructure and policy. NPP construction, for one, takes seven to nine years, a lengthy period that exceeds the serving term of Indonesian politicians and deters leaders from taking on these big-scale projects.

“The construction of NPPs depends on political decision.

Politicians are not interested in constructing NPPs since the construction time is more than 5 years,” says Taryo. “They have only 5 years to lead the country. It is better for them not to take the decision once they lead the country.”

He reckons more can be done in terms of financing, especially as the government looks to spend on other key infrastructure such as roads, ports, tolls, and railways. Building new NPPs also require improved expertise in selecting nuclear technologies based on factors, including safety, security, environmental impact, and capability to construct the project on time.

Finally, the country needs to improve its power grid and make sure that electricity generated from NPPs are kept relatively cheap, which is made more complicated by the country’s archipelagic geography consisting of more than 3,000 islands. Taryo says it can be an uphill battle for nuclear power if electricity prices are high, or more than 10 cents/Kwh. Nuclear opposition As countries like Indonesia look to ramp up their nuclear power programmes on the back of stronger public support, the governments of Taiwan and Vietnam have ditched nuclear due to vocal opposition from their constituents. Taiwan yielded to public demand to stop nuclear power generation, which forced the country to crank up the combined share of wind and solar power to 20% in the coming decade to offset the loss of nuclear power. Thermal energy is also being eyed as an attractive energy source following Taiwan’s planned nuclear phase-out.

sector report: NUCLEAR Nuclear grid connections rates required to meet the Harmony target of 1000 GW of new build by 2050

Source: World Nuclear Organization

Strong anti-nuclear power sentiment continues to persist in Taiwan despite doubts on whether the ambitious targets for non-hydro renewables like wind and solar power can be achieved. Then, last year, Vietnam had to forego plans to build a couple of NPPs in Ninh Thuan province because of safety and project feasibility concerns. Vietnam’s National Assembly voted to abandon what would have been landmark NPP projects in cooperation with Russia and Japan, a decision that was spurred on by growing public debt and ballooning project costs.

In Malaysia, rallying public support has been harder following the Fukushima disaster and is one of the biggest challenges to the country’s nuclear aspirations, says Dr Mohd Zamzam Jaafar, chief executive officer of the Malaysia Nuclear Power Corporation. “Winning public buy-in after the Fukushima accident with respect to nuclear safety and what to do with radioactive materials and used nuclear fuels” is a key hurdle to nuclear power development, he says. Because of shaky public support, the government cannot step hard on the nuclear development pedal. Critics have also called into question the competitiveness of nuclear electricity given its high upfront investment costs, especially when compared to popular renewable energy.

Abort mission Despite the hurdles that Malaysia’s nuclear programmes face and the potential chilling effect after Vietnam pulled the plug on its NPPs, Zamzam reckons there is still merit for the country to leverage nuclear power to drive economic growth and lower electricity cost. “It is too early to assess the impact of Vietnam’s decision to stop its nuclear power programme in the Association of Southeast Asian Nations (ASEAN). The Nuclear Energy Cooperation-Sub-Sector Network (NEC-SSN), a programme under the ASEAN Ministers of Energy Meeting, continues with Malaysia as the current Chairman. Nuclear Power Asia 2017 is listed as an activity under ASEAN NEC-SSN and Malaysia is still pursuing the nuclear option,” he says.

“Nuclear is an important base load power generation source as demonstrated in many countries with NPPs in operation.

This is an important feature valued by customers and investors who rely on affordable 24/7 power supply. With expansion of sustained commercial activities, national economic development can be assured through job creation and better standard of living for people.” Zamzam notes that Japan, in restarting its nuclear programme amidst public opposition, has explicitly recognised the role of nuclear to provide reliable electricity supply and enabling a more diversified energy mix for electricity generation.

Nuclear has also been shown to be a proven low carbon power source. This will likely play a major role for countries that want to meet the Paris Agreement requirements with respect to greenhouse gas emission and climate change concerns.

