Pimagazine Asia Vol 10 - Issue 1

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VOLUME 10 ISSUE 1

ASIA’S HYDROGEN HIGHWAY Fintech in Energy

Korea Market Review

China Fuel Cell


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EDITORS NOTE Welcome to another bumper edition of Pimagazine Asia.

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and Australia are increasingly turning to hydrogen as a long-term alternative to

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We also cover the Korean Market, Fuel Cells and Finch for the markets of Asia. I hope you enjoy this edition, it’s rammed with great interviews, articles and

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UPCOMING EVENTS

CONTENTS Editors Note..................................................................................................................... 3 News.................................................................................................................................. 5 South Korea’s Energy Market - An Overview............................................................ 12 State-of-the-Art Gas Engine Technology Leaves Room for Customer-Specific Innovation..................................................... 18 The Role of Fintech in Green Finance Asia................................................................ 22 China Backs Fuel Cell Technology............................................................................... 38 Asia’s Hydrogen Highway.............................................................................................. 44 Hydrogen for better lives ............................................................................................ 50 Hydrogen, Instrumental in Diversifying the Energy Mix in Asia........................... 52 Events Listings................................................................................................................. 58 Advertisers Index............................................................................................................ 58

4 | POWER INSIDER VOLUME 10 ISSUE 1


NEWS

MAN Launch New CHP Plant in Germany MAN Energy Solutions is handing over a new solution for combined heat and power generation (CHP) to energy company EnBW Energie BadenWürttemberg AG. The 30 MW plant in the Gaisburg district of Stuttgart (Germany) commenced commercial operations at the end of December

Ale Completes 1000KM of Wind Components in Thailand

in specialist wind equipment, such

2018. At the heart of the plant lie three

as the unique RA4 tower clamps

MAN 20V35/44G gas engines, which

and the new K1650L tower crane.

produce not only electrical energy

Demonstrating their expertise

Manufactured specifically for the

but also 30 MW district heating.

in logistics, civils works and the

company to transport larger and

Operating at a total efficiency of up

complete turnkey solution, ALE

heavier components, the tower clamps

to 90 percent, the power plant makes

has completed the transportation

enabled ALE to comply with the

particularly effective use of its fuel.

of heavy wind components through

local weight and height restrictions.

The new gas engines are part of an

a challenging 1,000km route to the

Similarly, the tower crane was used as

extensive modernization program

Rom Klao wind farm in Mukdahan,

a cost and time effective solution to

for the HKW3 cogeneration unit in

eastern Thailand.

install the WTGs.

Stuttgart Gaisburg. In addition to the CHP plant, EnBW has also constructed

Starting in April 2018, ALE was

“This is a complex scope of work

a heat storage and a boiler plant with

contracted for the full-service package:

and route to be undertaken. The

up to 175 MW thermal energy output

the transportation, craneage and

new tower clamps enabled us to

to cover fluctuations in supply and

installation (TCI) scope of 13 wind

overcome the large diameters of

demand. The existing coal power plant

turbines, measuring up to 5.4m in

the tower sections and reduce the

was decommissioned when the new

diameter and weighing up to 125t. With

travelling height to pass under the

facility commenced operations.

a hub height of 162m, these will be the

restrictions on route. Combined

tallest wind turbine generators (WTGs)

with the tower crane, our equipment

in South East Asia.

and methodology has driven project efficiency,” explained Project Manager

This project faces numerous

Matt Thomson.

challenges, including the sheer size and scale of the WTG components

“We are really pleased to be involved

as well as the logistics and routing of

in a project of this scale. It really

components over such a vast distance,

showcased how we brought together

Jens Rathert, Project Manager at

with varying obstacles and levels of

different expertise within the Group

EnBW, said: “The reconstruction of

infrastructure across the country that

to achieve the safe and successful

HKW3 is part of EnBW’s strategy

requires additional civils work.

completion of every stage.”

for the energy transition, replacing an existing coal-fired plant with

In order to overcome these challenges, ALE has utilised their local routing and

ALE completed the full TCI scope in

a modern gas-powered CHP and

engineering expertise, and invested

January 2019.

boiler plant. By doing this, we are

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NEWS

significantly reducing the emissions

being brought to fruition in Stuttgart

been installed at Tata Power Delhi

of CO2 and other pollutants, which

Gaisburg. The concept works on the

Distribution’s Rohini substation.

is particularly important given the

modular principle and can be scaled

urban surroundings of the power

up as required from 7 MW.”

plant. Looking at the bigger picture

It is expected to provide better peak load management, system flexibility

of the energy transition, we regard

MAN Energy Solutions enables its

and reliability to more than two million

facilities like the HKW3 as a blueprint

customers to achieve sustainable

consumers, Tata Power said in a

for further fuel-switch projects and

value creation in the transition towards

statement.

relish the opportunity for more

a carbon neutral future. Addressing

projects along these lines.”

tomorrow’s challenges within the

The country’s first grid-scale battery-

marine, energy and industrial

based energy storage system uses

Gas engines provide high flexibility

sectors, we improve efficiency

Advancion Technology of Fluence,

and reaction speed

and performance at a systemic

jointly owned by Siemens and AES.

The CHP plant is a core element of

level. Leading the way in advanced

the modular concept of the new

engineering for more than 250

Battery-based energy storage enables

construction: While the gas boilers

years, we provide a unique portfolio

electricity to be stored and delivered

produce exclusively heat and are

of technologies. Headquartered in

within milliseconds, reducing instability

primarily designed to cover the peaks

Germany, MAN Energy Solutions

of the electric grid and enabling more

in demand over winter, the gas engines

employs some 14,000 people at over

energy to be captured and delivered

will ideally be run continually to

120 sites globally. Our after-sales

on demand.

provide both electricity and heat. By

brand, MAN PrimeServ, offers a vast

combining the facility with a district

network of service centres to our

India is working on a plan to increase

heating accumulator, EnBW can fully

customers all over the world.

installed renewable energy generation

utilize the flexibility offered by the

www.man-es.com

capacity to 225 Gigawatt by 2022 and

engines and react to price signals. When demand for heat is low, the waste heat from the engines can be stored. This flexibility is made possible

energy storage provides the flexibility

TATA Comission South Asia’s Largest Grid Scale Storage System

to better integrate intermittent solar and wind energy resources into the electric grid.

by the high reaction speed of the MAN gas engines, which reach their full

Commenting on the development,

output in less than five minutes and

Tata Power Chief Executive Officer

can handle load changes effortlessly.

Praveer Sinha said grid-scale energy storage will pave the way

Dr. Tilman Tütken, Vice President

for ancillary market services, power

and Europe Sales Manager for the

quality management, effective

power plant division of MAN Energy

renewable integration and peak load

Solutions, said: “Large gas engine

management of Indian grids.

power plants are a new but important

China Coal Projects Causing Discontent in Pakistan

technology in Germany: They help to reduce harmful emissions and guarantee an extremely reliable supply. Gas engine power plants

Tata Power today announced it has

The environmental impact of China-led

have the potential to replace coal

commissioned South Asia’s largest

coal-fired power generation projects

power stations in a way that is not

grid-scale energy storage system

in Pakistan is once again a hot topic

only effective but better for the

in Delhi. The 10 Megawatt (MW)

of debate, weeks after a meeting of

environment. Our modular power

energy storage system, owned by

government officials from both sides.

plant concept for cogeneration is

AES and Mitsubishi Corporation, has

A raft of Chinese power projects,

6 | POWER INSIDER VOLUME 10 ISSUE 1


NEWS

Development and Reform Makhdum

“There are many aspects of how

Khusro Bakhtyar in Islamabad, during

the environment will be damaged,”

which both declared 2019 the “Year of

he said. “These range from direct

Economic Cooperation.”

emissions when coal is burned to the effect on the environment when coal

But such cooperation has given

is transported.”

others second thoughts on China-led projects they criticize as having little

Many experts believe that the

consideration for the environment.

Pakistani government will defend

Analysts say the projects lack

its commitment to CPEC projects. It

including coal-fired ones, have begun

transparency and warn that Pakistan

will likely argue that coal emissions

to ease the acute electricity shortages

has been making blind commitments.

from Chinese power plants “are just

a minority within overall emissions

that dogged Pakistan’s industries and consumers until five years ago. At one

“One of the biggest issues is that we

across Pakistan. This will be meant

point, power cuts lasted for more than

just don’t know the full details [of

to pacify criticism over Chinese coal

half a day in the country’s major cities.

agreements involving CPEC projects].

plants,” noted Abid Suleri, an economic

Now, blackouts have been reduced

Unless that concern is addressed, we

adviser to the government who heads

by half or even more, according to a

remain in the dark on where these

the Sustainable Development Policy

projects will head in the future and

Institute, an independent think tank.

how coal will impact our country,”

Suleri, however, also called for more

Yet, environmentalists are up in

said Kaiser Bengali, a prominent

openness about the projects.

arms and blame China for exporting

Pakistani economist.

government official.

“Overall, we need to have greater

pollution. A senior government official in

transparency on CPEC-related

“It is China exporting messy projects

Islamabad rebutted such criticisms

investments in Pakistan,” he said.

to Pakistan,” one environmental

and instead pointed to the economic

Some Western diplomats who

activist in the southern port city of

benefits of the deals with China.

regularly track economic and

Karachi said. “Rather than relying on

Pakistan now relies on imported coal,

investment trends in Pakistan

coal-fired plants on their own soil, the

but it hopes domestic production will

go further, saying that detailed

Chinese have decided to export these

pick up so that the country can save

assessments of Chinese investments

problematic plants to Pakistan.”

large amounts of money spent on

on the environment may not even

energy, he said.

have been undertaken. “There is a

range of risks to the environment

Beijing’s presence in Pakistan has been a constant source of conflict within

“If we can make this transition from

with any new infrastructure project.

the country. This is in large part due to

imported to domestic fuel, that will

CPEC investments are mostly

power projects it has planned under its

help Pakistan reduce our bill for

infrastructure,” one diplomat said.

$62 billion China Pakistan Economic

energy imports, and that will give us a

“Coal-powered plants pose the biggest

Corridor, which forms a crucial part

very major advantage.”

environment risk. There should have

ambitious Belt and Road Initiative.

