Power Insider Asia Vol 4

A S I A’ S L E A D I N G P O W E R R E P O R T

VOLUME 4 ISSUE 3

POWERING UP

MALAYSIA’S FUTURE

A DISTANT DREAM? THE ASEAN POWER GRID

MONGOLIA TURNING WIND TO PROFIT

FROST & SULLIVAN

EXPONENTIAL GROW TH AWA I T S E V C H A R G I N G

SPECIAL REPORT

Editors Note Welcome to another great edition of pimagazine Asia. This month we take a look at Malaysia. In the eighth Malaysian plan, renewable energy was the fifth fuel in the then new ‘five fuel’ strategy for their energy supply mix.

This is now sometime ago and the regional governments in Malaysia are working hard to ensure quotas and demands are met. We take a look at what has been happening so far, what’s to come and some challenges being faced. We’ve also taken sometime to put together a definitive guide to understanding business culture in the region.

Many a ‘faux pas’ are made when inexperienced business people believe they know what’s correct when often they do not. Doing business in another country demands respect and also an understanding of what is acceptable or not. Take a look and see if anything rings any bells and please put this into action. Even feel free to pass this on to colleagues to see if it helps them also.

As we go to print, we are in preparation for one of Asia’s largest shows, Powergen Asia. We are certainly looking forward to having a lot of feet

on the ground to catch up with clients and colleagues, there is even talk of our MD attending, so we will be in force. We are certainly looking forward to catching up with everyone and talking shop about the markets and developments.

Remember, if you have news releases, stories, inside information, feel free to pass this on to us in confidence so we can use our vast media resources to inform the market of particular developments that only benefit the industry. If your not already following us, make sure you add @pimagazineasia to your Twitter feed, we make sure all of our breaking news and stories go out on Twitter as well as our usual mediums.

Well, I sincerely hope that you enjoy this edition, as usual we feel we have provided something for everyone in this edition, we look forward to your thoughts, views and comments.

Thanks for reading

Charles Fox, Editor

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Power Insider Media Limited, The Eco Centre, 28 Burley Grove, Mangotsfield, Bristol, UK, BS16 5QA T/F: +44 (0) 1179 148429 M: +44 (0) 7778 946927 E: info@power-insider.com W: www.pimagazine-asia.com Power Insider media limited are the publishers of pimagazine asia. Pimagazine asia is published bi monthly and distributed to senior decision makers throughout Asia and the Pacific. The publishers do not sponsor or otherwise support any substance or service advertised in this publication; nor is the publisher responsible for the accuracy of any statement in this publication.

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Contents

Inside This Issue

16

08

26

36

Regulars 06

News The latest headlines

08

Country Focus Energy in Malaysia

20

Malaysia Solar Power

36

Hydropower Caution on its Impacts

39

Malaysia Doing Business in Malaysia

46

Upcoming Events

04 | POWER INSIDER VOLUME 4 ISSUE 3

Features 16

Frost & Sullivan Exponential Growth Awaits EV Charging

26

ASEAN Power Grid A Distant Dream?

32

Mongolia Turning wind to profit in Mongolia

42

Frost & Sullivan Utility-level Energy Storage?

32

Regulars

China Hydroelectric Corporation Announces Completion of Merger China Hydroelectric Corporation (“China Hydroelectric” or the “Company”), an owner, developer and operator of small hydroelectric power projects in the People’s Republic of China, today announced the completion of its merger (the “Merger”) with CPT Wyndham Sub Ltd. (“Merger Sub”), a wholly-owned subsidiary of CPT Wyndham Holdings Ltd. (“Parent”), pursuant to the agreement and plan of merger (the “Merger Agreement”), dated January 13, 2014, among the Company, Parent and Merger Sub. As a result of the Merger, the Company became a direct wholly owned subsidiary of Parent.

Thailand

News from around Asia

SPCG and KYOCERA Complete 35 Utility-Scale Solar Farms in Thailand, Totaling 257 Megawatts SPCG Public Company Limited and Kyocera Corporation today announced the full operational launch of one of Southeast Asia’s largest solar power projects. Since 2010, 35 “solar farms” totaling approximately 257 megawatts (MW) have been constructed under the project, and connected to the utility grid in Northeastern Thailand. A ceremony held earlier this month in Surin Province commemorated the launch of the installations.

Taiwan Taipower generators shut down in wake of incident Four sets of Taiwan Power Company’s (Taipower) generators fed with natural gas were shut down on the night of Aug. 1 as the company coordinated with Kaohsiung City government in rescue efforts and underground pipeline repair.

The four generators, fed with liquid natural gas, are located in Kaohsiung and supply utilities to the city.

The shutdown will lower the island’s electricity output by 1100-megawatts, about 2.7 percent of the total capacity.

The past 2 months have been interesting times in Asia. As per usual, the region has been faced with more rolling blackouts highlighting the desperate for energy throughout.

Southeast Asia has a high gross domestic product, escalating population and rural electrification drives, its very energy hungry.

The region is energy rich from hydro, oil, gas and renewables; however, its electricity grids are unable to handle additional loads.

To better meet the soaring demand for electricity, utilities are investing in large-scale transmission and distribution (T&D) infrastructure development and thereby, giving a huge boost to the high voltage (HV) transmission market.

Electric utilities in Indonesia, Vietnam and Myanmar have already laid out extensive power generation plans. As you will see with this months news stories, the market is beset by project delays due to financial constraints.

Keep up to date with our news online; www.pimagazine-asia.com

06 | POWER INSIDER VOLUME 4 ISSUE 3

News Desk

China

India GE invests in three wind projects in India GE Energy Financial Services, part of conglomerate GE, has undertaken investments in three wind energy projects in India, the company said on Monday. These wind farms, being constructed by Atria Power, have a combined capacity of 126 MW. Financial details were not disclosed.

GE Energy Financial Services said it has “invested equity in three Atria Power wind projects under construction in India, supporting GE’s commitment to invest USD 1 billion annually in renewable energy projects worldwide”.

Philippines Vietnam

Singapore

Vietnam rushes to import coal to feed thermal power plants Dinh Quang Tri, Deputy General Director of the Electricity of Vietnam (EVN), noted that enterprises are importing coal themselves to run thermal power plants instead of relying on the Vietnam Coal and Mineral Industries Group (Vinacomin), the only domestic coal supplier. According to Tri, it was very difficult to import coal two to three years ago, when the world market was hot because of high demand from China. However, things are different now.

Siemens & Rolls Royce gas turbine deal!

The deal by Siemens to buy Rolls-Royce’s gas turbine and compressor business for $1.32bn is a win-win for both parties, according to an analyst with research firm GlobalData. Mamta Saharan, GlobalData’s senior power analyst, said that a joint portfolio “will allow Siemens to pursue significant growth opportunities in the decentralized power generation and oil and gas sectors, while Rolls-Royce will be able to focus on the more profitable branches of its business”

Nv Vogt secures solar power plant finance of $29 Million for the Philippines Armstrong Asset Management (AAM; Singapore, Malaysia) has committed to provide USD 29 million to fund the construction of a pipeline of bilateral solar photovoltaic (PV) projects in the Philippines being developed by the development company, nv vogt (Singapore). The first project is a 6.25 MW ground-mounted and gridconnected solar PV plant in South Cotabato in the southern region of Mindanao, with construction scheduled to begin construction in August 2014, and expected to commence commercial operations by December this year (2014).

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Regulars

Country Focus

Malaysia

is the second largest oil and natural gas producer in Southeast Asia, the second largest exporter of liquefied natural gas globally, and is strategically located amid important routes for seaborne energy trade.

Malaysia’s energy industry is a critical sector of growth for the entire economy and makes up about 20 percent of the total gross domestic product. New tax and investment incentives, starting in 2010, aim to promote oil and natural gas exploration and development.

These incentives are part of the country’s economic transformation program to leverage its resources and location to be one of Asia’s top energy

8 | POWER INSIDER VOLUME 4 ISSUE 2 3

players by 2020. Another key pillar in Malaysia’s energy strategy is to become a regional oil storage, trading, and development hub that will attract technical expertise and downstream services able to compete within Asia.

Malaysia, located within Southeast Asia, has two distinct parts, the western half that contains the

Peninsular Malaysia and the eastern half that includes the states of Sarawak and Sabah, which share the island of Borneo with Indonesia and Brunei. The country’s western coast runs alongside the Strait of Malacca, an important route for the seaborne trade that links the Indian and Pacific Oceans. Malaysia’s position in the South China Sea makes it a party to various disputes among neighboring countries over

competing claimsto the sea’s resources. While it has bilaterally resolved competing claims with Vietnam, Brunei, and Thailand, an area of the Celebes basin remains in dispute with Indonesia. Potential territorial disputes with China, Vietnam, and the Philippines could emerge as exploration initiatives move into the deep water areas of the South China Sea. Malaysia is unveiling several major upstream and downstream oil and natural gas projects in the next few years, with some coming online in the

next few months, as part of the country’s strategy to enhance output from existing oil and natural gas fields and to advance exploration in deep water areas. The incumbent and long-ruling Barisan Nasional party (BNP) won the May 2013 election and will retain governing power. The BNP has a track record of promoting hydrocarbon investment and intends to continue boosting oil and natural gas production and developing energy infrastructure in the country.

Oil and natural gas are the main primary

energy sources consumed in Malaysia, with shares of 39 percent and 37 percent, respectively in 2011.

About 18 percent of the country’s energy consumption is met by coal. Biomass and waste make up another 4 percent, and hydropower contributes 2 percent to total consumption. Malaysia’s heavy reliance on oil and natural gas to sustain its economic growth is causing the government to emphasize fuel diversification through coal imports and to promote investments in renewable energy.

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Regulars - Country Focus

Country Focus Natural Gas – 37% Oil – 39% Coal – 18% Hydropower – 2% Biomass & Waste – 4%

40% 35% 30% 25% 20% 15%

“Oil and natural gas are the main primary energy sources consumed in Malaysia, with shares of 39 percent and 37 percent, respectively in 2011”

10%

LNG trade - Malaysia remains a key exporter of LNG, second largest

The Bintulu LNG complex on Sarawak is the main hub for Malaysia’s natural gas industry. Petronas owns majority interests in Bintulu’s three LNG processing plants (Dua, Tiga, and Satu), which are supplied by the country’s offshore natural gas fields. The Bintulu facility is one of the largest LNG complexes in the world, with eight production trains and a total liquefaction capacity of 1.2 Tcf/y following the debottlenecking completed at the end of 2010 at the Dua plant. Japanese financing has been critical to the development of Malaysia’s LNG facilities.

The Bintulu complex also hosts Shell’s GTL project, which converts natural gas into nearly 15,000 bbl/d of liquids.