In India, there is a similar need to push through with the

Relative unpopularity of coal/oil and nuclear plants in 2008

Source: WorldPublicOpinion.org

Akira Tokuhiro

Nguyen Hao Quang

Mohd Zamzam Jaafar

Professor R. Rajaraman

nuclear programme even in the face of fierce criticism and public protests. The fast-developing and populated country is ploughing forward to meet its economic development goals and mitigating its recurring energy shortages.

As India’s middle class continues to swell, government leaders feel increased pressure to provide electricity across the nation.

The state government of Tamil Nadu, facing critical electricity shortages, proceeded with the full rollout of the Kukankulam nuclear facility to provide electricity to the surrounding poor and underpowered southern states, even as protests among concerned villagers erupted. The government’s nuclear adviser to Rajagopala Chidambaram has tried to assuage the public that the Fukushima nuclear accident has taught lessons that will help prevent a similar incident from occurring in India, and insisted that nuclear accidents must not derail the nation from pursuing a safe civil nuclear programme.

India’s nuclear predicament Supporters of India’s nuclear program believe it can substantially mitigate the country’s ravenous energy needs, but the commitment to nuclear comes with caution from critics: There is a dearth of nuclear experts, which may impair the sustainability and safety of the program. “In India, [our nuclear] expertise is contained almost totally within the Department of Atomic Energy (DAE),” says Professor R. Rajaraman, emeritus professor of Theoretical Physics School of Physical Sciences.

“There are no nuclear engineering schools in our universities or institutes of technology. This has been by design.”

Apart from a few private companies that supply some parts for reactors, the “nuclear industry” in India consists only of that one government department, the DAE. Consequently, argues Rajaraman, when the need arose for some public debate on nuclear activities, there was little independent outside expertise available to foster a balanced debate. Nurturing more local nuclear experts will be critical to the Indian government’s plan to expand its nuclear energy capacity in the coming decades to address electricity shortfalls and lower carbon emissions. He warns that if the nuclear industry cannot develop in a unified and committed manner, there is a chance that momentum can shift to solar power, especially as the latter’s implementation costs fall and generation becomes more efficient.

India’s lack of nuclear expertise is also limiting its nuclear options. The country boasts vast quantities of thorium, an alternative to uranium. However, the country lacks hands-on experience and technology to harness thorium, preventing it from considering the element as a viable alternative.

“Thorium is simply not an alternative in the short-term,” says SP Singh, former head of the Nuclear Safety Division of the Atomic Energy Regulatory Board of India. “No power reactors are using thorium on a large scale today. Developing a system for a thorium reactor will take decades. It would take a long time for ASIAN POWER 23

sector report: NUclear a thorium demonstration reactor to be established and only then can we take steps toward assessing if thorium is advantageous or not. We have plenty of thorium, but have no technology available right now to utilise it,” he adds.

Playing technological catch-up Recognising the need of Asian countries, China has been stepping up to supply nuclear technology to the likes of Malaysia, Cambodia, and Thailand, although there are concerns over the safety standards from Chinese suppliers. This might prove tricky for governments that are still trying to woo critics, many of whom worry about the safety of nuclear facilities.

The Chinese are making bold moves to expand their nuclear technology exports in Southeast Asia, with both Thai and Malaysian authorities revealing they are in various stages of talks with Chinese technology suppliers. The China General Nuclear Power Corporation has outlined plans for commercial expansion into Southeast Asia, singling out its relationship with Malaysia and even establishing a regional headquarters in the country.