But Bengali said the government must

Pakistan and China decided to take

Newly planned electricity generation

assess the environmental impact

them on.”

projects were meant to showcase vast

of not just coal production but also

benefits for the South Asian country.

transportation of the fuel. Coal is

Others said Islamabad is in thrall to

imported via one of Pakistan’s ports

Beijing in part due to China’s clout as

In mid-January, Chinese ambassador

along the country’s southern coastline

the main supplier of military hardware

to Pakistan Yao Jing attended a

and supplied onward by train to coal-

to local armed forces, apart from

meeting with Minister for Planning,

fired projects located in the hinterland.

being the largest source of foreign

been detailed assessments before

of Chinese President Xi Jinping’s

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NEWS

investment. In other words, it is a

solar projects are now becoming

the sustainability and resilience of the

relationship that Islamabad would not

increasingly popular not only in

country, especially in achieving the

want to damage.

Malaysia but around the world.

target of reducing the production of

It is hoped that more Kedahans will

carbon dioxide emissions under the

take the opportunity to get involved.

2015 Paris Agreement.

“It is possible that Pakistan may take up different issues with China from time to time, but this is done

This announcement was made after

The 50-megawatt solar power station,

very discreetly,” one senior foreign

the opening of the 50-Megawatt

which began operations in December

ministry official told the Nikkei Asian

Quantum Solar Park in Malaysia

2018, is the largest in the north of the

Review. “I don’t think there can be an

recently. Quantum Solar Park’s Chief

country, and capable of generating

abrupt change to our commitments

Executive Officer was also present.

electricity for 30,000 households,

to China. This partnership [with

Meanwhile, the Chief Minister stated

while reducing carbon emissions by

China] is vital for Pakistan’s present

that the construction of the solar plant

21,000 tonnes annually.

and our future.”

in the Pendang district had indirectly

Malaysia Seeking More Solar Power Plants

made Kedah one of the leaders in the

According to a report published earlier

country’s solar industry and would help

by OpenGov Asia, the Malaysian

strengthen the state government’s

government (more specifically,

‘green’ efforts.

The Energy, Science, Technology, Environment and Climate Change

It was noted that the project is also

Ministry) announced that it aims to

among the initiatives to support the

have 18% of the country’s electricity be

objectives of the Ministry of Energy,

generated from renewable sources by

Science, Technology, Environment

2030, an increase from 2% currently.

& Climate Change (MESTECC) in

The Minister of Energy, Technology,

increasing the use of renewable energy

Science, Climate Change and

in Malaysia.

Environment had said that the ministry would have a series of meetings to

MESTECC was a Governmental

ensure the national grid is prepared

According to a recent report, the

agency established in 1992. It

to cater for this renewable energy

Malaysian state of Kedah recently

operates as the collection and

generation mix, as well as to study the

announced that it is inviting investors

dissemination centre for strategic

policies to meet its target.

to develop more green technology-

Science, Technology & Innovation

based projects in the state, especially

(STI) information in the country.

The view is to capitalise on future

those relating to solar power.

The agency also provides access

technological innovations, including

to STI information from various

industrial revolution 4.0 elements

The state’s Chief Minister said

institutions and acting as a linking

while retaining customers’ confidence

this would not only create more

mechanism among the policymakers,

through digitalisation of services and

jobs but also establish many new

fund providers, researchers/

improving customer experiences.

business opportunities in terms

developers, the industries and end

of the handling, maintenance

users. Our core business is to collect

RE usually depends more on

and installation of solar panels at

and disseminate strategic information

technology disruption that will come in

commercial and residential premises.

related to STI activities.

the next few years.

The Chief Minister noted that

The Chief Minister noted that the state

will decide on when whether the 20%

the state government is also

government will continue to support

target will be achieved. However, the

evaluating the entry of several new

the growth of green technology as a

Ministry affirmed its commitment to

solar projects, seeing as similar

new development model in enhancing

the cause.

How quick the technology evolves

8 | POWER INSIDER VOLUME 10 ISSUE 1


NEWS

its grids which leads to more older

for areas suffering from drought – and

This is RE is more than just being

plants continuing to be in use. These

could also improve fishing yields while

green; it is to make citizens’ tariffs

old plants would have been redundant

reducing algae growth.

much more predictable, of which

and phased out should China be

electricity right now is hugely

able to better utilize its generated

Google recently became the first

dependent on the global fuel price.

renewable energy.

company to make a purchase under

China’s Coal Plants Almost As Clean As its Gas Fired Facilities!

However, the country is certainly

the Taiwan Electricity Act. The project is expected to be completed in 2020.

making progress in its move towards green energy will coal consumption

The World Bank estimates a global

accounting for just 60% of China’s total

potential of 400 gigawatts for the

energy consumption last year, down

floating solar market. While the US

by 9.5 percentage points since 2012.

lags behind the Asia-Pacific region, the National Renewable Energy Laboratory

At the moment, with many coal

said in 2018 that as much as 10% of

plants still in operation, applying strict

US energy supply could eventually be

emission standards will go a long way

met with floating solar projects.

in helping to keep emission levels now. The capacity for floating solar is

Google’s First Floating Solar Project

soaring: in 2018, total installed

Google will build a floating solar

than 100 times the capacity in 2014

Top marks to the Chinese government

farm above fishing ponds in Taiwan,

of just 10 megawatts, according to a

as it reveals, three quarters of the

in the company’s first foray into

World Bank report published last year.

country’s coal power generation plants

Asia’s renewable energy market.

have been fitted with emission-

The company will work with Diode

In addition to avoiding land acquisition

reducing technology to make them

Ventures, Taiyen Green Energy, J&V

traditionally associated with solar

among the world’s cleanest coal plants.

Energy and New Green Power to build

installations, floating solar has the

To date, at least 700 gigawatts (GW)

the 10MW facility.

benefit, in some cases, of allowing for

worth of power plants have been

Floating solar farms have become

power generation to be sited much

capacity was at 1.1 gigawatts, more

fitted with “ultra-low emission”

popular in the Asia-Pacific regions

closer to areas where demand for

technologies, hitting the country’s

because they can be built over water,

electricity is high, according to the

target of having 580 GW of coal

negating the need for large tracts of

World Bank.

plants being equipped with the

costly land. Japan tops the world’s

technology 2 years ahead of schedule.

installations of floating solar; in China, the world’s largest floating solar farm

Asia Leading in IoT Adoption

Currently, emissions of soot, sulfur

was built last year over a lake that used

More than a third (34%) of businesses

dioxide and nitrogen oxides from

to be a coal mine.

now use IoT, and that 70% of these adopters have moved beyond pilot stage

China’s coal plants are at comparable levels to those of its gas power plants,

While floating solar farms tend to

and 95% of adopters are seeing the

meaning that their emission levels are

be floated directly on the water via

benefits of investment in this technology

lower than that of developed countries

pontoons, Google is considering a

as it moves into the mainstream,

by more than 50%.

canopy system which would see the

according to the findings of Vodafone’s

panels installed on poles, suspending

latest IoT Barometer.

China still continues to have

the structures over the water. The

While use cases for IoT are varied,

significant overcapacity in its power

canopies would provide shade to the

ranging from medical exoskeletons to

generation due to inefficiencies across

ponds, reducing evaporation – a concern

connected tyres, the research has found

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NEWS

that IoT impacts businesses regardless

Nelson, Head of IoT, Asia Pacific,

closer to the network edge, users can

of size and sector. Sixty per cent of

Vodafone Business. “Companies in

expect better performance, less risk and

businesses that use IoT agree that it

this region still have further to go in

faster data speeds.

has either completely disrupted their

developing their programmes to achieve

industry or will do so in the next five

all the possible benefits of IoT, ranging

Commenting on the results, Michele

years. Eighty-four per cent of adopters

from cost reductions to improved

Mackenzie, Principal Analyst at Analysys

report growing confidence in IoT, with

efficiency and even new business and

Mason said: “The Barometer makes

83% enlarging the scale of deployments

revenue streams. Organizations must

it clear that businesses are increasing

to take advantage of full benefits.

stay committed to this journey or risk

their investment into IoT as they gain

operating at a disadvantage. The time to

confidence and begin to develop more

invest in IoT is now.”

advanced solutions. In the short term,

The report also grades businesses in IoT usage by assessing strategy, integration

users of IoT will continue to access

and implementation of IoT deployments.

Stefano Gastaut, CEO IoT, Vodafone

reduced costs and improved efficiency,

Globally the report found that 53% of

Business, commented: “IoT is central

but increasingly ambitious projects

adopters fall into the top two levels out

to business success in an increasingly

will offer the opportunity to change

of five. Regionally, the Americas is the

digitised world, with 72% of adopters

business models. For example, in cities

most advanced, with 67% of adopters

saying digital transformation is impossible

heavy users of roads could pay more,

falling into the top two levels, compared

without it. The good news is that IoT

encouraging the use of different modes

to 51% in APAC and 46% in Europe. This

platforms make the technology easier

of transport with knock-on benefits to

suggests that businesses in the Americas

to deploy for businesses of all sizes and

public health and the environment.”

are progressing faster than those in other

NB-IoT and 5G will improve services and

markets, moving from individual projects

potential. In this climate, companies need

Vodafone IoT technologies are

to coordinated, strategic programmes.

to be considering not if but how they

embedded within connected vehicles

will implement IoT, and they must also

built by Aston Martin, Audi, BMW,

The most advanced companies also

be fully committed to the technology to

Mercedes Benz, Ford, Jaguar Land Rover,

saw the greatest return on investment

realise the strongest benefit.”

Lamborghini, Porsche, VW and Yamaha

in IoT. Eighty-seven per cent of those in

scooters. Vodafone’s IoT network and

the top level reported significant returns

Looking to the future, new technology

services also support smart meter

or benefits from IoT, compared to just

will continue to power the performance

capabilities for energy companies

17% in the “beginner’s” level. These

of IoT. Over half (52%) of adopters plan

including Centrica, EDF and nPower

benefits breed increasing reliance on IoT.

to use 5G, which promises to support

and provide connectivity for consumer

Seventy-six per cent of adopters say IoT

higher volumes of data, increase

electronics products such as the Amazon

is mission-critical. Some are even finding

reliability and offer near-zero latency.

Kindle and devices manufactured by

it hard to imagine business without it —

Combined with mobile edge computing,

Bosch, Panasonic, and Philips Lighting.

8% of adopters say their “entire business

which will process application traffic

depends on IoT”. “Asia Pacific is leading the world in IoT adoption with 43% of the companies in the region having adopted the technology in a bid to achieve a hyperconnected future. IoT delivers positive outcomes never envisaged in connected device business cases with insights often delivering fundamental transformation to marketing and distribution functions,” said Justin

10 | POWER INSIDER VOLUME 10 ISSUE 1


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South Korea’s Energy Market An Overview South Korea relies on imports to meet about 98% of its fossil fuel consumption as a result of insufficient domestic resources. The country is one of the world’s leading energy importers.

improve the nation’s energy security,

South Korea’s economy is heavily

oil and natural gas companies are

dependent on export markets,

aggressively seeking overseas exploration

particularly within Asia. Exports in the

and production opportunities.

region have increased over the past two years, which has boosted South

South Korea was the world’s eighth-

Korea’s energy use. The country’s

largest energy consumer in 2017,

ageing population is expected to

according to estimates from the BP

dampen domestic energy demand

Statistical Review of World Energy 2018.

and the overall economic landscape over the long term.