Petronas is currently developing a ninth train at Bintulu LNG that will have bi-directional capabilities for both liquefaction and regasification processing. The NOC anticipates the additional 175 Bcf/y capacity will be online by 2016. The NOC also plans a mini-expansion of Bintulu LNG, providing an extra 32 Bcf/y of natural gas in 2014.

LNG exports Malaysia was the second largest global LNG exporter after Qatar in 2012. The country shipped over 1.1 Tcf/y of LNG and contributed 10 percent of LNG exports worldwide according to FACTS Global Energy. The LNG consumers are

Petronas proposed two floating liquefaction terminals offshore Sarawak and Sabah to capture greater economic value from the country’s smaller, more remote gas fields. These plants would have flexibility to serve the export or domestic markets. The Petronas FLNG project, located off Sarawak near the Bintulu LNG complex, will have a capacity of 58 Bcf/y. The final investment decision (FID) was made in 2012, and the project is scheduled to commence by the end of 2015. Rotan FLNG, the

5% 0

Natural gas - Malaysia was the world’s second largest exporter

of liquefied natural gas after Qatar in 2012.

According to the OGJ, Malaysia had 83 trillion cubic feet (Tcf ) of proven natural gas reserves as of January 2013, and it was the third largest natural gas reserves holder in the Asia-Pacific region. Over half of the country’s natural gas reserves are in its eastern areas, predominantly offshore Sarawak. Most of Malaysia’s gas reserves are associated with oil basins, although Sarawak and Sabah have an increasing amount of non-associated gas reserves that offset some of the declines

from mature oil and gas basins offshore Peninsular Malaysia.

Sector organization As in the oil sector, Malaysia’s state-owned Petronas dominates the natural gas sector. The company has a monopoly on all upstream natural gas developments, and it also plays a leading role in downstream activities and the LNG trade. Most natural gas production comes from PSAs operated by foreign companies in conjunction with Petronas.

Shell remains the largest gas producer in Malaysia. The Malaysia International Shipping Corporation (MISC), which is 63-percent owned by Petronas, owns and operates ships for transporting hydrocarbons and chemicals around the world. The company has 27 LNG tankers and is the second-largest LNG fleet operator in the world by fleet size.

The company also owns and charters 80 petroleum tankers and 28 ships for chemical transport.

in the world after Qatar in 2012; however, the limited natural gas supplies and rising demand in the western part of the country triggered investment in regasification terminals, the first which commenced in 2013.

10 | POWER INSIDER VOLUME 4 ISSUE 3

Japan (63 percent), South Korea (17 percent), Taiwan (12 percent), and China (8 percent), all holding medium- or longterm supply contracts with Malaysia.

Malaysia also has sold LNG cargoes to Petronas LNG Limited, a trading company, which ships spot LNG cargoes

to many locations around the world.

Despite growing demand for natural gas at home, Petronas is keen to maintain its long-term export contracts as they currently capture a higher price than gas sold domestically where the gas prices are regulated and subsidized.

second proposed offshore LNG terminal, will monetize gas production from the Rotan field northeast of Sabah in the South China Sea. The terminal has a design capacity of 72 Bcf/y and could serve some domestic demand in Sabah by re-processing at the proposed Lahad Datu regasfication plant. The project partners, Petronas (50 percent), MISC (25 percent), and Murphy Oil (25 percent), target a final investment decision for 2014 and commissioning by 2017.

Altogether, proposed liquefaction projects and expansions are likely to add about 337 Bcf/y to Malaysia’s export capacity in the next few years.

LNG imports Although Malaysia is one of the world’s largest LNG exporters, the country currently experiences a geographic disparity of natural gas supply and

demand among its regions. Natural gas demand is primarily from the power and industrial sectors in Peninsular Malaysia, while gas supply is in the eastern states of Sarawak and Sabah on Borneo Island.

In order to meet the gas needs in Peninsular Malaysia, Petronas is developing various regasification terminals to secure supply from the global gas market.

Petronas is the leading developer of several regasification projects slated to

start operations by 2017. Malaysia’s first regasification terminal, located near Malacca with a capacity of 182 Bcf/y, began operating in August 2013. In addition, Petronas Gas is set to invest $2.6 billion over the next five years for the construction of two regasification terminals in Lahad Datu in Sabah and one of the terminals in Johor in Peninsular Malaysia. Lahad Datu is the only project located in the eastern region of Sabah. It is a smaller terminal designed to serve primarily the proposed 300 MW power generator at Lahad Datu. Petronas’ terminal in Johor is part of the NOC’s RAPID project that will include regasification and LNG storage and serve as a strategic oil and gas trading hub for the Asian region. A second terminal in Johor is proposed by a consortium (Royal Vopak, Dialogue

Group, and the State Government of Johor) with a similar concept to be the first independent LNG trading facility in Asia, allowing users to store and trade gas. Petronas signed several agreements to supply its planned regasification capacity for the next decade. The NOC has long-term agreements with Qatargas and Gladstone LNG (Australia) and medium-term agreements with Pluto LNG (Australia), Snohvit LNG (Norway), and GDF Suez (global).

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Country Focus

Malaysia’s existing and planned regasification terminals Regasification projects

Owners

Capacity (Bcf/y)

Status

Lekas LNG/Malacca

Petronas

184

Commenced operations May 2013

Johor LNG

Petronas

184

2017

Pengerang LNG

Dialogue Group (Malaysia) 46%, Royal Vopak (Netherlands) 44%, Johor state government 10%

Not available

Final Investment Decision anticipated 2013 Phase 1 - 2016 Phase 2 - 2018

Lumut

Petronas

Not available

Not available

Lahad Datu LNG

Petronas

37

2015

Pahang LNG

Pemandu of Malaysia

Not available

Not available

Electricity - Malaysia’s electricity demand, mostly met by natural gas

and to a lesser extent coal, continues to expand rapidly; therefore, the country is seeking to add capacity to avoid future power shortages.

Total installed generation capacity in 2012 was about 26.4 gigawatts (GW), mostly located in Peninsular Malaysia.

In order to meet the country’s growing demand, the government anticipates an additional 10.8 GW of new generation will come online by 2020 as 7.7 GW of existing capacity is retired. The government’s efforts are centered on meeting increasing electricity demand through a more balanced portfolio of electric generation using coal, renewable sources, and to a lesser extent natural gas, in the next decade. Malaysia’s policy to reduce power consumption also entails reforming electricity prices to be more reflective of market values and promoting demand-side conservation measures.

Fossil fuels, primarily coal and natural gas, make up nearly 90 percent of Malaysia’s electric generation capacity.

Natural gas accounted for about 51 percent of the country’s total installed

capacity in 2012, according to PFC Energy and about 43 percent of the electricity generation in 2011, according to TNB. Many of these gas plants are located in Peninsular Malaysia, and some have dual-fuel capabilities allowing for greater flexibility in fuel type. Natural gas shortages in Peninsular Malaysia in recent years caused by production declines in the state resulted in power outages and greater use of more expensive diesel-fired and coal-fired generation. Peninsular Malaysia intends to import LNG as well as diversify its power share with other fuels such as coal and hydroelectricity to alleviate gas and power shortages.

TNB is constructing a 1,071-MW combined-cycle gas turbine plant in Penang, Peninsular Malaysia to be completed in 2015. Also, Sabah is building two 300-MW gas-fired plants including the Kimanis Power Plant, which will purchase gas from the Sabah

oil and gas terminal by 2014. The Lahad Datu power plant is being developed to use gas from the adjacent regasification terminal project. Although diesel accounts for a very small portion of the capacity and generation, it has played a critical role as an alternative fuel to alleviate some power shortages when other fuels are in short supply. Diesel accounted for 6 percent of the electricity generation in 2011.

Coal, which accounted for 35 percent of total installed capacity in 2012 and 45 percent of electricity generation in 2011, has become more competitive with gas in terms of price and has gained share in power generation in Peninsula Malaysia in the past few years. There are plans to increase coal-fired capacity in Peninsular Malaysia and Sarawak by 2020. Malaysia signed construction contracts for the country’s first use of supercritical coal technology for two power plants located at Manjung and Tanjung Bin on

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Regulars - Country Focus Peninsular Malaysia. The plants are scheduled to add 2 GW of coal-fired capacity by 2016. Also, Malaysia issued bids for companies to build another 3 GW of coal-fired capacity in two projects on Peninsular Malaysia by 2019. Sarawak intends to use the country’s limited coal production, located on Borneo Island, and coal imports, for five new coal plants with a total capacity of 2.4 GW. The first plant is scheduled to commence operations in 2016. These plants are designed to fill some of the state’s power supply gaps as Sarawak expands

the presence of heavy, energyintensive industries.

Malaysia produced only 3 million short tons of coal in 2011, about 12 percent of its coal needs, and is limited in domestic coal reserves. Malaysia’s coal imports, mainly from Indonesia, have doubled in the last five years to about 24 million short tons to fuel greater coal-fired generation.nies to build another 3 GW of coal-fired capacity in two projects on Peninsular Malaysia by 2019. Sarawak intends to use the country’s limited coal production, located on Borneo Island,

and coal imports, for five new coal plants with a total capacity of 2.4 GW. The first plant is scheduled to commence operations in 2016. These plants are designed to fill some of the state’s power supply gaps as Sarawak expands the presence of heavy, energy-intensive industries. Malaysia produced only 3 million short tons of coal in 2011, about 12 percent of its coal needs, and is limited in domestic coal reserves.

Malaysia’s coal imports, mainly from Indonesia, have doubled in the last five years to about 24 million short tons to fuel greater coal-fired generation.

Natural Gas – 51% Coal – 35% Hydro – 10% Diesel – 3% Other Renewables – 1%

Hydroelectric capacity, which currently makes up about 10 percent of total electric capacity and 6 percent of electricity generation in 2011 in Malaysia, is undergoing significant expansion. Most of the hydro facilities are small or medium in size and located on Peninsular Malaysia.