China has also been helping Cambodia ramp up its nuclear capabilities, from preparing a legal framework for the development of a peaceful use industry to offering scholarships to high-achieving Cambodian engineering students. Apart from Malaysia and Cambodia, Indonesia remains keen to drive toward nuclear power. Thailand, which had shelved plans after the Fukushima disaster, is also talking to the Chinese. Not everyone is falling in line to do nuclear business with China, however. The Vietnamese Atomic Energy Institute has expressed concern about the downstream safety-related consequences of three new plants close to, or relatively close to, the SRV’s frontier with China. The Institute is desperately trying to mitigate risk by encouraging a dialogue with Chinese operators.

“With the very strong nuclear activity in China across the border, checkpoints [need to] be set up in the area to promptly detect any impacts,” says Nguyen Hao Quang, Vice Director of the Institute. The Vietnamese have traditionally sought the established experience of the Japanese and Russians in building their nuclear industry. Singh, which has spent 12 years overseeing nuclear safety, shares Vietnam’s concerns. “The major challenge now is that the Chinese eat into their cost margin by compromising safety,” he says. “Safety is reduced to export technology and this will affect not only the Chinese people but also mainly the people of importing nation.”

Nations interested in importing Chinese technology and eventually plants, such as the Cambodians, Malaysians, and perhaps the Thais, are keen to take advantage of the fact that contracts may be half the cost of the French and two thirds the cost of the Russians. However, there may be risks involved in these relationships. Singh admits that all nuclear vendor or export countries have taken the failings of Fukushima into account, including the Chinese. But not everything is yet Nuclear power plants in commercial operation or operable

Source: World Nuclear Association 24 ASIAN POWER

understood, and countries might not have the safety precautions in place to justify increased nuclear risk.

“Importing nations need to be careful that these [Chinese] designs still meet international standards. The Chinese have been known to overload the reactors. Any nation that considers importing Chinese units needs to make sure that such units meet Generation-3 safety standards,” says Singh. “Importing nations are very heavily populated with only small ‘safety zones’.

Certain Chinese technology — particularly what they export — is obsolete. An accident will devastate the immediate area, which will naturally involve relatively densely populated neighbouring regions.”

There is an important need for institutional control and infrastructures when committing in nuclear with new reactors.

China is leading China-based American nuclear specialist Robert Barrett, a partner with PwC in Beijing, is more upbeat about Chinese technology. He says that the Chinese are generally very good at what they do and they offer export solutions in nuclear that other nations cannot. “The Chinese offer good technology and good financial solutions — the finance side plays a very important role and Chinese nuclear vendors don’t have to look toward bank financing,” he says. However, he does warn that “in terms of their internal construction, the Chinese government is somewhat challenged by the fact that safety and standard operating procedures become less pure as nuclear technology reaches the provinces and the central government has some difficulty in making provincial authorities stick to the line.”

Japanese nuclear expert Professor Akira Tokuhiro, suggests that more transparency is needed before the question of safety can be answered. “Detailed information is rarely revealed to the general and the educated public. It would be unprecedented and ‘fearless’ if the Chinese designs were, on invitation, subject to safety-in-design review.” Tokuhiro reckons safety risks can be mitigated if design details can be made available to a review beyond that already exercised by the IAEA. An example is how the Koreans are undergoing the American NRC review process with their APR-1400 reactor design, and the Chinese might also follow suit — a process that provides the public and experts an opportunity to scrutinise and ask questions.

“Since detailed information is hard to find on Chinese nuclear technologies and also on state of operations, there are expectations that many in the nuclear communities share,” says Tokuhiro. As a best practice moving forward to increase the confidence of the public and other stakeholders to nuclear programs, he suggests nuclear industries subject themselves to several stringent standards. These include, among others, demonstrating a world-class safety culture with international peer review, making operational data available to IAEA/INPO/ WANO, and demonstrating risk and crisis management and communications.

Asian nations will need strong regulatory control to ensure safety standards are met, says Gerald Ouzounian, international director at ANDRA. Greater transparency is likewise needed to allay prevailing safety doubts and boost public support, but doing so might be difficult. “There is an important need for institutional control and infrastructures when committing in nuclear with new reactors. Among the challenges, the most important is definitely the regulation system for making sure that safety is achieved, for the public and the environment,” says Ouzounian. “The unique challenges will be to operate safely the new facilities, protecting them against any security risk, and providing all relevant information to the authorities, in charge of making it available for the public. Transparency is challenging.”