South Korea’s highly developed South Korea ranks among the world’s

economy drives its energy

Although petroleum and other liquids,

top five importers of liquefied

consumption, and economic

including biofuels, accounted for the

natural gas (LNG), coal, crude oil, and

growth is fuelled by exports, most

largest portion (44%) of South Korea’s

refined products. South Korea has

notably exports of electronics,

primary energy consumption in 2017,

no international oil or natural gas

semiconductors, and petrochemicals.

its share has been declining since the

pipelines and relies exclusively on

The country also is home to one of the

mid-1990s, when it reached a peak

tanker shipments of LNG and crude

world“s top shipbuilding industries.

of 66%.This trend is attributed to the

oil. Despite its lack of domestic energy

Real gross domestic product (GDP)

steady increase in natural gas, coal,

resources, South Korea is home to some

has edged up since 2015 to 3.1% in

and nuclear energy consumption,

of the largest and most advanced oil

2017 as demand for the country’s

which has reduced oil use in the power

refineries in the world. In an effort to

exports strengthened.

sector and the industrial sector. Higher

12 | POWER INSIDER VOLUME 10 ISSUE 1


vehicle efficiencies have also reduced

recovery, higher industrial output,

beginning of 2017 by a joint venture

oil consumption (Figure 1).

more residential consumption, higher

between GS Energy Corporation and

volumes from private sector LNG

SK E&S Company. The facility added

importing companies, and restocking

about 145 Bcf to capacity. Both of

inventory levels by KOGAS.

these privately owned terminals have

South Korea currently has six LNG

very small capacities compared with

regasification facilities with a peak

the capacity owned by KOGAS.

capacity of 6.1 Tcf per year and an average estimated utilization rate of

However, these private operators

35%. KOGAS operates four of these

have been key contributors to the

facilities (Pyongtaek, Incheon, Tong-

rise in Korean LNG imports in 2017,

Yeong, and Samcheok), accounting for

and their terminals operate at high

about 97% of current capacity. The

utilisation rates compared with the

Following Japan’s Fukushima disaster,

Samcheok terminal, located on the

national average. Because of KOGAS’

South Korea’s problems with false

northwest coast, is KOGAS’s smallest

monopoly power and high LNG resale

safety certifications of nuclear parts in

terminal and was added in 2014.

prices, private industries have a greater

Figure 1. South Korea total primary energy consumption by fuel type, 2017

late 2012, and several earthquakes that have occurred over the past two years, the government scaled back its long– term plans to rely on nuclear power in its first basic energy plan in 2008 to its most recent power plan, the 8th Basic Plan for Electricity Supply and Demand, unveiled at the end of 2017. In its most recent plan, South Korea is

incentive to invest in regasification

South Korea now ranks as the third– largest global importer of LNG after Japan and China.

attempting to balance its fuel portfolio

capacity and purchase less expensive LNG on the global market. KOGAS purchases most of its LNG through long–term supply contracts, and the company uses spot cargos primarily to correct small market imbalances. Nearly half of 2017 LNG imports came from Qatar and Australia

to meet high energy consumption, to

KOGAS is constructing a small

(Figure 2). Indonesia was South

moderate its nuclear power generation,

terminal at Jeju Island and expects to

Korea’s first source of LNG and supplied

to reduce greenhouse gas emissions

commission almost 50 Bcf per year

more than half of South Korea’s LNG

and fine dust particle pollution, and

of capacity by 2019. South Korea

imports before 2000. As South

to offset some fossil fuel imports. As

is well–endowed with natural gas

Korea diversified its LNG imports to

part of this effort, the government is

storage capacity at its LNG terminals,

secure more sources of natural gas to

also promoting greater demand–side

and KOGAS’ goal is to hold 20% of

meet its growing demand, Indonesia

management, energy efficiency

their natural gas demand in storage

measures, and use of renewable energy.

by 2029.

Liquefied natural gas

The first privately–owned

After China surpassed South Korea

regasification terminal in South Korea

in LNG imports in 2017, South

came online in 2005. Pohang Iron

Korea now ranks as the third–largest

and Steel Corporation (POSCO) and

global importer of LNG after Japan

K–Power jointly own the Gwangyang

and China. In 2017, South Korea

regasification facility located on the

imported more than 1.9 Tcf of LNG,

southern coast. A second privately

rebounding after a recent low of 1.6

owned regasification facility at

Tcf in 2015. LNG imports rose 13%

Boryeong, located in the northwestern

in 2017 because of an economic

region, was brought online at the

Figure 2. South Korea LNG imports by source, 2017

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OVERVIEW: SOUTH KOREA’S ENERGY MARKET

lost market share to other countries

South Korea produced an estimated

Several large coal–fired plants came

including Qatar, Oman, Nigeria, Russia,

1.6 million short tons (MMst) of coal

online in 2016 and 2017, adding nearly 12

and Australia.

from its anthracite reserves, which

gigawatts (GW) of incremental capacity,

was a small fraction of its estimated

and South Korea’s manufacturing sector

Several South Korean firms own

primary coal consumption of 151

began to recover in 2017.

shares in liquefaction projects in the

MMst in 2017 (Figure 3).

Middle East, Australia, Indonesia,

These factors contributed to a 9%

and Canada and signed long-term

increase in South Korea’s coal imports

Coal consumption in South Korea increased by more than 50% between 2007 and 2017, driven primarily by growing demand from the electric power sector.

purchase agreements for LNG coming online from new liquefaction projects in Australia and the United States. KOGAS and SK Energy hold flexible destination contracts, which allow the companies to resell volumes in the open market, with the Sabine Pass and Freeport liquefaction terminal projects in the Gulf Coast of the United States. Sabine Pass began operations in 2017, and Freeport LNG is expected to be online in 2019. KOGAS also owns

in 2017. Australia and Indonesia historically accounted for most of South Korea’s coal imports (more than 60% in 2017). Russia and Canada are other notable sources. Coal imports from South Africa, Colombia, and the United States substantially increased in 2017 when South Korea required more coal (Figure 4). Coal consumption in South Korea increased by more than 50% between

shares in upstream exploration and

Because of this wide supply and

2007 and 2017, driven primarily by

production assets in natural gas fields

demand gap, South Korea is the

growing demand from the electric

around the world including Canada,

fourth– largest importer of coal in the

power sector. The electric power sector

Iraq, and Southeast Asia.

world, following China, India, and Japan.

accounted for more than 60% of the

Imports have risen in the past few years,

country’s coal consumption, while

Coal

from 131 MMst in 2010 to 165 MMst in

the industrial sector (primarily steel

Rising coal consumption in South

2017 as a result of the forced shutdowns

and cement) accounted for most of

Korea and negligible domestic

of some nuclear plants in late 2012

the remaining coal demand in 2017,

production resulted in the country

because of safety issues and because

according to KEEI.

having to rely heavily on coal

of precautions taken following a major

imports over the past several years.

earthquake in 2016. However, weakened

As part of the South Korean

In 2017, South Korea was the fourth–

power demand and delays in starting

government’s efforts to mitigate air

largest global coal importer.

new coal–fired plants since 2012 have

pollution and environmental emissions,

slowed the growth of overall coal imports.

the country’s 8th Basic Plan for Electricity

Figure 3. South Korea’s coal production, 2000-17

14 | POWER INSIDER VOLUME 10 ISSUE 1

Figure 4. South Korea, coal imports by source, 2017


OVERVIEW: SOUTH KOREA’S ENERGY MARKET

Supply and Demand, suspended plans

electricity consumption came from

Coal-fired power, which is a base-

for new coal–fired capacity not already

industries, 26% from commercial

load source, is the dominant fossil

under construction and is retiring all

and service enterprises, 13% from the

fuel used to generate electricity, and

plants older than 30 years. Also, the

residential sector, and 7% from other

natural gas–fired capacity is the second

government plans to increase the coal

sectors such as transportation and

largest source. Oil products generate

import consumption tax in 2018.

agriculture, according to KEEI.

very small amounts of power. Nuclear power, also a base-load source, will

Even though South Korea intends to reduce its reliance on coal for power in the longer term, coal is likely to continue playing a large role in South Korea’s energy demand over the next few years. Several coal–fired facilities are already under construction and will come online by 2024, and coal

The government intends to cut its greenhouse gas emissions and reduce fine dust particle pollution

continues to remain more economical

increase capacity in the short term from plants that are already under construction. However, by 2030, the government intends to reduce the country’s reliance on coal and nuclear power generation in favour of renewable energy and natural gas. The country’s new power plan calls for shares of coal and nuclear to decrease

than natural gas and renewable energy,

In the 8th Basic Plan for Electricity Supply

to 36% and 24%, respectively. These

despite the current coal tax.

and Demand, published in 2017, the

shares are slated to be offset by

South Korean government lowered

renewable energy sources rising to a

Electricity

its anticipated electricity demand

20% share and natural gas staying at a

Fossil fuel sources account for

growth to 1% annually through 2030.

19% share in 2030.

nearly two–thirds of South Korea’s

The government intends to cut its

electricity generation, while the share

greenhouse gas emissions and reduce

Generation structure

of nuclear power accounts for almost

fine dust particle pollution through energy

Most of South Korea’s installed

one–third. Renewable energy is set to

conservation measures and through the

generation capacity is fossil fuel-

grow based on government incentives

use of cleaner energy from natural gas,

based, although nuclear power plays

and power plan targets.

nuclear, and renewable energy sources.

a significant role in the power sector.

Also, GDP is expected to grow at a slower

Base-load generation is primarily

South Korea generated more than 553

pace than previously anticipated, leading

made up of coal and nuclear power,

terawatthours (TWh) of gross electricity

to lower power demand.

while peak demand is generally

in 2017, according to KEEI estimates.

met by the natural gas–fired power.

South Korea’s power generation growth

Fossil fuels generated about 65% of

According to KEPCO and KEEI, South

has remained lower than 3% per year

South Korea’s electricity in 2016, while

Korea’s generating capacity at the

since 2012 after averaging about 5% the

30% came from nuclear power, and

end of 2016 was 106 GW, consisting

previous decade.This

more than 5% came from renewable

primarily of natural gas (31%), coal

significant deceleration, especially

sources, including hydroelectricity

(30%), and nuclear generation (22%).

through 2015, is attributed to weaker

(Figure 5).