However, Sarawak has the most hydroelectric potential of all the regions and envisions tapping into its hydroelectric reserves for new power plants and energy-intensive industry projects being developed in Sarawak as part of the government’s Sarawak Corridor of Renewable Energy (Score) program. In 2012, hydroelectric capacity was about 35 percent of Sarawak’s power capacity and is anticipated to expand to an 80-percent

14 | POWER INSIDER VOLUME 4 ISSUE 3

share by 2020 according to the government. Sarawak Hidro, a subsidiary of the Ministry of Finance, developed the massive 2,400-MW Bakun Hydroelectric plant in Sarawak. The first 300-MW unit came online in mid-2011, and the other seven turbines were brought online a year later. The 944 MW Murum Dam is nearly complete and is expected to be online in 2014. The Sarawak government plans to construct another nine hydro dams with a total generation capacity of 4 GW by 2020. According to the Sarawak government, total potential hydroelectric capacity in the state is 20 GW. Another key renewable fuel used to generate electricity is biomass. As part of its efforts to reduce carbon dioxide emissions by 40 percent by 2020 compared to its 2005 level and diversify

its electricity fuel mix, Malaysia encourages investment in other types of renewable energy projects. The government’s goal is that renewable sources, excluding large hydroelectric plants, will account for 5.5 percent of electricity capacity by 2015 compared to 1 percent in 2012. As part of this endeavor, Malaysia enacted feed-in tariffs for solar, biomass, biogas, and mini-hydro projects. Malaysia envisions capacity to grow from 219 MW in 2011 to 2,080 MW in 2020.

Malaysia has also discussed building two nuclear power facilities by 2021, although this project has encountered delays resulting from industry reluctance following Japan’s Fukushima nuclear disaster in 2011.

Feature

EV Charging

Frost & Sullivan:

Exponential Growth Awaits EV Charging Infrastructure Market in Asia Pacific by 2020 Strong Government Incentives and Technological Advancements to propel growth

By Avanthika Satheesh, Research Analyst, Asia Pacific Energy Practice

Asia-Pacific: The emerging EV Market The Asia Pacific (APAC) region is fast catching up with the West in their effort to cut back carbon emissions.

As part of the ‘clean mobility’ move, electrical vehicles are being adopted in several countries in the APAC region.

New analysis from Frost & Sullivan, In 2012, around 120,000 electric and hybrid electric vehicles were sold in the global market and the APAC region accounted for 17.0 percent of this market. Japan was the major contributor in the APAC region, while countries such as South Korea, Taiwan, Singapore and Malaysia, were still in the EV test-bed stage.

Australia being a developed nation is also at a nascent stage of EV adoption due to lack of charging

16 | POWER INSIDER VOLUME 4 ISSUE 3

infrastucture. Less than 100 Electric vehicles were sold in Australia in 2012 with consumers still having reservations related to range anxiety.

Lack of government incentives for consumers to buy electric vehicle along with lesser EV model options have led to low EV sales in Australia.

Currently, the market is in the nascent stage in most of the countries in the APAC region. Japan is the only country to have an established infrastructure for EVs. Governments of South Korea, Taiwan, Singapore and Malaysia have launched EV test-beds in these countries to test feasibility of EVs and their impact on the power grid. High cost of EVs and lack of established charging network has hindered EV acceptance among customers in these countries. However, the EV manufacturers are betting big on the industry’s future as the Li-ion battery

cost, which constitutes 70 percent of the EV cost, is expected to plummet by 50.0 percent in 5-7 years time.

EV Charger market Set to Boom by 2020 EV Charging infrastructure market is directly affected by the EV market.

For every EV purchased, there has to be one or more chargers sold in the market. The charging station installation base is forecasted to cross 13,80,000 units in the APAC region by 2020. Additional factors that would drive growth includes; - Government policies that support EVs and chargers - Availability of various charging options to customers - Low running cost of electric vehicles when compared to petrol engine cars.

The EV test-bed projects encourages public participation which in turn will supports EV charger market. It has been observed that Japan and South Korean government’s EV policies and incentives are the strongest amongst the countries of the region. To encourage installation of DC chargers in the country, the Japanese government has announced 50.0 percent subsidy on the price of the charger.

EV Charger Demand Trends Level 1 and Level 2 chargers are popular as residential chargers in the APAC region. Level 1 charger is priced between US$ 500 to US$1000, while a level 2 charger costs between US$ 2,500 and US$5,000. DC chargers have the shortest charging time of 20-30 minutes for a full battery charge, but are tha costliest of the lot. They are priced between US$ 20,000 and US$25,000, excluding government incentives and installation costs.

The latest addition to the charging station family are the inductive or ‘wireless’ chargers which are known to charge an EV through the principle of electro-magnetic induction. It is a safer mode of charging as it doesn’t involve any electrical contacts with the vehicle. In the Global market, Delphi Corporation is a pioneer in this technology. In Japan, IHI corporation and Witricity have partnered to develop

wireless chargers. Korea Automotive Institue of Science and technology (KAIST) have developed a wireless charger. But these version are yet commercialised in the market.

In the APAC region, networked EV chargers are commonly used.

EV charging stations integrated with software backend system are called networked stations. The networked charging stations form a cloud based database where the customer details and his vehicle charging statistics are stored. It also ensures remote monitoring and controlling of charging station, card payment, credit monitoring etc.

Level 2 Chargers to Secure Focus by 2020 In 2012, Level 1 chargers constituted 74.7 percent of the total installation base in the APAC region. In Japan, most of the residential chargers are level 1 type, which is the reason for its high share. By 2020, number of installations of Level 2 chargers are expected to grow to 38.3 percent. In Australia and Southeast Asia, level 2 chargers are used for residential charging. The increase in EV adoption in these countries relates to its rise in market share by 2020.

Source: Frost & Sullivan analysis.

Different business models are being tested for its feasibility. In Australia

and Singapore, ‘charging as a service’ is becoming popular.Companies such as Better Place, CO2 Smart, ChargePoint are the key participants in the Australian market, while Greenlots plays a major role in Singapore market.

‘V2H’ Chargers targetted

by Japanese Customers Smart grid projects in countries such as South Korea, Australia and Singapore will be integrating networked charging stations to establish ‘smart charging’ of EVs by 2020. Smart charging includes additional features such as off-peak charging, prioritizing renewable energy over conventional energy, vehicle to grid energy transfer at the time of peak-load etc. Renewable energy powered charging stations have been installed in Japan and Australia.

“Overall, Southeast Asia dominates the market as countries such as Indonesia and Malaysia are highly active in LNG exploration and production activities”

Feature - EV Charging Australia’s known wind resources, and Japan’s massive solar power investments opens up a bright future for renewable powered charging stations. In Japan, energy crisis has prompted EV charger researchers to study the feasibility of ‘vehicle to home’ (V2H) chargers, which can transfer energy from vehicle to home during peak hours. Nissan Corporation has recently launched the first V2H charger in Japan.

By 2020, rapid rate of urbanization will increase the number of cities in the APAC region. A strong transportation infrastructure will ensure sustainable living in cities in the long-run. This calls for governments to introduce policies

and support technologies that facilitate ‘clean mobility’. As adoption of EVs accelerates due to reduction in price of EV chargers and charging time over the next 5-7 years, opportunities are abound for the EV charging infrastructure market.

Frost & Sullivan research studies on “Asia Pacific EV Charging Infrastructure Market” was published in January 2013. The study identifies growth opportunities for EV charging OEMs in the emerging electrical vehicle market. For media queries or if you wish to know more about Frost & Sullivan’s research services or contribute to this study, please contact djeremiah@frost.com

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4 - 6 November 2014, Amsterdam

Regulars

Solar Power Berjaya Solar The Berjaya Corporation Berhad (BCorp) is a diversified entity engaged in a multitude of businesses including clean technology investment, headed up by Bcorp’s subsidiary company, Berjaya Solar. Berjaya Solar have started building a solar PV plant on a one-hectare site on their landfill in Bukit Tagar, which will produce 125 kW, with an investment of RM1.5 million. This small project is a pilot scheme to test out the efficiencies and yield of four different types of solar cells – monocrystalline, polycrystalline, thin-film and flexible solar cell, supplied by Q-Cell and EQ Solar. This is in order to prepare for a huge investment in an extension of the site into a 50 MW solar plant.

Malaysia is situated in the equatorial region with an average radiation of 4,500 KWh per square meter, and receives on an average 4.5 hours to 8 hours of sunshine everyday. However, the real harnessing of this renewable energy source is way below its potential. At present, Solar Photovoltaic (PV) applications in Malaysia are largely restricted to rural electrification, street and garden lighting, and telecommunications. A third of the Government’s total allocation of RM469 million for electrification programs under the Seventh Malaysia Plan has been allocated to solar powered installations for rural and remote communities.

Solar power features prominently in the Government’s Economic Transformation Program. Under the energy Entry Point Program, the target is for Malaysia to build solar power capacity up to 1.25GW by 2020. This will be achieved in two ways; firstly, through the widespread installation of PV panels on buildings and the development of large-scale solar power plants connected to the grid, and through the installation of PV panel manufacturing plants.

Malaysia aims to become the second largest producer in solar manufacturing by 2020 and is emerging as the favored country for new PV manufacturing units. Investments in solar PV power projects for 2012 is estimated at US$72 million, a 194% growth over 2011. 12 MW of solar PV power will also be added in 2012, a massive year-on-year increase of 242.9%.

At 201 applications for the FiT system in 2010, photovoltaics and solar made up the biggest piece of the renewable energy pie. The demand shows that Malaysia is finally ready for solar power.

Solar Power Plants - Wazlina Sdn Bhd Wazlina Sdn Bhd is a good example of Malaysia’s rural monopoly, providing a huge number of small-scale solar plants in rural areas. Aligned with the Government of Malaysia, they have established themselves as the strongest local turnkey developer in Malaysia for the off-grid electrification and grid-commented sector. A number of their plants are solar hybrid power systems, which combines photovoltaic and diesel generators. Table 1 details a number of their projects. See www. wazlina.com for broader overviews of their projects.

Location

Client

System Type

PV Capacity

Inverter Capacity

Installation Complete

Kampung Pergalungan, Nabawan, Sabah

Kementerian Luar Bandar & Wilayah (KKLW) C/O TNB-ES

Hybrid

20.16kW

45kVA

July 2008

Pulau Lubukan, Sandakan, Sabah

Kementerian Luar Bandar & Wilayah

Hybrid

15.12kW

30kVA

December 2009

Kampung Kuamut Seberang, Kalabakan, Sabah

Kementerian Luar Bandar & Wilayah

Hybrid

201.6kW

200kVA

March 2009

Kampung Pergalungan, Nabawan, Sabah

Kementerian Luar Bandar & Wilayah

Hybrid

20.16kW

45kVA

July 2008

Signage Board Lighting Project For The International School Brunei

TOTAL Oil & Gas Brunei

Stand Alone System

36W x 5 Lighting System

-

December 2008

Victoria Island Club, Labuan, Sabah

Victoria Island Club, Labuan, Sabah

Stand Alone System

36W Lighting System

-

December 2008

Wind Turbine Solar Hybrid Station Pulau Perhentian Kecil Kuala Terengganu, Terengganu

Unit Perancang Ekonomi Negeri Terengganu C/O TNB-ES

Wind/Solar/Diesel Generator Hybrid

100kW

125kW

September 2007

Solar Hybrid Station Kampung Sungai Tengah, Gerik, Perak

Kementerian Luar Bandar & Wilayah

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Hybrid

30.24kW

60kVA

June 2008

Berjaya Solar submitted a proposal to the Energy, Green Technology and Water Ministry in 2010 in order to gain an exemption from the 30MW maximum capacity of the FiT policy so as to enjoy the high rates. The proposed grid connected plant will be developed over a 50-ha site, and will be capable of generating power to supply electricity to 3,000 homes.