Countries follow in the footsteps of France, where 58 reactors are operated by EdF, the national electric power company, under the supervision of the Nuclear Safety Authority (ASN). All information is reported on the ASN website, allowing everyone easy access to the information.

Analysis: INDONESIA’S CAPACITY PAYMENTS PLN will pay US$76 billion to have access to all the capacity scheduled. Capacity charges for coal-fired power plants are particularly notable as these plants are far less flexible than gas-fired counterparts in accommodating variable renewable energy input into the grid.

Is Indonesia setting itself up for a trap?

Expensive electricity could be looming over Indonesia With Indonesia’s Regulation No. 10, will project lenders be assured that bankability of projects remain the same?

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nder Perusahaan Listrik Negara’s (PLN) procurement guidelines, power purchase agreements (PPAs) signed between PLN and IPPs of thermal power plants are for fixed terms of approximately 25 years, or for a maximum of 30 years after Commercial Operation Date (COD). Capacity payment, as part of the tariff, is a fixed payment calculated based on the installed capacity of the power plant with specific availability factor agreed to by an IPP and PLN. It is paid for each kilowatt of available (not necessarily dispatched) capacity.

Specifically, it covers payment of the principal and interest of the debt used to construct the power plant, usually on a non-recourse basis; return on equity invested by project sponsors; and fixed operation and maintenance (O&M) costs that are independent of the amount of energy generated (e.g., staffing costs, administrative expenses, operator fee, insurance premiums, etc.).

In January 2017, the Ministry of Energy and Mineral Resources issued Regulation No. 10/2017 on Principles of Power Purchase Agreements (Reg. 10). One aspect of Reg. 10 states that the take-or-pay timeframe within a PPA is for a “certain period,” which could be interpreted as a duration for less than the full term of the PPA, perhaps for only the debt-servicing period.

Lenders are assured that the bankability of the project will remain the same, whilst 26 ASIAN POWER

IPPs will have to take the risk on whether PLN will dispatch from their plants after the debt is repaid.

Less flexible capacity charges This change, yet to be definitively applied, will be subject to negotiation between IPPs and PLN. But it could transfer the risk of bearing a residual stranded asset from PLN to investors if it is interpreted narrowly by PLN. We estimate that PLN pays US$3.16 billion/GW in the form of capacity payment for a coal-fired power plant.

This is based on a debt tenor of 20 years with an all-in interest of 5%, a PPA of 25 years and targeted equity return of 12%.

According to RUPTL 2017-2026, a total of 24GW of coal fired power (PLTU) and mine-mouth power (PLTU MT) generation capacity has been allocated to IPPs,8 which will receive the capacity payment. On this basis, in aggregate,

What is the cost?

The difference between the MEMR’s and IEEFA’s projection (188,768MW and 143,315MW respectively) is accounted for by the difference in the extent of electricity sector demand growth over the forecast period (with IEEFA assuming lower economic growth and a greater contribution from energy efficiency savings), whilst the composition differences reflect different views on the rate to which renewable energy potential is realised, with the residual portion (i.e. the difference between total installed capacity and all renewable sources in the IEEFA case) assigned to thermal power.

Specifically on solar, the IEEFA projection (33GW for utility, rooftop and offgrid solar combined) is more ambitious than MEMR’s. IEEFA has referenced both MEMR’s solar projection (9.3GW) as well as IRENA’s projection (47.2GW), and our projection represents a partial deployment of the amount of available space for ground-mounted and rooftop solar PV and the ability of grids to deal with the supply of variable renewable energy. Were PLN to stay on course to develop all the planned thermal power, and assuming IPP invests in 50% of this excess capacity, this would amount to a total of 32,667MW. On the basis that PLN will have to pay US$3.16 billion per GW on capacity charge, and assuming that all of the generation will be coal-based as it represents the cheapest form of thermal power (when cost externalities and capital subsidies are both ignored), costs total to US$103 billion for this capacity.