Oil, hydroelectricity, and other

economic demand and export growth

renewables made up smaller shares

and demand side management

(Figure 5).

measures. After electricity generation growth fell to less than 1% in 2014,

Capacity rose from 98 GW in 2015 as

it began to increase slowly. In 2016

coal, natural gas, renewable energy, and

and 2017, power generation growth

nuclear units were added. South Korea

slightly rebounded to more than 2%

intends to reduce its greenhouse gas

each year as a result of stronger export

emission levels by 26% from business-

growth and some recovery in industrial demand. [54] In 2017, about 54% of

Figure 5. South Korea electricity generation by type, 2016

as-usual projected levels (projections of emission levels absent any carbon

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OVERVIEW: SOUTH KOREA’S ENERGY MARKET

price scheme) and to cut its fine dust

nuclear power stations, which have 25

pollution levels by 62% by 2030. To

individual reactors with a net power

meet these goals, the government

generation capacity of 23 GW. The

is promoting the development of

latest reactor came online in early

renewable energy and natural gas-fired

2016, and the country has added 5.3

plants and phasing out of older, less

GW of capacity at new plants since

efficient coal–fired plants.

2010. Five reactors with 6.7 GW of capacity are under construction and Figure 6. South Korea installed electricity generating capacity by type, 2016

Fossil fuels account for most of the country’s installed capacity, which

scheduled to come online by 2022. Meanwhile, about 7.9 GW of capacity

consisted of 69 GW of coal and natural

economic, and nuclear safety concerns

are scheduled to close by 2030 under

gas power plants in 2016, or about

and is trying to balance its power

the government’s policy not to renew

65% of the total capacity, according to

generation portfolio accordingly.

licenses for older nuclear reactors.

In South Korea plans to retire all coal–

The country’s future slate of fuel for

Although South Korea has historically

fired power plants older than 30 years

power will depend on fuel costs,

relied on nuclear power for a significant

and to suspend any proposed coal-fired

the government’s tax policies and

portion of its generation, public

projects either not under construction

regulations that favour one fuel over

sentiment has turned negative following

and not at least 10% complete, which

another, and the level of investment for

Japan’s Fukushima disaster in 2011 and

is consistent with the country’s goal

clean energy technology.

several incidents of falsified certificates

KEPCO (Figure 6).

to incorporate cleaner sources of fuel

for components of some South Korea’s

into the generation portfolio. By 2022,

Nuclear generation accounts for nearly

about 5.6 GW of coal–fired capacity will

one–third of South Korea’s electricity

be slated for closure.

generation and about 22% of installed

A renewable portfolio standard for

generating capacity. As of early 2018,

South Korea replaced the previous

These closures are expected to be

South Korea ranked sixth–highest for

feed–in tariff system in 2012 and

offset by about 7.3 GW of new coal

nuclear generation capacity in the world

requires South Korea’s major electric

capacity already under construction and

and was surpassed by China in 2016.

utilities to gradually increase the

coming online in the same timeframe.

existing nuclear power plants in 2012.

renewable energy share in their power The country’s first nuclear power plant

generation portfolios to an average of

The government intends for natural

was completed almost four decades

10% by 2024.

gas–fired power plants to replace

ago, and since then, South Korea has

coal–fired facilities after they are retired

directed significant resources toward

Renewable sources (primarily solar,

and the coal–fired power projects that

developing its nuclear power industry.

wind, biomass, and waste) remain a

have been shelved as a result of the

South Korea imports all of the uranium

small share of South Korea’s electricity

latest electricity plan. So far, about 4

needed to fuel its nuclear power plants

generation (6% in 2016), although

GW of these conversions have been

and does not reprocess or enrich

robust growth in generation from

announced and are scheduled to be

uranium as a result of a 30-year nuclear

renewable sources has occurred.

online by 2025.

cooperation agreement with the United States. The countries extended this

South Korea’s latest power plan targets

Currently, natural gas competes with

agreement for 20 years in June 2015,

the share of power generation from

less–expensive coal and nuclear sources

although the new terms did not lift

renewable energy to rise to 20% by

of power, and prices for much of the

the restrictions on South Korea for

2030, mostly by developing wind and

natural gas sold within the country,

producing its own nuclear fuel.

solar capacity.

particularly by KOGAS, is higher than international spot LNG prices. South

Korea Hydro & Nuclear Power Company

SOURCES:

Korea is weighing environmental,

currently operates South Korea’s four

WWW.EIA.GOV - WWW.IEA.ORG

16 | POWER INSIDER VOLUME 10 ISSUE 1


Engie


State-ofthe-Art Gas Engine Technology Leaves Room for CustomerSpecific Innovation

Since late 2016, the new MWM TCG 3016 from Mannheim has been running in the cogeneration power plant at the swimming pool, providing power and heat energy.

Photo Copyright: Caterpillar Energy Solutions GmbH/Germany

18 | POWER INSIDER VOLUME 10 ISSUE 1


Holger Herzberg, responsible Project Manager at Vereinigte Stadtwerke Bad Oldesloe/Germany: “The gas engine is extremely robust, which translates to longer service life.

Though you can’t see it from the outside, the indoor swimming pool in the picturesque town of Bad Oldesloe in SchleswigHolstein is supplied by cutting-edge energy technology. The plant is operated by Vereinigte

says Holger Herzberg, responsible for

TCG 3016 – also comes directly from

Stadtwerke, a municipal operator

heat at Vereinigte Stadtwerke. He is

Caterpillar Energy Solutions and fully

that runs a total of five district heat

pleased to be one of two operators who

controls the generator switch as well

networks in the Stormarn/Herzogtum

have been given the opportunity to

as the dry coolers, pumps, and other

Lauenburg region. Originally designed

thoroughly test the brand-new genset.

auxiliary drives. With the engine and

to supply the swimming pool with

According to Herzberg, the new genset

control software originating from one

heat, the state-of-the-art cogeneration

boasts a number of improvements over

source, the communication for the

technology now benefits a close-

its predecessors.

integrated power plant control with all

by youth hostel, a hospital, various

its components works even better. “Our

customers via the heat network.

The latest MWM TCG 3016 gas genset runs as a fieldtest plant in Bad Oldesloe.

Since late 2016, the new-generation

“The gas engine is extremely robust,

gas engine MWM TCG 3016 of

which translates to longer service

Caterpillar Energy Solutions (CES)

life. Moreover, the new TCG 3016

from Mannheim has been running in

is maintenance-friendly, and the

the cogeneration power plant at the

lubricant consumption has been

swimming pool, providing power and

reduced significantly, making the

heat energy.

genset even more efficient.” The TPEM

“The new TCG 3016 is still something

(Total Plant & Energy Management)

like a ‘mule’ among the gas engines”,

– the new control software for the

schools in the city center, and numerous private and commercial

project presented a challenge for the

The new gas genset MWM TCG 3016 boasts a number of improvements over its predecessors.

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FEATURE: GAS ENGINE TECHNOLOGY

MWM engineers, as the genset had to be installed in an existing cogeneration plant. That is more complicated than

Tailored to Customer Needs

installing an entirely new plant”,

Vereinigte Stadtwerke GmbH

says Herzberg, commenting on the

Contact

Holger Herzberg

planning and construction phase.

State, country

Schleswig-Holstein, Germany

The conversion had to take place

Project manager

Holger Herzberg, Energy Generation department

while the heat supply went on. The conversion phase in late 2016 took

Cogeneration Plant Specifications

about eight weeks from the removal

Go-live

November 2016

of the old genset to the connection

Engine type

MWM TCG 3016 V16

of the new one. The TCG 3016 has

Control TPEM

run smoothly since November 2016.

Electrical output

800 kW

Holger Herzberg has upgraded it with

Thermal output

826 kW

a number of additional features, such

Electrical efficiency 43.4%

as highly efficient, speed-controlled

Thermal efficiency 44.7%

pumps for hot water, engine cooling

Overall efficiency 88.1%

water, and mixed cooling water circuits. Herzberg proudly explains: “In this way, we save about 25,000 kWh of pump energy a year.” MWM plants excel in terms of their adaptability to specific customer needs, by means of which the plants can be made even

New MWM TCG 3016: outstanding efficiency, reliability, flexibility, and environmental compatibility represent the basic pillars of the gas engines in the output range from 400 kWel to 800 kWel

more efficient. This is a key reason why Herzberg appreciates the new TCG 3016. The reduced lubricant

Increased Efficiency

a dynamic market environment in the

consumption of less than 0.1 g/kWh

As a special treat, Herzberg has

age of global value chains. Outstanding

is another positive aspect. “Compared

implemented the inflow of the low-

efficiency, reliability, flexibility, and

to the previous oil change interval

temperature mixed cooling water circuit

environmental compatibility represent

of about 2,000 to 3,000 operating

of the cogeneration plant (47°C) for

the basic pillars of the gas engines in the

hours, the TCG 3016 only needs an oil

the return flow increase in the adjacent

output range from 400 kWel to 800

change once every 5,000 operating

swimming pool. “Normally, this energy

kWel. Their innovative drive is especially

hours, i.e. about once a year.”

is emitted directly to the outside air via

evident from the greatly reduced fuel

the dry coolers. With this modification,

costs, the extremely low lubricant

The generation of heat and especially

we now use the entire heat energy and

consumption, and the digitized power

its effective power production make

thus achieve a higher thermal efficiency

plant control TPEM.

the new engine an extremely efficient

(+5 percent) compared to conventional

product for cogeneration plant

applications.”

operators. The investment has truly

For more information please visit www.mwm.net

paid for Vereinigte Stadtwerke, as

The new MWM TCG 3016 gas gensets

Herzberg has taken care of the entire

are more than merely the next iteration

project engineering and the new

of MWM’s proven gas gensets: The

Source: Caterpillar Energy Solutions

German Combined Heat and Power Act

new gas engines represent an entirely

GmbH, Mannheim/Germany

(KWK) paves the way to attractive state

new development – perfectly tailored

Author: Frank Fuhrmann

incentives. The second TCG 3016 has

to the challenges of Industry 4.0 and

April 24, 2017

already been ordered!

the changed framework conditions of

20 | POWER INSIDER VOLUME 10 ISSUE 1


Ametek Land

W W W. L A N D I N S T . C O M

|

W W W. A M E T E K . C O M


The Role of Fintech in Green Finance Asia

Implementation of the Paris Agreement and achievement of the Sustainable Development Goals (SDGs) will require significant new investment. (World Economic Forum 2013; Global Commission on the Economy and Climate 2014; Organisation for Economic Cooperation and Development 2017; Bhattacharya et al. 2016; Bielenberg et al. 2016).