The potential involvement of local and regional manufacturers will provide significant benefits to the country’s existing and new industry throughout the course of the project. The project is expected to draw global green-technology expertise to Malaysia, creating a new industry and a positive impact on the local job market.

Tenaga Nasional Berhad Powering Malaysia for over a decade, Tenaga Nasional Berhad (TNB) is the largest electricity utility company in Malaysia with a total installed generation capacity of about 12,000 MW and an estimated RM71.4 billion worth in assets. Recognized for its outstanding performance, regionally & globally, TNB’s core businesses comprises of generation, transmission & distribution of electricity. In Peninsular Malaysia, TNB contributes 55 per cent of the total industry capacity through six thermal stations & three major hydroelectric schemes. In addition, TNB manages & operates the National Grid, a comprehensive transmission network interconnected to Thailand & Singapore. TNB have begun to diversify into renewable energy, with two flagship solar projects: Putrajaya Solar Power Plant: Malaysia’s first solar power plant will be located in Putrajaya. The solar power plant will take 12 months to complete and is located in the buffer zone of an existing power station in Putrajaya, which reduces costs. TNB will implement the project based on three types of solar technology: silicon, thin film and polycrystalline.

The utility will soon announce the winner of the call for tenders for the project that is estimated to cost RM60mil. Some 20 companies participated in the tender. The winner will do the earthworks for the 12 ha site, and will prepare the platform for the first 2MW system. The 5MW power generated by this plant will be too small to make a profit, but it will be a major step forward in the country’s drive to harness renewable energy sources.

“The target is for Malaysia to build solar power capacity up to 1.25GW by 2020” Kampung Denai Solar Power Plant: Kampung Denai is an isolated rural village in Pahang consisting of 28 households.

Due to the cost of connecting the village to the grid 8 miles away, the decision was taken to install a modern solar power plant. The first phase supplied 15 households, with others brought on stream once upgraded to meet safety standards.

TNB hopes Kampung Denai will be a model for rural Malaysia. The generator capacity is 18.6 kW, with the maximum demand measured at 4195.35 kW. The pilot centralized solar power station consists of 10 kW photovoltaic panels, a 10 kW inverter, and a 150 kWh battery. The power stored there can last five days without any sun. A diesel generator with a capacity of 12.5 kVA is installed for back up and during monsoon season.

TNB will charge the villagers exactly the same as it charges customers on the national grid at about 24 Malaysian cents (four pence) per kilowatt-hour. Traditionally subsistence forest people, the villagers have little access to cash. TNB’s answer is to give each household six acres of land to grow oil palms, one of the staples of the Malaysian economy.

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Regualrs - Solar Power Cypark Resources Berhad Cypark Resources Berhad specialise in the application of environmental science and technology. Cypark is the leading integrated renewable energy power producer in Malaysia, and have established the first Renewable Energy Park in Pajam.

From a zero-economy wasteland, Cypark have restored a 26-ha former landfill in Pajam by investing over RM100 million to install 32,000 solar photovoltaic (PV) panels.

After utilising more than 600 tonnes of steel structure, 12,000 pieces of solar structure footing, 3000 sets of solar panel array, 32,000 pieces of solar panels and 20km electrical cabling and 612 units inverters, this huge tract of land was finally brought to a stage where it is able to supply more than 11,000 MW of green energy annually. With this first Phase complete, work has already started on a second phase that will see the installation of another 20,000 solar panels to reach the company’s target of 13 MW. Currently, the panels are mostly monocrystalline and polycrystalline, while the thin-film technology is installed on a trial basis to produce 100 kW of electricity, supplied by LG, Q-Cells, Hyundai and SMA. Meanwhile, biogas produced by the landfill will be used to fire two 1MW gas engines, with the energy generated sold to the grid. Once completed, the park is expected to be capable of producing 19 GWh of electricity from solar with another 17 GWh from biogas. It has been acknowledged by the Malaysia Book of Records as the largest grid-connected solar farm in the country.

The site’s proximity to the national grid means the company only has to install the connection for a distance of less than 5 km. As a result, company insiders expect that the payback period for the park could be less than ten years, compared to the industry average of 12 years.

Same power. Same products. New owner.

The Renewable Energy Park is the first solar project to benefit from the FiT scheme. Cypark signed a renewable energy power purchase agreement with TNB for a FiT concession period of 21 years. Cypark started selling its solar energy to TNB grid from March this year at a tariff of 95 sen per kWh, and the total green energy sales from the plant are about RM11 million annually.

Cypark is now focusing its effort in building other new solar projects in Johor, Perlis, Melaka and Negeri Sembilan.

The company is planning to implement another 30 MW within the next year on 6 other landfills, with another 12 in the pipeline, subject to FiT quota availability. All 161 ha of landfills have been restored by Cypark. With the targeted completion of 33 MW total solar capacity, Cypark expects to generate annual turnover of about RM45 million from 2013 onwards.

Solar Panel Production Malaysia is set to become one of the largest solar panel producing nations. China and Taiwan are the market leaders in solar cell production in Asia due to their low costs, good infrastructure and massive government support. However Malaysian policy makers have been focusing on attracting and encouraging investment in this sector. Factors such as government support in the forms of tax breaks, loans, simple regulation, low labor costs, reliable power supply and the FiT policy have contributed to attracting foreign investment in the Malaysian Solar PV manufacturing market. Photovoltaic manufacturers such as Q-Cells, First Solar and Solarworld have been moving production to Asia for cost efficiency and to tap into the region’s growing market, which is expected to expand by 30 per cent annually.

Bosch As well as the multitude of technologies produced by this major conglomerate, Bosch develops, manufactures and sells photovoltaic products. The company has been present in Malaysia since 1923 with offices in Selangor, Perak and Penang.

In addition to crystalline technology, Bosch Solar Energy also produces thin-film solar modules based on micromorphic silicon and CIS technologies.

Bosch has invested in a solar PV producing plant in Bat Kawan, Pahang. With a reported cost of RM2.2 billion, the plant will have a capacity for 640MW a year. Lauded as the country’s first fully integrated crystalline photovoltaics facility, the new manufacturing site will mainly serve Asia’s solar energy market.

The annual cell production of the site is expected to cover the energy needs of up to 300,000 households in Malaysia - twice the amount of central Europe. When the plant is running on full production capacity, it is anticipated to further facilitate Malaysia’s aspiration of becoming the second largest producer of solar cells in the world by 2020, increasing its market share to 17 percent after China. Construction is set to start by the end of 2013.

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Regualrs - Solar Power Twin Creeks Technologies Twin Creeks Technologies Incorporated (TCTI) is an American company that is investing in the construction of a high power solar cell plant in the Kanthan Industrial Area. TCTI develops “Hyperion” technology, which produces wafers that are less than one-tenth as thick as conventional wafers, meaning manufacturers can produce more of their products with less raw material and less capital equipment. That means crystalline solar panels that sell for nearly 50 percent less than conventional panels.

The new plant will cost about RM1 billion and will be built by Twin Creeks Malaysia Sdn Bhd (TCMSB). TCMSB’s main goal is to become one of the leaders in the solar cells and panel production. A joint venture between TCTI and the Perak State Development Corporation (PSDC) through its associate company Red Solar (M) Sdn Bhd, the new TCMSB 250,000 square-foot production facility represents a substantial investment.

Once in full production in 2012, TCTI’s solar modules will enable immediate grid parity with the conventional means of producing electricity at an average delivered cost that is competitive with fossil fuels. TCMSB will expand the solar cell plant on a 15-hectare area stretching to the Perak Hi-Tech Park (PHTP) by the end of 2015. In the first part of 2012, the TCMSB plant will generate around 100 MW of electricity. Afterwards, the power production will be increased to 500 MW in 2014.

Q-Cells Q-Cells SE is among the leading companies in the photovoltaics industry worldwide. Its extensive product portfolio ranges from solar cells and modules to complete photovoltaic systems. Q-Cells develops and manufactures its products at its headquarters in Germany and markets them through a global distribution network.

The company has a second production facility in Malaysia. Q-Cells Malaysia Sdn Bhd is located at Selangor Science Park II, Cyberjaya. With groundbreaking in June 2008, the 30,000-sqm production facility was built, installed and equipped in just 10 months, and production of solar cells commenced in May 2009. The plant core manufactures and distributes high performance crystalline solar cells. All 4 production lines in operation bring together a production capacity of 670 MW. Q-Cells Malaysia currently ships its solar cells to many countries across the globe.

Solar Power Considerations for Investment in the Solar Market in Malaysia

PROS

CONS

Malaysia has a rich supply of sunlight and should be aggressively tapping solar power. Opening plants, both power production and PV manufacturing, creates thousands of green jobs for skilled and semi-skilled workers in the local population.

Clouds/bad weather is a possible disadvantage, particularly during monsoon season.Malaysia doesn’t have unproductive land. Countries like the US have desert they can utilise for solar panels. In Malaysia, finding space for solar panels means using fertile land or rainforest, creating an economic trade-off.

Demand for solar panels is expected to slump in Europe due to cuts in government funding.

Much of the technology used in the solar cell production doesn’t involve toxic metals, so it’s environmental impact is limited.

As stated above, because of the huge amount of government support and excellent infrastructure, Malaysia is an excellent place to begin or expand businesses involved with green technologies.

The cost of a solar power plant is roughly six times more costly than putting up an open cycle gas-fired plant, four times more expensive than a combined-cycle gas plant and just under three times higher than a coal-fired plant.

Panasonic

Conclusion:

Panasonic is to build a solar panel plant in Malaysia, its first such facility overseas. Panasonic has begun construction on the facility at the Kulim Hi-Tech Park, and plans to start manufacturing the Panasonic HIT (Heterojunction with Intrinsic Thin layer) photovoltaic modules by December 2012. A total of 1.84 billion ringgit has been invested into the facility that is capable of generating 300 MW of power.