From “Overpaid and Underutilized: How Capacity Payments to Coal-Fired Power Plants Could Lock Indonesia into a HighCost Electricity Future” by Yulanda Chung, energy finance consultant, Institute for Energy Economics and Financial Analysis

Basic cost of electricity production and average selling price It could transfer the risk of bearing a residual stranded asset from PLN to investors if it is interpreted narrowly by PLN.

Source: IEEFA

Analysis: THAILAND RENEWABLES announced in July 2017 that the Asian Development Bank (ADB) has invested over USD57mn into Thai company B Grimm Power Public Company to develop renewable energy projects across South East Asia.

Thailand’s solar market has been luring Chinese investors

How Thailand plans to beat peers in renewables growth Its renewables industry is increasingly gaining financial support from international institutions and development banks, strengthening project pipeline.

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hailand’s non-hydropower renewables industry has grown rapidly over the last five years, driven by the government’s implementation of a supportive regulatory environment for renewable energy, which includes a feed-in tariff, bidding programmes for renewables capacity and tax incentives. The rationale behind the creation of this favourable investment environment for renewables is the government’s desire to diversify the country’s power mix.

We expect growth to remain robust over the coming decade, with non-hydro renewables capacity increasing by an annual average of 4% between 2017 and 2026, totalling over 9 gigawatts (GW) by the end of our 10-year forecast period.

According to this forecast, non-hydro renewables will account for over 8% of Thailand’s total electricity mix by 2026.

As such, we expect Thailand will be a renewables outperformer in the South East Asia region over the coming decade, in terms of total installed renewables capacity.

In conjunction with the supportive regulatory environment, we expect a number of additional factors to drive growth in renewables capacity in Thailand, particularly in the biomass and solar segments: Domestic energy sources and equipment manufacturing base: Furthermore, the steady build-up of local solar manufacturing capacity that we have witnessed over the last two years 28 ASIAN POWER

Chinese solar manufacturers have increasingly targeted the market, as they look to offset the overcapacity in their domestic market and seek out alternative growth opportunities.

will ensure that local panels are readily available for developers, without the need of shipping. In particular, Chinese solar manufacturers have increasingly targeted the market, as they look to offset the overcapacity in their domestic market and seek out alternative growth opportunities.

Several Chinese solar manufacturers are reportedly looking to set up module production facilities in the Thai solar industry, including Zhongli Talesun Solar, Symbior Solar, Suntech Power, Yingli Green Energy and Trina Solar.

Thailand’s renewables industry is receiving financial assistance from international financial institutions and development banks, which will support the deployment of capacity and strengthen the pipeline of projects. In fact, the wider South East Asia region’s renewables sector is becoming an increasingly common destination for development finance. For example, it was

Headwinds to progress Ongoing environmental and social opposition facing new coal-fired power projects in the country is creating opportunities for growth in Thailand’s renewable energy sector, as developers shift their business strategies away from coal. Coal-fired power is one of the most competitive sources of energy for Thailand, partly due to the sizeable amounts of domestic coal reserves but also due to the widespread availability of coal across Asia; however, local opposition to the development of coal power plants continues to hinder projects.

A pertinent example is the 800MW Krabi coal power plant, which is facing strong protests from the local population and delaying Electricity Generating Authority of Thailand’s (EGAT) bidding process for the plant. As such, EGAT is reportedly going to focus more heavily on renewable energy in its long-term strategy to account for the issues facing its coal capacity portfolio.