Indeed, the latter will require additional

The United Nations Conference on

trillion for power and $8.4 trillion for

investment of $2 trillion–$3 trillion

Trade and Development (UNCTAD

transportation, in order to maintain

per year and $1.4 trillion per year in

2014) estimates total global annual

growth, eliminate poverty and address

developing countries, including $343

investment needs as equating to

climate change (ADB 2017).

billion–$360 billion for low-income

$5 trillion–$7 trillion, including $3.3

countries and $900 billion–$944 billion

trillion–$4.5 trillion in developing

Owing to limited public budgets,

for lower-middle-income countries

countries in key SDG sectors

private capital must constitute a large

(Schmidt-Traub 2015; Schmidt-Traub

(comprising infrastructure, food

proportion of this new investment.

and Sachs 2015).

security, climate change mitigation and

The Paris Agreement includes a

adaptation, health and education). The

commitment to “[making] finance

Trillions of dollars in new investment,

OECD (2017) estimates current levels of

flows consistent with a pathway

including incremental investments to

investment as approximately $1 trillion

toward low greenhouse gas emissions

ensure that long-term investments such

per year, i.e., less than a third of the

and climate-resilient development”

as infrastructure are low-carbon and

amount required.

(United Nations Framework

climate-resilient, will be required to meet

Convention on Climate Change

the Paris Agreement’s key objective of

Developing countries in Asia will

(UNFCCC) 2015). Ensuring that capital

ensuring that global average temperature

need to invest an estimated $26

flows to sustainable investment has

increase remains “well below” 2°C and

trillion by 2030 (or $1.7 trillion per

therefore become an important focus

achieves the SDGs.

year) in infrastructure, including $4.7

for policy makers.

22 | POWER INSIDER VOLUME 10 ISSUE 1


The United Nations Environment Program explored the potential for alignment of the financial system to meet sustainability objectives (Zadek and Robins 2018). Innovations in green finance offer the potential to contribute to global goals and reshape the economy in favour of access to services such as energy, poverty reduction and

Innovations in new technologies such as blockchain that have the potential to accelerate the flow of capital to a more sustainable economy technology

economic activity, as well as lowering

The aim of this paper is to survey the potential applications of fintech and blockchain for green finance, with an emphasis on renewable energy as a key element of implementing the Paris Agreement and achieving the SDGs. Moreover, the paper will suggest areas for future policy consideration. Where applicable, it highlights examples from Europe, which has emerged as a leader in blockchain innovation,

aggregate investment and operating

policies that encourage the development

and therefore potentially relevant for

costs and therefore helping to improve

of a more sustainable economy”

developing countries in Asia, especially

our capacity to achieve agreed

(Lindeberg 2014, The Sustainable

in the energy sector.

sustainability outcomes.

Development Goals encompass 17 global goals, including SDG 1 – No Poverty, SDG

Where applicable, the paper highlights

1. Technology innovation and new

2 – Zero Hunger, SDG 7 – Affordable

examples from Europe, which has

financial instruments will be required

and Clean Energy, SDG 8 – Decent

assumed a leadership role in sustainable

to lower costs and raise capital at the

Work and Economic Growth, SDG 9 –

finance and fintech innovation,

appropriate scale and speed. Green

Industry, Innovation and Infrastructure,

including blockchain start-ups.

finance and fintech are relevant to

SDG 10 – Reducing inequalities, SDG

policy makers, particularly in emerging

11 – Sustainable Cities and Communities,

The paper also draws linkages from

and developing countries, as they

SDG 12 – Responsible Production and

these innovations to the People’s

pursue the implementation of the

Consumption, and SDG 13 – Climate

Republic of China (PRC), as a leader in

Paris Agreement and achievement of

Action. p. 1).

both green bonds issuance as well as in

the SDGs.

fintech and blockchain technology. Innovations in new technologies such

Fintech broadly refers to “companies

as blockchain that have the potential

Fintech and Blockchain

or representatives of companies that

to accelerate the flow of capital to a

Fintech in its initial applications involves

combine financial services with modern,

more sustainable economy technology,

“technologies used and applied in the

innovative technologies” (Dorfleitner et

as well as financial instruments such

financial services sector, chiefly used

al. 2016). Green finance can be said to

as green bonds that meet the risk-

by financial institutions themselves

constitute “financial investments flowing

return requirements of investors for

on the back end of their businesses”

into sustainable development projects and

sustainable investments, will help meet

but its applications have enlarged

initiatives, environmental products, and

global policy objectives.

“to represent technologies that are disrupting traditional financial services, including mobile payments, money transfers, loans, fundraising, and asset management” (Marr 2017). Prominent among fintech applications are blockchain or distributed ledger technologies. The concept of a blockchain protocol and its application for bitcoin was first proposed in a white paper published in 2008

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FEATURE: ROLE OF FINTECH IN GREEN FINANCE ASIA

by an unknown person or persons

providing a complete history for

named Satoshi Nakamoto (Nakamoto

every piece of data in the system. Each

2008). Blockchain, which is a type of

transaction on the record is digitally

distributed ledger technology, enables

signed so we know who submitted it

the creation of a distributed database

to the network. Avery asset can also be

that removes the need for trusted

directly transferred in a secure, fast,

intermediaries, such as banks or other

and transparent way.

institutions, to facilitate transactions. A blockchain is “a type of database that

The Blockchain provides

takes records and puts them in a block

unprecedented data security. The

(akin to, say, a sheet in your Excel file).

Blockchain system self-guarantees the

Each block is then ‘chained’ to the

authenticity of all the data within it,

previous block, using a cryptographic

eliminating the need for trust in other

signature. This allows blockchains to

parties. This prevents double spending,

be used like a ledger, which can be

are valid, and anyone in the world can

falsified asset ownership, and other

shared and corroborated by anyone

participate in the consensus process”

forms of data tampering.

with permission” (DiCaprio and Beck

that determines the blocks to be added

2017). Blockchain thereby ensures

to the chain. By dis-intermediating

The Blockchain is highly transparent; a

“the integrity of the data exchanged

institutions that were previously

record of all transactions is permanently

among billions of devices without

required to establish trust, blockchain

available. All users on the system can

going through a trusted third party”

offers the potential of “a world without

see in real time as new transactions are

(Tapscott and Tapscott, 2017; also see

middlemen” (Gupta, 2017).

added to the database.

Public distributed ledgers combine

The Blockchain is also entirely audit-

As Crosby et al. (2015) explain:

economic incentives with cryptography,

able. Every time a new transaction

A blockchain is essentially a distributed

peer-to-peer protocols and data

is added to the record, it is also

Tapscott and Tapscott 2016).

database of records or public ledger

storage to create a transparent,

cryptographically linked to every

of all transactions or digital events

immutable and decentralised record of

previous transaction. Therefore, the

that have been executed and shared

transactions that is visible to all parties

Blockchain ledger cannot be altered

among participating parties. Each

on the blockchain (Gupta and Knight

once it is verified.

transaction in the public ledger is

2017; Meunier 2018). As the Blockchain

verified by consensus of a majority of

Trust Accelerator (2018) explains: The

As a result, blockchain technology has

the participants in the system. And,

innovation of the Blockchain begins

been described as a “trust machine”

once entered, information can never

with the fact that no central entity

because it produces the efficiencies

be erased. The blockchain contains a

owns or controls it. Data is stored

of trust between parties without a

certain and verifiable record of every

across a global network of computers.

central intermediary (The Economist,

single transaction ever made.

When we put an asset of value onto

2015). Blockchain proponents note the

the Blockchain, these transactions are

far-reaching, transformative potential

cryptographically linked in data blocks,

of the technology in financial services

Blockchains can be public (open access) or private (controlled access). Vitalik

and across the global economy, even

Buterin (2015), who created Ethereum,

as blockchain applications remain

a decentralized platform that runs selfexecuting ‘smart contracts,’ describes public blockchains as ones “that anyone

in the world can read, anyone in the world can send transactions to and expect to see them included if they

24 | POWER INSIDER VOLUME 10 ISSUE 1

blockchain offers the potential of “a world without middlemen”.

at an early stage of development. Indeed, Tapscott (2016) describes blockchain as “the biggest innovation

in computer science — the idea of a distributed database where trust is established through mass collaboration


FEATURE: ROLE OF FINTECH IN GREEN FINANCE ASIA

and clever code rather than through

platform for the exchange of value,

a powerful institution that does the

where data is the core underlying

authentication and the settlement.”

element. IoT refers to connecting any

Fintech and sustainable development applications

object or electronic device with a sensor

Fintech – and blockchain in particular –

and that is connected to the Internet,

have important potential implications

while big data refers to the large-scale

for the implementation of a range of

collection, analysis and application of

sustainable development applications,

data, which may generated by the IoT.

owing to the potential impact of fintech

IoT and big data provide a base layer of

on the economy and the fact that

information that can then be managed,

these new technologies will continue

automated and acted upon by either

to develop over the same timeframe

human or automated decision processes.

as the implementation of the Paris

This interrelationship between

Agreement and SDGs.

technologies will enable a future in which these complementary

Fintech and blockchain have already

technologies are integrated.

been related to sustainability

Recent market activity involving bitcoin and other crypto-currencies

applications and use-cases. The United As Outlier Ventures (2016) state:

Nations Environment Programme

has drawn attention to blockchain and

“Blockchains, artificial intelligence,

(UNEP 2016) has identified over two

the related digital ledger technologies

the Internet of Things, autonomous

dozen distinct applications of fintech

that underpin them as having broader

robotics, 3D printing, and virtual and

for sustainable development and in

and deeper long-term societal and

augmented reality are all converging to

varying levels of implementation,

economic implications than the volatile

significantly disrupt existing industries

including four applications in energy

market prices of cryptocurrencies such

and create whole new markets and

described in greater detail below: pay-

as bitcoin. As Johnson (2018) writes:

economic models.” In this future

as-you-go resource utilities; flexible

The true believers behind blockchain

economy, the big data collected by

energy supply and demand, peer-to-

platforms such as Ethereum argue

the IoT are “authenticated, validated

peer renewable energy, and community

that a network of distributed trust

and secured using distributed ledgers,

distributed generation.

is one of those advances in software

consensus and other decentralised

architecture that will prove, in the long

technologies” (Outlier Ventures 2018).

Chapron (2017) has compared

run, to have historic significance. That

As IoT, big data and blockchain continue

blockchain technology “to the

promise has helped fuel the huge jump

to evolve, their gradual convergence

invention of double-entry book-

in cryptocurrency valuations. But in a

will create new possibilities for the

keeping...which enabled the modern

way, the Bitcoin bubble may ultimately

fulfilment of sustainability goals

economy” and has highlighted Citations

turn out to be a distraction from the

where these digital technologies are

from The New York Times, Wall Street

true significance of the blockchain. The

developed with such objectives in mind.