The current status of solar energy in Malaysia is a healthy one. The abundance of sunshine combined with government encouragement and legislation, such as the elimination of subsidies for non-renewable energy sources and the FiT tariff mean that investment in solar is being actively encouraged, particularly for the production of PV units. However, the Malaysian government is now calling for more investment and development to aid the actual installation and maintenance of solar facilities. Energy Minister Datuk Seri Peter Chin claims that Malaysia needs more technological know-how, noting that the number of component suppliers in the country is small and there aren’t enough knowledgeable personnel on equipment handling. “This drives the maintenance and operations costs up and further complicates matters,” said Chin.

The Minister suggests that the next step for the industry in Malaysia will be to synergize with other sectors. “The country is strong in the electronics sector,” he said, “which is a big advantage because this potential can be used to enhance its impact in the renewable energy market too. Many international names invest and our strong electronics industry is one of the major reasons.” This call from the government shows that despite having disadvantages like a very small market, little local technology and much larger rivals, Malaysia has become a Green Success by being focused and persistent in its approach.

There is little doubt that solar power will continue to be a rapid growth market in Malaysia.

The facility represents Panasonic’s first integrated production of wafers, cells, and modules. Panasonic say it will sell its solar modules both individually and also in a system with storage batteries and other devices, as well as assembling solar panels at the plant. At present, Panasonic’s total global production capacity is 600MW of HIT products. This new factory will increase their production capacity by 50%, bringing the total to 900MW. This will allow Panasonic to price the products 10% lower than its lowest priced HIT. EQ Solar EQ Solar Technology International Sdn Bhd is a China-based subsidiary of Hangzhou Energy Solar Co Ltd. EQ Solar is preparing to set up its latest solar panel manufacturing plant in Johor Baru, producing mono- and poly- crystalline PV modules. They plan to invest RM1.71billion over three years to produce module, cell and wafer technology. The company will become the first China-based solar module manufacturing company to invest in Malaysia.

The new plant is located on a 10-hectare site leased from Senai Hi-Tech Park. Production is expected to commence production by early next year, producing some 50MW of high-technology crystalline modules a year. The annual production capacity would later be increased to 200MW. The output would be exported to the United States, Europe, Asia-Pacific and the Middle East.

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Feature

Distant Dream

Is ASEAN Power Grid Realization a Distant Dream?

Introduction The energy needs of the Southeast Asia region has grown significantly in the past 10 years to support the fast economic growth during the period.

This region is heavily dependent on imported fuels, despite having significant energy resources such as oil, gas, hydro and coal. According to International Energy Agency, the ASEAN Oil imports have increased from 3.0 Million barrels per day (mbpd) in 2000 to 4.0 mbpd in 2010, and by 2035 it is projected to grow to 7.0 mbpd.

Due to financial constraints, lack of technical expertise and other restraints, these nations are unable to tap into their reserves. Countries such as Myanmar, Vietnam, and Laos have huge untapped hydro potential while Brunei, Malaysia and Indonesia have surplus gas and oil reserves. To share the energy reserves and to eliminate the power generation- demand imbalance, the 10 ASEAN countries signed an MOU in 1997 to establish the ASEAN Power Grid (APG) with an objective to interconnect the national power grids by 2020.

Source: ASEAN Energy Center

What Factors Drive the APG Projects?

Energy Security In 2013, 22% of the total ASEAN population had no access to electricity. Establishment of the ASEAN power grid would ensure energy security and increase electrification rates. This is a key factor to improve the quality of life as well as sustain stable economic growth in the region.

Generation Cost Savings The establishment of an interconnected grid system is expected to ensure total power generation reduction by 2000 MW in the ASEAN region by 2020, as compared to individual power generation by national utilities. This amounts to a net savings of $788 million after considering the interconnection project costs.

APG Project Status As a part of the ASEAN Power Grid Plan, 16 transmission line projects were chartered. The status of some of the ongoing projects is represented in the chart on page 10.

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Feature - Distant Dream

Transmission Line

Completion date

Remarks

1

New Peninsular Malaysia- Singapore

2018

-

2

Thailand- Peninsular Malaysia

2 lines are existing 2 lines to be completed by 2016

EGAT awaits TNB’s approval for the 2 lines.

3

Sarawak- Peninsular Malaysia

2021

Project Shelved in 2012 due to economic feasibility issues.

4

Peninsular Malaysia- Sumatra

2017

Ongoing: Land acquired, tender open for contractors.

5

Batam-BintanSingapore

2015-2017

Ongoing: 150kV Submarine Cable project between Batam-Bintan under construction.

6

Sarawak- West Kalimantan

2015

Ongoing: 100MW, 275 kV TL Project construction commenced in Q1 2013.

7

Philippines -Sabah

2020

Technical and economic feasibility is being studied

8

Sarawak-Sabah- Brunei

2020

Technical and economic feasibility is being studied

9

Thailand- Lao PDR

2 lines are existing 5 lines to be completed by 2023

On-going 500kV TL to transfer power from Nam Ngum3 and Nam Theun Hydro plants will be completed in 2016

10

Lao PDR- Vietnam

2016

On-going construction.

11

New Vietnam- Cambodia

2017

-

12

Thailand- Myanmar

2025

Technical and economic feasibility is being studied

13

Lao PDR-Cambodia

2016

14

New Thailand -Cambodia

2020

-

15

Sabah- East Kalimantan

2020

Ongoing technical feasibility Study to be concluded in 2015

16

Singapore- Sumatra

2020

-

Source: ASEAN Energy Centre

Financial Assistance for the Projects To support the infrastructure development projects in the ASEAN region, the ASEAN Infrastructure Fund (AIF) was established by the 10 ASEAN countries, along with support from Asian Development Bank in 2011. The fund was organized to finance infrastructure projects in power, railways, ports, roads, etc in the ASEAN region. The 10 nations supported the initial equity with US$ 335million and ADB aided the fund with US$150 million. The AIF funds 6 projects

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year-on-year for upto US$440 million each year. Between 2012 and 2020, ADB is expected to co-finance upto US$12 billion. 40% of this fund will be allocated for energy projects every year.

The projects included in APG plan are not always fully funded by the respective governments of the countries; they avail for financial loans from AIF. Besides, AIF explores for the possibility of financing options from other bilateral and multilateral partners and through public-private partnerships. ADB extends

significant assistance in several projects in the region. For instance, the West Kalimantan-Sarawak transmission line project was funded by AIF (US$ 35 million),ADB (US$ 49.5 million), and Agence Francaise de Development (US$49.5 million).

Challenges Financial Constraints: Total estimated investment for establishing APG is US$5.9 billion and AIF funds gets restricted to only 6

Feature - Distant Dream ASEAN Power Grid Project Status: 2014 and Laos. The electrification rate is very low at 26% in 2014. Power generation is heavily dependent on expensive fuel, which cuts down the utility investments in the grid.

Laos has strong hydro reserves and 85% of the power generated is exported to neighboring countries. The national grid development is sidelined in the country.

Power utility in Myanmar is keen on investing in strengthening the transmission backbone structure. Hence, they have not been proactive in the APG projects.

Conclusion

Source: Frost & Sullivan Analysis and ASEANEnergy Center

projects a year. Besides, AIF’s initiative in finding other financing options gets prolonged, which delays the commencement of projects. Getting timely financial closure for projects is one of the major challenges affecting APG’s on-time execution.

Technical Challenges: Faced by the utilities are high.

Compatibility between communication protocols and technical standards has to be analyzed in detail before initiating a cross-national grid interconnection project. Some of the utilities in this region do not have the technical expertise required to manage the planning design and operation of an interconnected system.

Absence of Regulatory Framework: A strong regulatory framework has to be established to control and manage the grid operations, to define technical standards and protocols, and to regulate the electricity tariffs to be charted for power transfer across the grid.

Current lack of it creates ambiguity in prospective investors.

Conflicting Priorities of the Power Utilities: Investments in APG projects takes

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a backseat in many of the ASEAN countries as the state-owned utilities have varying priorities when it comes to investments in the grid – In The Philippines, the utility’s primary focus is to establish a nationalized grid interconnecting the 3 regions- Luzon, Mindanao and Visayas.

The Indonesian utility has diverted all investments towards rural electrification, and strengthening of the existing grid.

The Cambodian national grid is already interconnected with Thailand, Vietnam

“The AIF funds 6 projects yearon-year for upto US$440 million each year. Between 2012 and 2020, ADB is expected to co-finance upto US$12 billion”

ASEAN Power Grid was a novel plan established by the ASEAN-10 countries, but due to lack of clarity on technical harmonization and financial constraints, the projects have failed to kick-off as scheduled. A detailed road map with clarity on operation guidelines and technical standardization is mandatory for proper functioning of the APG. Expert advice on planning, design and operation, has to be sought from the European Union where an interconnected grid operates successfully. ‘Plan of Action’ has to be established and a regulatory body to oversee the operations. Besides, a proper funding mechanism ensures smooth completion of the projects.

Strong Initiatives have to be undertaken to encourage private investors.

Under the ASEAN Power Grid Plan, new projects are not likely to kick-start in 2014. Strengthening the existing national power grid is the key focus for major utilities in the region. By 2016, the APG project that could start design and procurement is the Thailand-Peninsular Malaysia power line, which is currently awaiting approval from Tenaga Nasional Berhad. Beyond 2016, when the governments start their new 5-year plans, there will be revised budgetary allocation for APG and national power grid projects. However, realizing the ASEAN Power Grid by 2020 as originally envisaged is unlikely to become a reality.

Feature

Wind to Profit

Turning wind to in Mongolia Mongolia is “a renewable energy paradise,” according to asia.nikkei. com. In fact, Mongolia has winds capable of producing 946 terawatts of energy per hour (one terawatt equals 10 trillion watts). However, 95 percent of all energy in Mongolia comes from coal.

“By 2025, it is necessary to produce a minimum of 1,545 megawatts of energy to meet domestic demand,” said Chief of the Regulatory Authority for Policy Implementation of the Ministry of Energy Ts.Bayarbaatar. If the government actualizes policy projects in the energy sector, by 2030, renewable energy will conquer 30 percent of all energy production in Mongolia.

Experts say Mongolia is perfect for producing renewable energy, and can take advantage of its resources to become an exporter.

The 50 mw capacity Salkhit wind farm, the country’s first big source of renewable energy, was launched last year by Clean Energy LLC. Umnugovi wind farm now in the works CleanTech is leading the

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construction of a 250 mw wind farm in Khanbogdsoum of Umnugovi Province, 37 kilometers from Gashuunsukhait port. The construction of a wind power plant will start next spring. This project will be developed in two stages.

The first stage, building a 102 mw power source, will be launched in six months.