We do highlight that despite this positive investment climate, the country’s weakening political risk outlook presents a downside risk to our forecasts. In fact, our Country Risk team has downgraded BMI’s long-term political risk score for Thailand to reflect the combination of increasingly strict control over the country’s media and use of lèse-majesté laws, the potential for a power struggle to emerge between the royal palace and the military generals and continued delays in the timetable for the next election.

Since May 2014, when the military junt assumed power in a coup, elections have consistently been delayed, first to 2016, then 2017 and most recently, to 2018. This has the potential to cloud the investment environment for the renewables sector and weigh on the success of future renewables tenders. From BMI Research

Growth in non-hydro renewables to outperform

Source: BMI Research

OPINION

ERIC HO

Solar power development in Southeast Asia

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s renewables markets mature, renewables investors are looking to new markets for their next source of growth. Solar photovoltaic (PV) generation has great potential and has been the most attractive renewable energy source amongst the Southeast Asian nations.

Annual solar radiation levels in the region ranges from 1,460 to 1,900 kWh/m2/per year. Growth prospects are tremendous in Southeast Asia with a combination of fast-growing economies with resulting investment in manufacturing, transportation and energy infrastructure, rapid growth in electricity demand and good solar resource.

Singapore’s appeal In 2015, installed capacity of solar power in Singapore was almost 60MWp as it doubled at the end of 2016 to 126MWp. Singapore plans to install 350MWp by 2020, increasing the generation threshold to 600MWac based on the largest

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tility-scale solar PV continues to grow at a breakneck pace, driven by continually falling prices, including 19.7 USD/MWh in the recent Mexico auction and 17.9 USD/ MWh in the recent Saudi Arabia auction – price levels that were nearly inconceivable even just a few years ago. However, while utility-scale solar PV’s rapid ascent is a positive for the environment and electricity consumers, the technology can represent a challenge for grid operators due to its intermittent nature and concentrated output profile. Some of the challenges that utility-scale solar PV can present include: • Requirementforadditional“back-up”capacity elsewhere in the system • Curtailment of solar (or other plants) • Negative power prices, in wholesale markets • Local grid voltage issues • Increased ramping of other, dispatchable generators These challenges can be lessened, if not completely mitigated, by adding support systems to help balance the grid network activities. One solution is adding energy storage – for example, batteries – to the electricity system.

Battery storage is a well-documented, if still nascent, method for alleviating many of these challenges (among other services that energy storage can provide). Pumped storage is a proven and effective energy storage technology, but good sites can be difficult to find, and projects require many years to plan, develop, and construct.

30 ASIAN POWER

available reserve unit in the system. The city-state has made significant investments in research and innovation around energy sustainability. In 2016, Singapore announced more than US$ 700 million of new public-sector R&D funding for the next five years for Urban Solutions and Sustainability.

This funding is expected to strengthen Singapore’s innovation capacity in areas such as clean energy, smart grids and energy storage.

The potential for urban solar plants and floating solar on its precious reservoirs are presently being tested. A project to accommodate more intermittent sources in energy storage for the efficient consumption of energy is also being studied in a microgrid system. Singapore expects to fully liberalize its electricity market in 2018 allowing all consumers including households to choose their electricity suppliers.

Instead of direct subsidies to spur solar PV installation, Singapore offers competitive, marketdriven tariffs, together with measured policies to

promote a competitive solar market. Consumers with embedded intermittent generation sources are allowed to receive ‘net-settlement’ of the energy component i.e. consumers are either charged for their net consumption or paid the energy price for their net generation within each trading period.

The average energy prices in June 2017 was about US$ 61per MWh. Net metering scheme in Malaysia Malaysia’s overarching policy framework for clean energy development has provided a strong foundation for significant deployment of renewable energy and energy efficiency. It adopted a renewable energy feed-in tariff (FiT) mechanism under the country’s 2011 Renewable Energy Act and revised the solar FiT with a degression approach in 2014 in response to falling panel price and changing market conditions. The net metering scheme (NEM) was introduced in 2016 with 500MW NEM targeted in 2020 in Peninsular Malaysia and Sabah. With the NEM in place, consumers can generate their own electricity with one meter installed and sell excess power to the national utilities. The country presently has 338MW solar PV capacity installed and targets 1,356MW by 2020.