Journal, and the Financial Times.

This interrelationship between technologies will enable a future in which these complementary technologies are integrated.

The potential for blockchain

real promise of these new technologies, many of their evangelists believe, lies not in displacing our currencies but in replacing much of what we now think of as the internet, while at the same time returning the online world to a more decentralised and egalitarian system. Technologies such as the Internet of Things (IoT) and big data can be deemed as complementing blockchain as a

applications that blend cryptography and sustainability. Gupta and Knight (2017) have highlighted innovations in mobile money services such as M-Pesa as an example of how developing countries can leap ahead: “[Imagine] what

full-scale transformation build on

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FEATURE: ROLE OF FINTECH IN GREEN FINANCE ASIA

blockchain might do. It could create

scale over the next five years, they

hyper-efficient government with

could deliver a transformation in

provably trustworthy infrastructure;

global supply chain management.”

new markets and opportunities for citizens to access the formal

Indeed: Blockchain solutions

economy on equal terms; efficiencies

constitute the rare innovation that

of operations that lower prices and

could provide both profits and social

improve the quality of goods for all

purpose. Regulators, social enterprises,

consumers; and a kickstart to high-

and civil society organisations are

tech innovation around the world.”

poised to harness the transparency and accountability available through

The World Bank (2017) has catalogued

Maersk, the world’s largest shipping

blockchain-based tools to help solve

a wide range of blockchain applications

company, based in Denmark, and IBM,

supply chain problems including

in the financial sector, including money

announced plans to form a joint venture

dangerous labor conditions and

and payments, financial services

“to provide more efficient and secure

environmentally destructive practices.

infrastructure, agriculture, governance,

methods for conducting global trade

(Golden and Price 2018)

healthcare records, and humanitarian

using blockchain technology” with the

and aid applications, such as tracking

aim of reducing costs and inefficiencies

Blakstad and Allen (2018, passim),

and delivery of aid.

(White 2018).

from the fintech start-up Hiveonline based in Denmark, have highlighted

Examples of potential use-cases that are relevant to sustainable development include supply chain transparency, identity and financial inclusion, and property rights, as described below.

Supply Chain Transparency A major set of use-cases with implications for sustainable development involves supply chain transparency. Blockchain’s application in tracking assets is expanding into natural

Blockchain-based supply chain solutions reach scale over the next five years, they could deliver a transformation in global supply chain management

the potential of fintech solutions across a number of intervention areas tied to sustainability, as well as diverse ways in which blockchain can improve supply chain integrity, including: the traceability of transactions, allowing consumers to “be confident where

their money is going”; provenance across the lifecycle of an asset or commodity such as location of origin; disintermediation using self-executing contracts that “can be encoded so

that the need for administration and

resources and offers the potential to

central intermediaries is significantly

transform the ways in which natural

Golden and Price (2018) have

resources are recorded and traced

noted the number of pilot projects

reduced or removed, taking much of

across several sub-sectors, including

that have been launched by major

the challenge and cost out of running

forestry and fisheries to carbon

supply chain companies – including

circular economies”; and transparency

accounting and energy. DeCaprio and

agriculture traceability tied farmers’

in “removing the need for third party

Beck (2017) have cited the example of

digital identity, shipping and logistics

auditing” and facilitating identification

a pilot blockchain project to establish a

software to reduce inefficiencies in

of value through a supply chain.

sustainable supply chain in Indonesia

container shipping, mapping to create

to track the provenance of skipjack

transparency in supply chains for

and yellow fin tuna caught by local

consumer goods to improve ethical

Digital Identity and Financial Inclusion

fishermen, which enables compliance

sourcing, and efforts to build solutions

For many people in developing

at origin and could replace the current

for the sustainability of seafood supply

countries, participation in the financial

system of hard-to-verify paper records,

chains – and predict that if “blockchain-

economy (including capital formation

which are subject to corruption. In 2018,

based supply chain solutions reach

through savings, opening a bank account

26 | POWER INSIDER VOLUME 10 ISSUE 1


FEATURE: ROLE OF FINTECH IN GREEN FINANCE ASIA

or borrowing money from a financial institution, or financial leverage to support investment and growth) remains impossible due to a lack of sufficient identity and credit history, which are elements of identity that are often taken for granted in developed economies. Economic identity can be defined as “the marriage of identity and

commerce, resulting in a global, vetted, and manageable asset. This identity consists of the digital or electronic credentials that define a person’s history of economic interactions in the world economy” (BanQu 2018). As the United States Agency for International Development (USAID 2017) has observed:

There may be no single factor that affects a person’s ability to share in the gains of global development as much as having an official identity. Identity unlocks formal services as diverse as voting, financial account ownership, loan applications, business registration, land titling, social protection payments, and school enrolment. A functioning digital economy hinges on the critical infrastructure of digital identity. Emerging trends in digital identity have the potential to offer more inclusive biometrics, leveraging digital footprints to identify those who lack official ID, and potentially providing individuals with more convenient, secure, and portable identification options. cash transfers where the potential

and blockchain for economic identity

Examples of relevant blockchain-

for fraudulent claims is reduced or

and financial inclusion are property

based use-cases include economic

eliminated, and land titling, described in

rights and land titles. In nearly every

identification, in which identification is

further detail below (USAID 2017).

country, the way in which people know

“built up over time through a series

that they own property is dependent

of transactions stored on a blockchain

Property Rights

on a well-established and often

and verified by others,” humanitarian

Closely tied to the application of fintech

complex set of documents certifying

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FEATURE: ROLE OF FINTECH IN GREEN FINANCE ASIA

that the title holder has a legal claim on

however, address problems related

high impact and uncertainty,” with

the property. In some countries, title

to the reliability of records. ... This

IoT blockchain scoring highest in terms

insurance is required in the event of a

suggests that using the technology

of impact and uncertainty among

dispute between the parties about the

to store land records works best in

issues facing the energy sector. In the

validity of the transfer of the property.

places where the existing system for

energy sector, blockchain’s potential

recording land titles is already strong.

implications include dis-intermediation

A wide range of countries, including

of utility business models of centralised generation and grid distribution, with

blockchain platform, thus simplifying

Blockchain Technology for Renewable Energy and Distributed Electricity Systems

the process of transferring title and

In addition to the potential applications

Blockchain is in an early stage of

rendering future disputes less likely.

of fintech and blockchain for SDGs,

the innovation process ... [but] is

blockchain and related technologies have

expected to lead to much more direct

Sweden, where land records are

important early use-cases in the energy

relationships between energy producers

already recorded in digital form, may

sector, including peer-to-peer energy

and consumers, and to strengthen the

represent the country that is furthest

trading, climate finance and carbon

market participation opportunities for

ahead in this pilot testing process. A

credit trading. Applications have drawn

small energy providers and prosumers.

recent report on the second phase

attention from the financial sector,

In a decentralised energy system,

of Sweden’s test for the feasibility of

where the potential for blockchain to

blockchain could enable energy

putting property titles on a blockchain

improve the efficiency of settlement

supply contracts to be made directly

highlighted the significance of this

and other intermediary functions has

between energy producers and energy

application for developed as well as

represented a key attraction.

consumers, and for them to be carried

Estonia, Georgia, Ghana, Honduras and Rwanda, have started to test the potential of putting land titles on a

developing economies:

significant implications for distributed energy systems and decentralised grids:

out automatically (World Energy Council 2017).

For countries without a trustworthy real estate ownership record and land

Europe has been pioneering innovation

registry, a similar project may be the

and financing for blockchain firms

easiest, most cost efficient and fastest

involved in energy and the clean

way to increase GDP in the medium

technology sector. According to data

term. It will serve as a foundation for

from the Cleantech Group, which

better investments in land, enable the

tracks firms spanning energy, logistics

development of a mortgage market and

and supply chains, blockchain and

a credit market in general, and become

IoT, mobility, agriculture and other

an institution for trust in one of the

applications, the number of companies

most fundamental parts of an

or consortia involved in the broader

economy: land and real estate (Kairos

blockchain ecosystem has grown over

Future 2017).

the past year from about 35 to over Energy has been the second major

150. European companies had raised

Moreover, as Pisa and Juden (2017, p.

sector where blockchain has attracted

some $723 million as of May 2018,

28) note:

interest due to its potential role in

compared to $251 million in Asia

[Sharing] a land registry across a

disrupting current business models.

and $140 million in North America (Besnainou 2018).

distributed network greatly enhances

According to the World Energy Council

its security by eliminating ‘single

(2017, p. 3), blockchain was identified as

point of failure’ risk and making

“one of the most critical uncertainties”

An analysis of companies and pilot

it more difficult to tamper with

and “is perceived by energy leaders

projects working with blockchain and

records.... A blockchain cannot,

globally to be an issue of both relatively

energy found that over half were based

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in Europe, followed by North America and Asia, and nearly three quarters had been founded in either 2016 or 2017, reflecting their early stage of development (SolarPlaza 2018). Livingston et al. (2018) have described a range of potential applications of blockchain technology to electric power systems, including peer-to-peer and grid transactions, energy financing,

Blockchain will be able to provide many rapid, lowcost transactions in an electricity market with a growing share of renewable energy

According to Livingston et al. (2018, pp. 9–10), “[even] if blockchain does not

replace the grid, it could enable more participants to trade electricity. For example, Vattenfall, the largest Nordic utility, is running trials in which it uses a private blockchain network to record electricity transactions in which department stores or even individual homes can sell electricity generated by distributed batteries or solar panels;

sustainability, attribution, electrical vehicles, as well as other applications

As of 2017, over 90 companies and

previously, such transactions would

such as smart appliances. Examples of

pilot projects were working with

have been prohibitively expensive or

applications for renewable energy and

blockchain and energy, including

time-consuming to process.”

distributed energy systems described

the United States (US) start-up L03

below include peer-to-peer energy

Energy, which has a pilot peer-to-peer

In his design principles for the power

transactions, carbon credits and

energy exchange called the Brooklyn

markets of the future, Liebriech (2017)

climate finance.

Microgrid; PowerLedger, an Australian

views blockchain technology applied

blockchain-based trading platform

to payments for transmission and

Peer-to-peer Energy Transactions

that enables the decentralised selling

distribution as well as the attribution

A prominent set of use-cases of

and buying of renewable energy; and

of carbon content of imported power

blockchain technology for sustainability

Energy Web Foundation, a consortium

as being part of a broader “digital

applications involves peer-to-peer

of major global energy and blockchain

convergence of energy, infrastructure

energy exchange, including from

companies aiming to develop an energy

and services.”

distributed energy systems using

sector blockchain (Solarplaza2018).

renewable energy (Tapscott 2018).