CleanTech is developing an investment contract with HappyWind Holding (Sweden) and General Electric (USA), said an expert

“Over a span of 16 years, Mongolia could earn nine billion USD, create 880,000 jobs, and build better roads by engaging in this project”

from the company. The power plant’s estimated cost will be 170 million USD. Sinohydro, a leading construction company from China, is working on the construction of another wind farm in Khanbogd soum. Big banks interested in investing A 52 mw wind power plant will be built 15 kilometers from Sainshand in Dornogovi Province. “Since an investment contract with Ferrostaal of Germany was signed in February 2014, much work has been done.

Domestic companies are working on landscape research.

Construction of a wind power plant will start in spring next year, and will take 18 months,” said Director of Sainshand Wind Park R.Davaanyam.

He added that they have announced a tender for power plant construction and wind turbine importing.

Through August 8, they will receive the documents of tender bidders, and the results will be presented by August 25. General Electric, Siemens, Danish and Chinese companies have expressed interest in importing tur-

bines. Several international banks and financial organizations have accepted credit requests, including European Bank of Reconstruction and Development, KfW Development Bank of Germany, and ten other financial organizations from the USA, the Netherlands and Belgium.

To actualize this project, Mongolia needs 120 million USD. Thanks to Sainshand Wind Park, every year, 100,000 families will receive energy. This is the fourth largest power producer in Mongolia, following Power Plant no.4, Power Plant no.3 and Darkhan Power Plant. Mongolia can fetch nine billion USD The main principles of the Asian Supergrid project “Gobitech” are to build big wind farms in the Mongolian Gobi and export energy to China, Japan and South Korea.

Mongolia and Russia can export their produced energy to these three countries using transmission lines.

Last month, the Ministry of Energy organized a forum on “Renewable Energy in East Asia: Gobitech and the Super Network of Asian Power ,” which the Mongolian President attended.

“Mongolia has a certain initiative, which is called ‘Gobitech,’ to become an active user of the renewable energy of the Gobi,”said President Ts.Elbegdorj.

Within the “Gobitech” project, there is the possibility of constructing solar and wind power plants with a capacity of 50 gigawatts each. Project experts report that Mongolia will benefit most from the projects. Over a span of 16 years, Mongolia could earn nine billion USD, create 880,000 jobs, and build better roads by engaging in this project. There is a 100 percent chance of actualizing this project here report experts. The total cost of the project would be 237 billion USD, but the Gobi has resources capable of producing 2,600 terawatts of solar and wind energy per hour.

Turkish company Aydiner Global plans to spend 94 million USD to build a wind farm next year near Choir soum of Govisumber Province. Additionally, Clean Energy Asia is conducting research on building 50 and 100 megawatt wind farms in Umnugovi Province.

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Regulars

Regulars - Hydropower

As Small Hydropower Expands, So Does Caution on its Impacts Small hydropower projects have the potential to bring electricity to millions of people now living off the grid. But experts warn that planners must carefully consider the cumulative effects of constructing too many small dams in a single watershed. The northern Indian state of Uttarakhand, nestled in the Himalayas, is home to a population of 10 million people, mostly farmers.

Many are among the 400 million Indians who lack access to electricity. In recent years, however, a strong push for hydroelectric power development has started to change

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that. Since Uttarakhand’s rise to statehood in 2000, the expansion of hydropower in the region has mirrored the region’s robust economic growth.

Many of the dams that have Micro-hydro project in Kenya have been built are small hydropower projects that harness the force of a river without trapping large reservoirs of water. But hydropower’s benefits have come at a cost. In June 2013, early and extraordinarily heavy monsoon rains fell for two days, streaming off Uttarakhand’s mountainsides, overflowing its rivers, and overwhelming scores of new

dams. The flooding eventually killed almost 6,000 people, tore up 1,300 roads, took out nearly 150 bridges, and destroyed 25 small hydropower projects. The disaster seemed an act of God, but a government-commissioned said much of the blame lay elsewhere — on the new hydroelectric power infrastructure, which included nearly 100 dams, many of them smaller than 25 megawatts in capacity.

A panel of experts said the huge number of dams and associated construction debris were spaced so closely together that they had changed the river courses and flow of

sedimentation, exacerbating the flooding. Tunneling through mountains and deforestation also contributed to the disastrous flooding, the panel said.

As the floodwaters roared through narrow gorges where small dams had been built, the torrent swept up uncounted tons of dam construction spoils and carried them downstream, Run-of-the-river projects can provide cheap, off-grid power, allowing rural areas easy access to electricity.swamping villages, according to a report commissioned by the Indian Supreme Court. It turned out that one or two of the state’s largest hydroelectric dams — an energy source that for decades has been blamed for serious environmental damage around the world — may actually have held back some of the worst flooding. Uttarakhand may have been a worst-case scenario for small hydro, but there is nevertheless an increasing understanding that a global push to downsize this renewable energy source carries risks. Small hydro has great potential to bring power to some of the

1.2 billion people around the world who lack electricity, and groups like the World Bank and United Nations are increasingly backing small hydropower projects.

But it is not environmentally benign, with impacts ranging from the fragmentation of river habitat to the potential for cascading dam failures during the kind of flooding experienced in Uttarakhand. Small hydro, which includes so-called mini- and micro-hydro projects on small rivers and creeks, is most often defined as dams with a capacity up to 10 megawatts, though some countries define it as including dams of up to 25 or 30 megawatts.

(The world’s biggest dam, the Three Gorges Dam in China, has a 22,500-megawatt capacity). Although designs differ and sometimes rivers do get diverted, small hydro dams are often built as “run-of-river” projects, meaning the flow of the river turns some turbines in the dam to produce electricity without the need to create a reservoir behind those turbines. This can provide cheap, off-grid power, allowing rural areas

access to electricity. So far, about 75 gigawatts of small hydro have been installed worldwide, the bulk of it in China (37 gigawatts), Europe (about 17 gigawatts), and North America (about 8 gigawatts). So how much small hydro potential remains? According to one assessment from the United Nations Industrial Development Organization (UNIDO), the total remaining global potential is just under 100 gigawatts of projects of 10 megawatts or less. That’s equal to 100 nuclear reactors or big coal power plants.

A glance at the specifics of small hydro’s potential sharpens the focus on developing countries even further.

East Africa has only 208 megawatts of installed small hydro, with another 6,000 megawatts (6 gigawatts) that could be added; Kenya alone, with less than 2,000 megawatts of installed electricity from any source, could add 3,000 megawatts

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Regulars - Hydropower

of small hydropower, according to UNIDO. Southeast Asia also has 6,000 megawatts of untapped potential. (The U.S. and Canada have tapped more than 85 percent of their small hydro potential already, with about another 1,000 megawatts that could still be developed, UNIDO says.)

Although there is still plenty of focus on major dams in certain parts of the world — including scores of large projects in China and numerous The World Bank is trying to convince developing nations that pushing too fast with small hydro carries risks. megadams in the Amazon — many countries, developers, and financing groups are now more strongly focused on downsizing hydropower. Pierre Audinet, the program team leader for clean energy at the World Bank’s Energy Sector Management Assistance Program, said that the majority of the bank’s current hydropower projects are small. Since 2003, the World Bank reports that 61 percent of its projects were run-of-river or other small-scale or micro-hydro development.

Still, the World Bank is trying to convince developing countries that pushing too fast with small hydro carries risks.

“This whole discussion on accumulating impacts, it is something we pay a lot of attention to, and we have been pressing our client countries… to mitigate and prevent the negative impacts that can happen when there are too many dams on a single basin,” Audinet said. In Vietnam, a $202 million commitment from the World Bank is helping finance the construction of nine new small hydro plants — maxing out at 30 megawatts each — with six already completed. The project includes an exhaustive environmental framework that requires numerous safeguards before a project is eligible for funding.

These range from assessing impacts on fisheries, water quality, and sedimentation, to consideration of downstream effects.

These precautions are in place for a reason, as the risks of building too many small dams in a single river basin aren’t yet fully understood.

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Hydropower

“It’s really tricky because these smaller dams, they don’t have the measurable impacts that you have with the bigger dams,” said Martin Doyle, director of the Water Policy Program at Duke University. “You don’t get the same sediment-starving effect downstream, and a lot of species can actually get by them during floods. But what they do is — we always called it death by a thousand cuts. Instead of having one big Hoover dam, you have thousands of little dams. They add up.” David Strayer, a freshwater ecologist at the Cary Institute of Ecosystem Studies in

“In Vietnam, a $202 million commitment from the World Bank is helping finance the construction of nine new small hydro plants”

Millbrook, New York, said fragmentation by hydropower is a serious threat to ecosystems. In the U.S., Strayer said that studies have shown small dams mark the boundaries of various freshwater species, such as mussels, with potential long-term consequences. Put a small power project in today, and mussels will likely still live on both sides of the dam tomorrow. But over time, a drought or a flood might kill off the group on one side or the other, and the dam will block the rest of the species from spreading out to fill the void.

“It’s not something that is yet regarded as a primary factor affecting freshwater biodiversity, but we have enough hints of this now that I personally would put this on the short list of major endangering factors One study found the cumulative impacts of small hydropower can actually outweigh those of larger dams. over the longer term,” Strayer said.

Another study in the Nu River area in China found that the cumulative impacts of small hydropower can actually outweigh those of larger dams.

Flow modification of streams, for

example, was “3 to 4 orders of magnitude greater” for the numerous small dams than for dams as big as 4,200 megawatts and 300 meters in height.

Downstream of small hydro projects — which in some cases actually do divert rivers for large portions of the year — the rivers were “dewatered” an average of 74 percent of days studied, which aside from the obvious problems also can negatively affect water quality.

Water quality was also more strongly affected by small hydro than large, the Nu study said.

Two studies — one by a group at Kansas State University and one by scientists at the University of New Mexico — found that some fish species, such as the family that includes carp and minnows, need as much as 100 kilometers of unbroken stream in order to survive and thrive.

Many existing and proposed mall hydro projects are spaced much more closely together.

The Uttarakhand disaster represents an extreme scenario. In the report on the floods submitted to the Indian Ministry

of Environment & Forests, the expert panel concluded that “bumper-tobumper” development of run-of-river hydro projects is dangerous, and that changes to sedimentation of rivers caused much of the flooding damage.

Even smaller dams hold back sediment and other materials that would naturally flow downstream, which can increase erosion below the dam and make the Life on MekongWith a massive dam under construction in Laos and other dams on the way, the Mekong River is facing a wave of hydroelectric projects that could profoundly alter the river’s ecology and disrupt the food supplies of millions of people in Southeast Asia.

The report recommended that because of the threat of a “cascading chain of catastrophes,” planners needed to examine the basin-wide impacts of building numerous dams on a single river system. The existing guidelines in the region require only one kilometer of separation between two projects.

The report called for a halt to almost all hydropower development until studies could determine optimal

distances between dams.