Under its FiT scheme, the installed capacity increased modestly by about 30% each year in 2015 and 2016, to 335MW at the end of 2016. Basic FiT in 2017 for installation below 72 kW is 52.18 sen/ kWh (12.17 US¢/kWh) with a potential bonus FiT of up to 34.55 sen/kWh (8.06 US¢/kWh).

Matthew Heling Utility-scale solar+storage in Southeast Asia

Although grid planners and operators in Southeast Asia acknowledge that battery storage can be valuable, many governments and electricity systems may not have the financial resources, technical capabilities, and/or market and regulatory mechanisms to support or encourage stand-alone battery deployment. Hence, other approaches are gaining attention and being considered to alleviate the challenges that come with increased use of intermittent renewables.

Emergence of “Solar+Storage” One approach to doing this is to co-locate energy storage (e.g., batteries) with a utility-scale solar PV (or wind) plant – i.e., hybrid “Solar+Storage” plants, in order to enable the combined plant to operate more like a conventional plant. Adding storage to solar PV has multiple benefits, including: • Reduces short-term intermittency. By storing solar output when the sun is shining, a battery can discharge during short-term solar output

fluctuations (e.g., when a cloud passes over) to enable the combined plant to maintain stable output.

• Reduces longer-term intermittency.

Depending on the size of the battery, the battery can also enable the combined plant to maintain output across longer time frames – for example, a series of cloudy days.

• Shifts output to more-valuable time. Peak system loads in many regions occur in the after the sun has weakened or set, when offices and industrial facilities still consume power, but residential evening loads are beginning to increase. A battery can enable a Solar+Storage plant to shift some portion of the combined plant’s output to later in the day, when the energy may be more valuable.

• Reduces need for balancing elsewhere in the electricity system. In general, the more reliable the output of a solar plant, the fewer the balancing

OPINION

AgostinhoGarcia

O

Water and PV plants: Why we may not be able to have both

ne of the major issues in solar power that is usually overlooked and is so fundamental to our life is water. Concentrated solar power (CSP) uses a whopping amount of water per MWh produced, totally driven by the need to cool the steam out of the turbine, key to achieving a good turbine efficiency and thus be able to generate as much electricity as possible. Key to the discussion in CSP is that these plants use the same amount as any conventional thermal power plant, but usually where we locate a coal power plant we may not actually locate a CSP plant and vice versa.

Usually places with abundant water resources are not rich in Direct Normal Irradiation, which is the solar irradiation component relevant to CSP plants. There may be a single exception which is near the coast where water can be desalinated with the extra heat dissipated from the turbine.

Such applications though quite common in CSP analysis and reports are somewhat rare if not absent. The main issue remains that in a water starved area CSP is not feasible unless air cooling

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n the surface the Philippine government might look like a genius with its solar Feedin-Tariff program: It originally allocated 50MW for the FIT program, later increased it to 500MW due to strong interest and ended up with over 900MW of installed solar generation at an FIT that is about half the original rate. On top of that the solar capacity has been running for almost 2 years and the government has reportedly only paid for 4 months at the FIT level. But in the end are we really seeing cloudy skies and dark days for investors and the Philippines?

The renewable Energy Act in the Philippines was passed in 2008 and allocated 50 MW for solar at an initial FIT rate of PHP 17.95/kwh (USD 0.40).