In Norway, the state-owned energy

In Europe, over 40 energy-trading firms

As PwC (2017) explains: “so called

company Statkraft has demonstrated

have joined forces under the project

‘prosumers’ not only consume energy

the feasibility of energy exchange on a

name Enerchain, a blockchain project

but also dispose of generation in the

blockchain platform and has predicted

to conduct peer-to-peer trading in the

form of solar systems, small-scale wind

that within five years “blockchain will

wholesale energy market: The main

turbines or CHP plants; moreover,

be able to provide many rapid, low-cost

goal of Energy is to deploy a technical

blockchain technology could enable

transactions in an electricity market

infrastructure allowing participants in

them to sell the energy they generate

with a growing share of renewable

the energy wholesale markets to trade

directly to neighbors.”

energy” (Statkraft 2018).

power and gas in a decentralised way, thus avoiding intermediaries and central

As a result, “[b]lockchain based energy

market platforms. ... Operating costs

processes would no longer require

for a decentralised system are different

energy companies, traders or banks

from operating a ‘classical’ central

(for payments). Instead, a decentralised

platform, i.e., dramatically reduced

energy-transaction and supply system

(Merz 2018).

would emerge, under which blockchainbased smart contract applications

Enerchain is at the proof of concept

empower consumers to manage their

stage and is designed to determine

own electricity supply contracts and

whether a decentralized blockchain-

consumption data” (PwC 2018).

based model can support the trading volumes and transaction speeds

30 | POWER INSIDER VOLUME 10 ISSUE 1


FEATURE: ROLE OF FINTECH IN GREEN FINANCE ASIA

required for trade execution in the

reliable and scalable, blockchain

gas and electricity markets (World

technology may ultimately accelerate

Marke (2018) has explored the ways

Energy Council 2017). Other early-

the transition to what the energy

in which blockchain may increase

stage initiatives include Alliander in

industry calls a “distributed world”

the efficiency of emissions trading

the Netherlands, which is piloting a

made up of both large and smaller

schemes, including by suggesting

blockchain-based energy tool to enable

power-generation systems for homes,

more efficient systems to transfer or

consumers to manage and share their

businesses, and communities.

trade carbon credits and proposing

renewable energy, and Conjoule,

the networking of carbon markets using blockchain technology, as well

in Germany, which is developing

Trade and Exchange of Carbon Credits

blockchain-enabled peer-to-peer

According to the World Bank

energy trading and accelerating

energy markets (World Energy

(2018), current markets for climate

international climate finance transfers.

Council 2017).

assets have created a ‘patchwork’ of

a start-up launched by Innogy

as boosting peer-to-peer renewable

climate actions with different units,

A broad group of over 40 organisations,

The International Energy Agency (IEA)

governance structures, registries and

including the International Emissions

(2018, p. 98) has stated: “Although still

rules, resulting in a system that does

Trading Association (IETA), formerly the

early-stage and small-scale, projects

not encourage economic efficiency,

Carbon Disclosure Project (CDP), the

of this kind suggest that decentralised

scale or complexity. At the same time,

Energy Web Foundation, and Power

energy, flexibility from transitive

the rapidly developing technological

Ledger, recently launched the Climate

energy and blockchain could develop

landscape is creating new opportunities

Chain Coalition (CCC) “to cooperatively

together to positive effect.”

for the harmonisation of climate assets

support the application of distributed

among different systems, instruments

ledger technology (‘DLT’, including

Alliander in the Netherlands, which is piloting a blockchain-based energy tool to enable consumers to manage and share their renewable energy

and assets. According to a recent

‘the blockchain’) and related digital

World Bank study, “Blockchain, Big

solutions to addressing climate change”

Data, the Internet of Things (IoT),

(Climate Chain Coalition 2018). The

smart contracts and other disruptive

UNFCCC has expressed support for

technologies hold out the promise

the CCC initiative and “the potential of

of addressing the needs of new

blockchain technology to contribute

generation climate markets post-2020”

to enhanced climate action and

(World Bank 2018).

sustainability” (UN Climate Change News 2018).

For different physical commodities, a digital asset can be created to represent

Blockchain offers significant promise

and provide title to the commodity

for creating new flows of finance for

asset, as well as multiple outputs (e.g.,

climate investments. As Thomason et

Indeed, these use-cases remain at

energy content) and outcomes (e.g.,

al. (2018) note, “blockchain enables

an early stage, and the technologies

greenhouse gas emissions, energy

new forms of finance to address global

and regulatory frameworks for these

access enhancement and poverty

climate finance problems, including

approaches must develop further for

reduction impact) associated with its

crowdfunding and dynamic funding

these use-cases to reach their potential

production and/or lifecycle. Blockchain

mechanisms from private finance

scale or disruptive impact (Medium

technology can provide a digital

markets.” More broadly, Marke and

2018; Metlelitsa 2018). Similarly, as

mechanism for recording and tracking

Silvester (2018,) state:

Basden and Cottrell (2017) argue:

these separate streams of information

Climate finance and green investment

To be sure, as with any new

associated with units. This delineation

provide the best ground on which

technology, blockchain remains largely

and tracking of separate value elements

to apply Blockchain as a ‘fintech’ to

unproven, and significant barriers

in the unit is the central idea behind this

combine technology and finance. ...

remain. ... Nevertheless, if it proves

new architecture (World Bank 2018).

As a loop, the energy sector provides

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FEATURE: ROLE OF FINTECH IN GREEN FINANCE ASIA

valuable production data very useful for the research and development of financial products, whereas new financial products benefit the energy sector reciprocally. Among the fintechs including big data, cloud computing, machine learning, distributed computing technology, Blockchain is the most impactful and revolutionary to the bottom- level (green) finance architecture, especially in lowering regulatory costs and expanding regulatory boundaries. a sustainable economy (McCormick et

high-level of creditworthiness. This can

Financial Innovation and Green Bonds

al. 2015). Nordic countries have also

be achieved by using several levels of

pioneered the use of green bonds to

credit enhancements, which would be

Financial instruments with the ability

mobilize capital for sustainability goals.

cost-prohibitive if applied to individual

to mobilise public and private capital

projects. These enhancements include

Subnational Pooled Financing Mechanisms

reserve accounts, cash flow over-

investment are therefore key to success. One of the most dynamic

One of the key financial innovations

financial transfers and intercepts, partial

instruments in the area of sustainable

at the institutional level for green

credit guarantees, first loss-facilities and

finance comprises green bonds, which

finance has been the use of a structure

subsidies (IISD 2018).

are fixed-income instruments whose

known as subnational pooled financing

proceeds are used by the issuer for

mechanisms (SPFMs) as means of

According to the Global Fund for Cities

environmental projects. Over the past

raising sustainability-oriented capital

Development (FMDV) or Fonds Mondial

decade, investor demand for these

from financial markets. An SPFM

pour le Développement des Villes),

instruments has been growing in

aggregates the financial needs of

SPFMs “have been successfully used

response to shifts in policy and capital

members into a pooled financing

since 1898 in securing finance for both

allocation due to growing concerns

agency (PFA), which then issues debt

large and small local projects, securing

about climate change and sustainability.

and distributes the proceeds from

over $1 trillion in finance in the US

Moody’s (2018) projects that the global

the bond offering to its members. As

and Europe, and over $2.6 billion in

issuance of green bonds will grow to

International Institute for Sustainable

developing countries” (FMDV 2017).

between $175 billion and $200 billion

Development (IISD) (2018) explains:

toward low-carbon, climate-resilient

collateralization, intergovernmental

In Europe, Nordic countries in particular

in 2018, up from $155 billion of green Most SPFMs require the set-up of a

have applied the SPFM model to meet

Special Purpose Vehicle (SPV) that

subnational financing needs. Examples

In Europe, Nordic countries have pioneered

have transparent governance structure

of Nordic PFAs include Kommuninvest

the use of green bonds to mobilise

and processes. These SPVs, whose

(Sweden), an organisation jointly owned

capital for investment in sustainable

structure depends on national laws,

by local government authorities and

infrastructure and related sectors.

are responsible for contracting debt

that acts as an aggregator and conduit

and making debt service payments on

issuer to Swedish local governments

Beginning in the 1970s, Sweden,

this debt. They are usually owned by

and uses proceeds from its green

Norway, Denmark and Finland

governments, though owners can also

bond capital-raising for lending to

have demonstrated leadership in

include the private sector, development

Swedish municipalities in the form

environmental policy, regulation and

partners, NGOs, etc. SPFMs must be

of green loans, which members

changes in behaviour consistent with

structured in such a way as to have a

then use to invest in environmental

bonds issued in 2017.

32 | POWER INSIDER VOLUME 10 ISSUE 1


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FEATURE: ROLE OF FINTECH IN GREEN FINANCE ASIA

projects; Kommunalbanken, Norway’s

concern among investors. Continued

establishing a green financial system,

largest lender to local governments,

momentum in the growth of the green

including “financial instruments such

which has an active green bond and

bonds market and more broadly in

as green credit, green bonds, green

green loan program; KommuneKredit

the expansion of green finance will be

stock indices and related products,

(Denmark), which serves as a municipal

contingent on transparency in the use

green development funds, green

credit aggregation agency and is

of proceeds (Santibanez et al. 2015;

insurance, and carbon finance, as

similar in function to Kommuninvest

Kyriakou 2017; Linsell 2017). In order

well as relevant policy incentives to

and Kommunalbanken; and MuniFin

to raise capital for the implementation

support the green transformation

(Finland), which is the main financial

of the Paris Agreement and the SDGs,

of the economy” (People’s Bank of

services provider to Finland’s local

developing countries in Asia and other

China 2016).

governments and offers a discount

regions may expand the use of green

margin to its borrowers to provide an

bonds, adopt financing models such

The PRC’s growth in activity in the

incentive to propose projects depending

as SPFMs, and further develop and

green bonds market has propelled the

on how ‘green’ the project is in terms of

implement innovative fintech and

country into a leadership position, and

its environmental sustainability (Climate

blockchain approaches to enhance and

green bond issuance from this country

Bonds Initiative 2018).

promote the growth and transparency

represents one of the largest sources

of their growing green bonds markets.

of issuance in the global green bond market (Climate Bonds Initiative 2017).

In addition, an important blockchain use-case has begun to take shape in

Adoption of innovative approaches,

monitoring green bonds proceeds in the

such as the Green Asset Wallet initiative

form of the Green Asset Wallet initiative

described above, could provide

(Repinski 2017).

additional means to boost investor confidence in the underlying quality of

The project, led by Stockholm Green

green financial instruments.