With the help of the UN, the World Bank, and others who increasingly focus on the impacts of small hydro, progress is being made. A survey of professionals working on small hydro around the world, from a database run by the International Energy Agency, suggests most think the industry is beginning to be regulated properly.

“Environmental impact studies are done even here for any sizeable hydro project, but there is room for improvement,” said Terry Gray, a consultant on hydro projects based in Mbabane, the capital of Swaziland. Others in Uganda, Vietnam, India, and elsewhere said that increasingly regulations are being adopted to match a growing demand for small hydro.

“Of course there are benefits to small hydropower, and I’m not saying we should stop doing any hydropower development,” Strayer of the Cary Institute said. “But if you’re really balancing costs and benefits, you ought to be doing so with your eyes open.”

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Regulars

Doing Business in Malaysia Malaysia’s 19 million inhabitants present the external business traveler with a minefield of cultural dilemmas.

The country is divided between three large ethnic groups, the Malays, Chinese and Indians. Contemporary Malaysia is a pluralistic and multicultural nation that has its character strongly rooted in social harmony, religion and pride in its ancestral background. Over the last few decades the country has evolved from a successful producer of raw materials to a multi- sector economy.

As the Malaysian market continues to develop and prosper, it is becoming increasingly valuable for those entering into business in Malaysia to be aware of the cultural dimensions that shape the fabric of this country.

Language The official language in Malaysia is Bahasa Malaysia, or Malayu. Bahasa Malayu is used as a ‘bridge’ language across the various ethnic divides.

The Malay language is an Austronesian language spoken not only by all Malay people, but by many of the surrounding nations, such as Southern Thailand, Singapore, and Central Eastern Sumatra. It is also very similar to Indonesian, known locally as Bahasa Indonesia. Other languages sometimes spoken in Malaysia are Mandarin, Hokkien, Cantonese and Tamil. Despite this variety, English is widely spoken and many people are near fluent, making communication easier than in some other countries in the region. Although most government officials speak some English, they may prefer to hold meetings in their own language.

An English-speaking translator, however, is usually provided for these occasions.

Multi-culture A number of considerations have to be made to circumnavigate issues thrown up by the differing cultural approaches to business. Firstly, be aware of the practical requirements of the Muslim daily routine and religion, such as prayer, diet and fasting. However, although Malaysia is an Islamic country,

fundamentalist principles have not affected the conduct of business.

Women will encounter few difficulties when working in Malaysia, with many women working and reaching senior positions. Only five Malaysian states follow the Islamic workweek of Saturday through Wednesday. These include Perlis, Kedah, Kelantan, Terengganu, and Johore. Offices in these states are sometimes open for half a day on Thursday, usually in the morning.

In the Malaysian capital city, Kuala Lumpur, the working week is Monday through Friday.

Secondly, all of the major cultures you may encounter when doing business in Malaysia are group-oriented.

It is important to take into account the needs of the whole group rather than any one individual. Thirdly, Malaysian culture relies heavily on the concept of fatalism. Fatalism is the belief that success, failures, opportunities and misfortunes result from fate or the will of God. In a business context, when making decisions Malays will tend not to rely on hard facts, but prefer to be guided by subjective feelings combined with the Islamic faith. Your Chinese and Indian colleagues will also take a similar approach. Consequently, negotiations may take longer than expected and your Malaysian counterparts will view decision making in a more personal light.

Lastly and most importantly, all ethnicities strive to “maintain face” and avoid shame both in public and private.

Face is a personal concept that embraces qualities such as a good name, good character, and being held in esteem by one’s peers. Face is considered a commodity that can be given, lost, taken away, or earned. Face also extends to the family, school, company, and even the nation itself.

Causing your Malaysian counterpart to lose face may influence the outcome of your future business dealings. Face can be lost by openly criticizing, insulting, or putting someone on the spot; doing

something that brings shame to the group; challenging someone in authority, especially if this is done in public; showing anger; refusing a request; not keeping a promise; or disagreeing with someone publicly.

Face can be saved by remaining calm and courteous; discussing errors or transgressions in private and speaking about problems without blaming anyone.

Name and Personal Address The Chinese traditionally have 3 names.

The surname precedes two personal names, and is frequently written as one word. Many Malays do not have surnames. Instead, men add their father’s name to their own name with the term “bin”, meaning ‘son of’. Women use the term “binti”, meaning ‘daughter of’. Indian names are similar, placing the initial of their father’s name in front of their own name. The man’s formal name is their name, followed by “s/o” (son of ) and their father’s name. Women use “d/o” to refer to themselves as the daughter of their father. It is important for all ethnicities that professional titles and honorific titles are used in business.

Malays and Indians use titles with their first name while Chinese use titles with their surname.

Meeting and Greeting Initial greetings should be formal and denote proper respect, but will differ in style depending upon the ethnicity or sex of the person you are meeting.

For example, women will not always shake hands with men, and foreign men should always wait for a Malaysian woman to extend her hand. Foreign women should also wait for a Malaysian man to extend his hand. Some Muslim men will prefer not to shake hands or touch palms with Western women and, in most cases, will indicate so early on in the first meeting. If in a team, introduce the most important person first. When introducing a man and a woman, the female’s name should be said first.

The Chinese handshake is light and may

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Doing Business anyone with the forefinger, as Malays use the forefinger only to point at animals.

Pounding one fist into the palm of the other hand is another gesture that Malays frequently consider obscene and should be avoided.

be rather prolonged: do not be excessively firm in your handshake. Many older Chinese lower their eyes during the greeting as a sign of respect. Indians shake hands with members of the same sex.

When being introduced to someone of the opposite sex, nodding the head and smiling is usually sufficient. Some Malaysians, especially Muslims, will prefer to touch palms lightly and bring the hand up to the heart afterwards to signify a greeting accepted with sincerity. This may be accompanied with the traditional Malaysian greeting of “Namaste”.

Business cards are exchanged after the initial introductions. Business cards are offered with the right or with both hands; both is more polite. You should accept the card in the same manner and briefly study it before putting it away. The respect you show someone’s business card is indicative of the respect you will show the individual in business; never write on someone’s card in their presence. Ensure that your business card outlines your education, professional qualifications, and business title. You’ll find that Malaysians include many of these details on their card. If you are meeting with the Chinese, have one side of your card translated into Chinese, with the Chinese characters printed in gold. If you are meeting government officials, have one side of your card translated into Bahasa Malaysia.

Communication It is imperative to effectively communicate with your Malaysian counterparts, so it is helpful to be aware of some of the cultural differences that may cause complications.

For example, gaining negative or positive responses can cause difficulties. Insistence on receiving an “adequate” response to an unanswered question will embarrass

40 | POWER INSIDER VOLUME 4 ISSUE 3

a Malaysian. Malaysians will rarely say no, but instead say, “I will try”, or “I’ll see what I can do”. This allows the person making the request and the person turning it down to save face. Sucking air through your teeth is one way to signal a definite answer of “no”. Also, don’t always take the word ‘yes’ to mean ‘I agree’. It could be merely an affirmation of understanding.

Silence is an important element of Malaysian communication. Pausing before responding to a question indicates that they have given the question appropriate thought and considered their response carefully. Do not show anger in public as it makes Malaysians uncomfortable and creates a feeling of powerlessness. There is a greater chance of achieving a good outcome if you are calm, whereas little is resolved by shouting.

Certain gestures and body language may also cause offence or confusion. When you must indicate something or someone, use the entire right hand (palm out). You can also point with your right thumb, as long as all four fingers are curled down. Older Malays would interpret a fist with the thumb and a little finger uncurled as an insult. It is considered rude to point at

“Since Malaysians - particularly the Chinese - often consult astrologers, signing a contract may be delayed until a “lucky” day”

Feet are considered to be unclean: never point your feet at another person or show the soles of your feet or shoes. You will be expected to apologize whenever your shoes or feet touch another person.

The head is believed to be the “seat of the soul” by many Indians, so never touch someone else’s head. The “arms akimbo” position, that is, standing tall with your hands on your hips, is always perceived as an angry, aggressive posture. In public, reaching into your pocket is fine but to stand around or chat with hands in pockets is very distasteful.

Hierarchy Malaysian businesses are hierarchical.

The three main religions of Islam, Confucianism and Hinduism all stress the over-riding importance of respect and duty. Respect is based rather on personal attributes than on task-oriented matters, such as age and status. When meeting Malaysian business people seek out and address the most senior person in the group first and focus on that person during meetings and presentations. In negotiation, it is important to ensure that you are dealing with the key senior figures.

Business structures dictate that most decisions are made by key senior management figures. Subordinates may feel uncomfortable when given vague, non-specific instructions. Tasks may remain undone, unless specific instructions are issued from the boss - even if it is apparent that the task needs urgent attention. The boss/subordinate role can be likened to the father/son relationship. The boss is expected to take an interest in the overall well-being of subordinates. In return for this concern, subordinates will offer diligence and loyalty.

Dress When attending normal business meetings, standard business attire of suits and ties for men and dresses or light-coloured blouses and skirts for women are appropriate. Because Malaysia is very hot all year long, cotton and linen clothes are the most sensible choices.

Avoid wearing yellow because it is the colour reserved for Malaysian royalty, and shorts should be avoided. Women must

be sensitive to Muslim and Hindu beliefs, and wear blouses that cover at least their upper arms. Skirts should be knee-length or longer.

Meetings Doing business in Malaysia requires a long-term commitment. Business is often conducted on the basis of personal relationships and you need to visit regularly and develop a good rapport with contacts. It is appropriate to discuss family, career, hobbies and personal views on issues of general interest. Be aware that in Malaysia, it’s perfectly acceptable to ask people questions about their weight, income, marital status, and related subjects. If you don’t wish to answer personal inquiries, side-step these questions as graciously as possible.

It is important to remember that in any meeting the relationship is of greater importance than the issue being discussed.

Initial meetings between business associates begin with a great deal of small talk. It is not unusual for these meetings to focus solely on non-business related issues.

Do not destroy the harmony through being overly pushy. It is rarely worthwhile to push for a decision within the meeting as the decision will be taken only after all the facts have been analysed in great detail, and after all the relevant members of the group and the hierarchy have been consulted. Patience may be needed.

The majority of Malaysian business people are Chinese; you can expect them to be punctual. Most government officials, however, are ethnic Malays who have more of a relaxed attitude toward time. Although

business travellers are expected to be on time, Malays may not necessarily do the same. The Indian minority’s perspective on time is similar. Additionally, do not be surprised if meetings start late or last longer than had originally been scheduled.

Build delays into your timetables.