Although the exact rules for the FIT system had yet to be determined, this rate attracted many developers with over 4000 MW of proposed solar projects eventually approved by the Department of Energy by 2016. Due to the strong interest the FIT allocation for solar FIT was later increased to 500 MW. Financing race While developers were busy getting permits, approvals and land leases for their projects, the Implementing Rules and Regulations for FIT were being developed. As the years went by and developers waited, the capital cost of solar continued to decrease prompting the government to reset the FIT rates. Eventually the FIT rates were set at 9.68 PHP/kwh (USD 0.19) for the first 50MW and 8.69 PHP/kwh (USD 0.17) for the next 32 ASIAN POWER

is used with impact in the efficiency of the plant, but in good DNI locations that can be mitigated by adding more solar field. The other water usage is to wash the mirrors and that requires as much as per m2 of module area in the PV plants.

In the name of solar rush In the PV plants the water needs are resumed to washing the PV modules and that may require between 1 and 3 liters per m2. Same would apply to the CSP plants, as mentioned. The next point is how often do we clean. If the rule of one cleaning per month is used each MWp of PV modules requires: • 75000 to 225000 liters per year for modules of 16% efficiency • 80000 to 240000 liters per year for modules of 15% effciency For a comparison we need 100 to 200 liters per person per day in India.

For a CSP plant the same analysis would yield 60000 to 180000 liters per MW of installed

capacity (Considering 30% efficient turbines on a Mwthermal of solar field considering 600 Wh/ m2 for the solar field). These numbers mean that: • 1 MWp of PV modules = 200 to 650 liters per day = 1 to 3 persons per day • 1 MW of CSP = 140 to 400 liters per day = 1 to 2 persons per day The target of 100 GW of solar power in India, using mostly PV, means: additionally 115000 to 345000 persons per day. This means that the population in the desert areas of India where most likely the solar plants will be located will have no water or very much depleted available water resources. Now these figures double with the current practice of doing 2 cleanings per day.

We could be talking about 1 million people being impacted (rural population use less water).

The current installed PV capacity in the world is around 300 GW, so we have potentially already 3 million people deprived of water or impacted by solar power plants. And this is just the beginning, we need probably several tenfold to be able to power the world. This is not possible to continue and yes efficiencies must come slightly down, reducing the number of cleanings, decrease soiling, use hybrid and dry cleaning solutions that use much less water per m2. Solar power cannot be a competitor for water, otherwise it will not be sustainable in the long run. Solar policies must take into consideration this issue and the impact on their solar rich areas: northern part of Chile, desert areas of India in Rajasthan, Gujarat and Andrah Pradesh.

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Joel Laykin

Solar in the Philippines: A bright future or dark skies for investors?

450MW. In May 2015 the final rules for solar FIT were announced where the first 500MW to commence commercial operation would get the FIT but only if they were operational by March 15, 2016 – only 10 months away.

So the race was on. Who could get the financing in place and construction completed and get across the finish line by the deadline? One problem especially for smaller investors, was securing financing when there was no certainty of a power offtake agreement while well-funded developers could take the risk and build with all equity.

In the end, 900MW of solar generation got built but many developers were left with shovel ready projects that they had spent millions of dollars to develop but couldn’t get into construction.

Although the DOE endorsed projects totaling 526 MW for FIT, there were questions from the 400 MW “losers” about how this was determined. The rules were that the full declared capacity of a plant had to pass the commissioning test by the deadline or the full capacity was excluded. There could

be no partial approval of less than the declared capacity of the project. The DOE appointed an Independent Investigation Committee to determine how projects were selected and to determine if a third FIT should be enacted that would cover the additional 400MW that was built.

The report was to be completed by the end of 2016.

Then a December 2017 deadline was set. To date the report has not been published.

So today there are a lot of unanswered questions.

When will the Independent Report come out? If its findings propose projects for FIT different than those originally endorsed, what will be the response of the industry? Will legal action be taken? Will the government pay the FIT if there is a question about who qualified and the answer is tied up in litigation?

The Independent Power Producers Forum (IPPF) is an international NGO composed of senior executives and decision-makers heading up firms with energy and power business commitments across Asia, Europe, Africa and the Americas.

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