The most senior person on your team should enter first to greet the most senior Malaysian. This demonstrates respect towards the Malaysians. It is customary for leaders to sit opposite each other around the table. Many companies will have their team seated in descending rank. Expect the most senior Malaysian to give a brief welcoming speech. You need not reciprocate.

Since most of the country is Muslim, it would be sensible to schedule meetings around prayer times. Since Malaysians particularly the Chinese - often consult astrologers, signing a contract may be delayed until a “lucky” day. When doing business in Malaysia, you should never assume that a signed contract is a final agreement. Understand that in Malaysian business culture, it is commonplace for negotiations to continue after a contract has been signed.

Gifts The gift giving culture in Malaysian business is declining, but gifts are still seen as a relationship-building tool. There are a number of rules that guide this procedure, both general and culturally specific. When presented with a gift, it is customary to accept it with both hands, palms facing upwards. It’s a good idea to choose and reciprocate with a modest, inexpensive gift so that the recipient won’t feel obligated to you. Recommended business gifts include quality pens, desk accessories, and items representative of your country or city. Gifts are not opened in front of the giver, as the giver and recipient may lose face if the gift is a poor choice.

When giving gifts, be sensitive to the cultural background of the recipient.

Never give alcohol to a Malay Muslim, and avoid all gifts associated with pigs. If you give food, it must be “halal”. Avoid white wrapping paper as it symbolizes death and mourning, and yellow as it is the color of royalty. If you are a man giving a gift to a female colleague, be aware that personal gifts from a man can be misinterpreted as having romantic intent. Malaysian business protocol requires that a man should explain that his wife sent the item.

It is Chinese custom to decline a gift three times before accepting. When you receive a gift, you will be expected to go through the same routine. Do not wrap gifts in mourning colours - white, blue, or black, though elaborate gift wrapping is imperative. It is best to give gifts in even numbers since odd numbers are unlucky.

Avoid items associated with funerals such as clocks, towels, handkerchiefs, straw sandals and flowers.

For Indians, flowers are appropriate, but avoid frangipani as they are used in funeral wreaths. Most gifts, especially money, should be given in odd numbers. However, avoid giving gifts in multiples of three.

Wrap gifts in red, yellow or green paper or other bright colors as these bring good fortune. Do not give leather products to a Hindu, and avoid giving alcohol unless you are certain the recipient drinks.

Eating Business entertainment performs an important function in the relationship building process. Protocols for dining need to be adhered to. Always wait to be seated; the highest Malaysian officer in attendance or the host is usually in charge of the seating arrangements. The host should be seated to the immediate left of the most senior guest. This guest is traditionally given the “best seat” at the table-- which usually means the one located farthest from the door. The host is expected to pick up the tab.

Muslims and Hindus believe that the left hand is unclean. Consequently, eat only with your right hand when dining with these groups. These rules apply even if you are left-handed. Before serving yourself, wait for your host to initiate these proceedings. Indian utensil etiquette requires that the serving spoon should not touch the plate when either you or another person is putting food on a plate.

Chopsticks should be placed on the chopstick rest after every few bites.

They also belong on the chopstick rest when you are drinking or talking.

Malaysian food can be very spicy but less spicy alternatives are available. It is polite to leave some food on your plate as a sign that you are satisfied. Muslims will definitely not eat pork, and Hindus will not eat beef. For the sake of politeness, sample everything that is offered - even if you find it unappealing. Buffets are extremely popular here. Generally speaking, your Malay counterparts will not drink, so no real drinking culture exists in Malaysia.

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Feature

Energy Storage

Frost & Sullivan:

Does South Korea Have the Right Concoction to Lead APAC Utility-level Energy Storage?

Strong Government Incentives and Technological Advancements to propel growth

By Avanthika Satheesh, Research Analyst, Asia Pacific Energy Practice

Utility-level energy storage is an oft-discussed topic in the energy storage industry, widely expected to be the holy grail unearthing a huge potential market across the world.

It has the ability to provide power utility customers, multiple benefits such as electric energy time shift, peak management, area regulation, transmission support, time-of-use energy cost management etc. While this concept has gained significant mileage globally and has been implemented in Europe and parts of the US, it is still a nascent market in Asia except Japan. Next to Japan, China and South Korea are widely touted to be the major markets for utility-level

42 | POWER INSIDER VOLUME 4 ISSUE 3

energy storage. Based on the current market stage and interest levels, South Korea seems to have all the right factors that could accelerate the market growth for utility-level energy storage.

The Technology Advantage – Key for Market Growth Energy storage being a technolgy -intensive market, necessitates that technology be developed and supported locally. In this case, South Korea has a strong technology advantage that works in its favor.

For instance, in lithium-ion batteries, the market has witnessed the evolution of two global giants in companies such as Samsung SDI and LG Chem which have

been able to surpass the Japanese market dominance since 2011-2012.

This success has led to investments in futuristic battery energy storage technologies like NaS batteries, Redox Flow batteries and Metal air batteries from leading domestic conglomerates such as Samsung electronics, Hyundai Heavy Industries, POSCO, LSIS and Doosan Heavy Industries. The next 2-3 years will largely be focused on developing these technologies. As per the current corporate and government plans, from 2015 onwards, there is likely to be a spurt in utility-level energy storage demonstration projects using these technologies which will be a pre-cursor to mass commercialization.

Post 2017, battery technologies are expected to dominate the country’s utility-level energy storage infrastructure. Apart from batteries, South Korean firms such as Nesscap Co., Ltd., LS Mtron Ltd. also have a strong presence in supercapacitors market though their application for utility-level benefits may be limited due to their discharge characteristics. Other than these, efforts are underway to develop compressed air energy storage (CAES) technology that would suit the geological conditions of the country.

Currently, strong government support exists for lithium-ion batteries and CAES in which there have been demonstration projects to support utility-level installations.

Energy Storage has a Strong Government Focus The technology advantage is supported by a strong government vision to make utility-level energy storage a reality in South Korea. The Korean government especially the Ministry of Knowledge Economy (MKE) has been giving a strong impetus to the energy storage sector and has taken the following steps to ensure that Korea becomes a leading provider of energy storage solutions globally, occupying 30% of the global market by 2020.

- The MKE with the private sector plans to invest a total of 6.4 trillion KRW in the Energy storage sector by 2020. Of this, the government will spend 2 trillion KRW in Research & Development, and plans to invest 4.4 trillion KRW in the development of infrastructure.

- The country is positioning itself as a technology-export center for energy storage technologies. The government through its efforts strives to replicate the success story of lithium-ion batteries to other technologies as well.

- Ongoing initiative to implement ‘Smart Grid’ demonstration projects and subsequent roll out of smart grid across the country requires to be supported by energy storage at the utility-level.

End-to-End Value Chain Development Supports Market Growth End-to-end (from vendors till customers) value chain support is essential for the overall market growth. While the lithium ion battery companies have been flourishing and garnering more market share, the cell component manufacturers’ presence has been limited in the domestic market. Majority of them were located in Japan.

However over the last two years, the domestic supplier eco-system for

lithium-ion battery manufacturers has been on the rise. The government introduced measures to support the Small and Medium Enterprises that supply the lithium-ion battery industry by – Providing financial support to those firms that made initial losses and - Promoting collaboration between the lithium-ion battery companies and domestic component suppliers by setting up industry associations.

Besides, established home-grown battery companies such as Samsung SDI, LG Chem, and SK Energy prefer to source from local component suppliers that give them cost advantage and technology protection. Further, the downstream segment of the value chain involves energy storage system (ESS) integration with Battery Management Systems (BMS) and Power Conversion Systems (PCS). Companies such as Hyosung and LSIS are well-known in this space as ESS integrator companies.

For CAES technology, consortiums exist that manage the few demonstration projects. Gradually as this technology develops and commercializes, it is likely that a strong value chain would develop to support these installations as well.

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Feature - Energy Storage Future Need for Utility-level Energy Storage Systems Despite all the support infrastructure and overall eco-system growth, the need for ESS in grid integration or at the utility-level is the key driver for market growth. This support in the form of market demand is expected to remain in South Korea due to the following factors: Renewable Integration into the grid governed by stringent Renewable portfolio standards.

As per the recently released 6th Basic Plan, upto 20% of the overall generating capacity would be served by renewable energy (RE), by 2027. Of this 3% of the peak demand would be from RE sources, which would have to be integrated into the grid through ESS. The intermittency in solar and wind capacity has to be eliminated for the integration of these RE sources to the grid that would increase the demand for utility-level energy

storage in Korea. Its impact is likely to be maximum after 2017 when the stress on Renewable Portfolio Standards (RPS) is likely to gain maximum mileage.

However, it is widely expected that ‘Frequency Regulation’ will be the major demand driver for utility-level energy storage during the short term and renewable integration being the source for maximum demand for utility-level energy storage during the medium to long term.

Growth of Smart Grid South Korea currently has many smart grid installations coming up and plans for installation of newer smart grids.

With ESS being a basic requirement for smart grids, the smart grid plan will increase demand for utility-level ESS. Increasing demand for better grid facilities With time and increasing cost of power,

end users are likely to demand better grid facilities like demand management, time-of-use services, frequency regulation etc. Utility-level energy storage would be crucial to provide these services to end users.

While the market dynamics are expected to drive the growth of the utility-level energy storage, initial government support for energy storage and utility regulations that provide economic benefit for ancillary grid services will go a long way in supporting and ensuring sustainable growth of the utility-level ESS in South Korea. The above factors seem to suggest that South Korea has the right concoction to lead the Asia Pacific utility-level energy storage market.

Based on an assessment of these factors and views of industry participants, Frost & Sullivan predicts that the South Korean utility-level ESS market will reach a size of 300 billion KRW by 2020 from a size of around 9 billion KRW in 2012.

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About Frost & Sullivan Frost & Sullivan, the Growth Partnership Company, works in collaboration with clients to leverage visionary innovation that addresses the global challenges and related growth opportunities that will make or break today’s market participants. For more than 50 years, we have been developing growth strategies for the global 1000, emerging businesses, the public sector and the investment community.

Is your organization prepared for the next profound wave of industry convergence, disruptive technologies, increasing competitive intensity, Mega Trends, breakthrough best practices, changing customer dynamics and emerging economies? Contact us: Start the discussion

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TCG 2020

Regulars

Upcoming Events For the Energy Business in Asia August 2014

October 2014

PV Guangzhou - China

CEPSI

26 August – 28 August Guangzhou China

26-30 October 2014 Jeju Korea

September 2014 4th India Smart Utility Week 16 September – 18 September Delhi India

Powergen Asia

10 September – 12 September 2014 KLCC Kuala Lumpur Malaysia

Advertisers Index Siemens Man MWM Membrana Asian Utility Week Power Systems

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