Digital Finance and backed by Norway’s Centre for International Climate

Implications for Asia

Research (CICERO), applies the concept

Major developing countries in Asia

of sustainability attribution to green

have recently begun to adopt and

financial investments. As CICERO

extend innovative approaches to

(2018) explains: The project ... is

promote green finance. The People’s

designed to equip green investors with

Republic of China (PRC) has identified

the technology to better deliver on the

the establishment of a green financial

goals of the Paris Climate Agreement

system as a goal in its Thirteenth Five-

and the SDGs. ... The wallet is based on

Year Plan (Central Committee of the

open-source technology tailored for

Communist Party of China (CPC) 2016)

capital market actors.

and has taken the lead in creating new institutional frameworks and incentives

Green Fintech in the People’s Republic of China

The technology will offer a platform for

for green finance and green bonds.

In the PRC, the ANT Financial Services

validation of, as well as impact reporting

The Guidelines for Establishing the

Group, formerly known as Alipay and

on, green investments. The Green Assets

Green Financial System, released in

a leading fintech company, launched

Wallet will help to effectively channel

2016 by the People’s Bank of China

a large-scale pilot to engage with

private institutional capital to green

(PBOC), the Ministries of Finance

consumers in shaping their behaviour

projects globally, specifically supporting

and Environmental Protection, the

in ways aligned with green finance at

green emerging markets investments.

National Development and Reform

scale. Chen et al. (2017) have explained

Commission (NDRC), and the banking,

the design of the pilot and have

In spite of the rapid growth in the green

insurance, and securities commissions,

highlighted its immediate impact and

bond market, transparency remains a

all emphasise the importance of

long-term potential:

34 | POWER INSIDER VOLUME 10 ISSUE 1


FEATURE: ROLE OF FINTECH IN GREEN FINANCE ASIA

The ‘Ant Forest’ encourages Ant’s

As a recent study on the future of

example to the rest of the world of how

users to reduce their carbon footprint

blockchain technology in the Asia and

the blockchain revolution will unfold

through a three-part approach: (a)

the Pacific region has noted: “Asia could

(Cognizant 2017).

providing individualised carbon

become a dynamic testing ground for

savings data to peoples’ smartphone,

the new business models promised

According to recent statistics, the PRC

(b) connecting their virtual identity

by blockchain, as the region has high

was the most active filer of patent

and status to their earnings of

demand for financial inclusion and the

applications related to blockchain

‘green energy’ for reduced carbon

need for more efficient, convenient

technology, with 56% (226) of the 406

missions, and (c) providing carbon

and affordable products and services”

blockchain related patent applications

offset rewards through a physical tree

(Cognizant 2017).

filed in 2017 (Desouza et al. 2018;

planting program.

Noonan 2018; Thomson Reuters 2018).

The PRC was the most active filer of patent applications related to blockchain technology

products owing to policy uncertainty.

2016 to January 2017, 200 million

For the Asia-Pacific region, blockchain

toward cryptocurrency is very explicit,

people across the PRC have voluntarily

represents the most significant

as it banned initial coin offerings

joined the program, about 44% of Ant’s

technological opportunity of the next

(ICOs) in September 2017 and

user base in the PRC, or about 20% of

decade, and is likely to be a wellspring

later prohibited all cryptocurrency

the PRC’s adult population or 3% of the

of innovative ideas for leaders across

exchanges from operating in the PRC.

world’s total population. Behavioural

the globe. Thoughtful observers of

Yet the regulation on blockchain, the

change over the period has resulted

the blockchain phenomenon already

technology behind cryptocurrencies,

in an estimated 150,000 tons of

recognise that they cannot ignore

remains unclear. Business operators

cumulative avoided carbon emissions

the cost efficiency and business

must be cautious, given the difficulty

and over 1 million trees planted by

effectiveness promises of distributed

of determining if blockchain

January 2017. ... The Ant Forest pilot

ledger technology.

products are fully compliant with

with other digital financial companies

Blockchain offers a once-in-a-lifetime

cryptocurrencies are involved. ...

to encourage billions of people to

opportunity for firms and leaders in

Sorting out the regulatory uncertainty

reduce their carbon footprint.

the Asia-Pacific region to provide an

with blockchain is key to the future

The Ant Forest pilot has far exceeded expectations in attracting large numbers of users in a short period of time, and elicited significant behavioural change.

As Desouza et al. (2018) argue:

Despite a spate of enthusiasm for blockchain business, many companies are keeping low profiles for their involvements in blockchain-related The central government’s policy

Over the first six months from August

government rules, even when no

could be extended in collaboration

innovation trajectory.

Conclusions and Preliminary Recommendations The future development and adoption of blockchain, IoT, big data and other related technologies offers the promise of systemic transformation: a radically different financial and capital allocation system geared toward inclusive and sustainable development. These new technologies are at an early stage of

FOLLOW US ON TWITTER: @PIMAGAZINEASIA WWW.PIMAGAZINE-ASIA.COM | 35


FEATURE: ROLE OF FINTECH IN GREEN FINANCE ASIA

development and their future trajectories are difficult to predict with confidence. However, the net effect of applications of fintech and blockchain technology to the wide range of potential use-cases above will be to substantially improve reliability (such as identity and financial inclusion), increase access to services (such as energy, banking and property ownership) and importantly, lower overall system costs. The aggregate impact of lower costs in each individual organisation or service-provider, and given sufficient competition and market

Fintech and blockchain sector will create new opportunities for countries that wish to reach the next stage of development in terms of financial, economic and technological performance

Policy makers can draw inspiration from a wide range of current and ongoing initiatives led by committed, dynamic fintech entrepreneurs who are focused on developing and implementing their particular technologies with a view to an application or set of applications that often have material direct or indirect bearing on our ability to fulfill the SDGs and the Paris Agreement. However, it is often the case that the deeper opportunity set rather than the agreements themselves are at the forefront of people’s thinking and business models.

dynamics, may have the positive effect of lowering the costs of achieving the

financial and machine processes” and

Finally, policy makers should engage

goals connected to these services.

in “specific, well-defined, and complex

more closely with the fintech and

applications” such as in interaction with

blockchain sector, in part because it

self-driving cars or drones.

is developing quickly, in parallel with

Of course, there will be growing pains, particularly as the system takes shape. According to Tapscott (2016), “[the

and to some extent separately from the ‘real’ economy. For policy makers

biggest problems...have to do with

Preliminary Recommendations for Policy Makers

governance. Any controversy that you

Policy makers responsible for finance

change, engagement with the fintech

read about today is going to revolve

for climate change and sustainable

and blockchain sector will create new

around these governance issues. This

development should pay attention

opportunities for countries that wish to

who can keep up with the pace of

new community is in its infancy. Unlike

to developments in fintech and

reach the next stage of development

the Internet, which has a sophisticated

blockchain. The sector is rapidly

in terms of financial, economic and

governance ecosystem, the whole world

evolving with a proliferation of different

technological performance in a global

of blockchain and digital currencies is

initiatives that have either direct or

economy that is increasingly dependent

the Wild West.” The significant energy

indirect relevance to green finance

on complex, decentralised networks.

use of blockchain consensus algorithms

and sustainable development. Many

Recognition of this potential will

relying on proof-of-work, as compared

initiatives are at an early stage and,

create opportunities for approaches

to the more efficient proof-of-stake

if supported by appropriate policy

that provide significant long-term

approach, will also need to be resolved.

and regulation, have the potential to

advantages in strengthening green

develop into business models that can

finance for low-carbon, climate-

However, even critics such as Roubini

both reduce the cost and improve the

resilient investment and achieving the

and Byrne (2018) who labeled

prospects of achieving the objectives

sustainable development goals.

blockchain “one of the most overhyped

of the Paris Agreement and the SDGs,

technologies ever” due to its inefficiency

particularly with respect to the areas

Nassiry, D. 2018. The Role of Fintech

compared to existing databases

described in this paper, including

in Unlocking Green Finance: Policy

and its superior demand for storage

supply chain transparency, identity

Insights for Developing Countries.

space and computing power, among

and financial inclusion, property

ADBI Working Paper 883. Tokyo: Asian

other limitations, have conceded that

rights, expansion of renewable energy,

Development Bank Institute. Available:

blockchain could have “potentially

decentralisation of electrical power

https://www.adb.org/publications/

far-reaching implications” if combined

systems, carbon credit trading and

role-fintech-unlocking-green-finance

with “secure, remote automation of

improved access to climate finance.

Email: dnassiry@gmail.com

36 | POWER INSIDER VOLUME 10 ISSUE 1


Karpowership

www.karpowership.com

power for asia


China Backs Fuel Cell Technology Stung by the impact of the financial crisis, the hilly city of Yunfu in China’s southern Guangdong province decided in 2009 it was time for a makeover.

Known over hundreds of years for

Attracted by generous government

“When we moved here it was all

producing delicate stones for arts

subsidies, a whole suite of companies

barren hills,” says Frank Ma, chairman

and crafts, the city had few modern

covering the supply chain have now set up

of Guangdong Nation Synergy

industries apart from consumer

in the park, which is producing hundreds of

Hydrogen Power Technology, walking

appliances. So officials decided to

buses and small trucks using fuel cells that

along a line of bright blue fuel cell

lop the top off the surrounding hills

run on hydrogen gas. So successful has it

buses. “Your first impression [of

and build a 13.4 sq km industrial

been that local officials now plan to flatten

the area] is that this is not the

park focused on fuel cells — a rival

two more hills to create a neighbouring

kind of place to do this kind of

technology to internal combustion

vehicle manufacturing plant and a

manufacturing. [But] this is a special

engines and electric batteries.

chemicals facility.

kind of industry in China.”

38 | POWER INSIDER VOLUME 10 ISSUE 1


The Yunfu park is the epitome of China’s powerful industrial policy — which is designed to use generous subsidies to develop and dominate emerging industries critical to the

“Made in China 2025” shift to highend manufacturing. Beijing has spent an estimated $58.8bn subsidising its electric car industry over the past decade, according to the US-based Center for Strategic and International Studies,

A hydrogen fuel cell bus in Zhangjiakou, northern Hebei province

creating the world’s largest market for electric cars as well as a dominant

China’s rush into fuel cells could be

village along the Sham Chun river

position in batteries— surpassing Japan

an expensive gamble, however. The

that separates the mainland from

and South Korea. Subsidies have also

vehicles need to be able to compete

Hong Kong into one of its most

helped propel Chinese solar makers

without subsidies just as batteries are

vibrant cities and home to some of its

into the ranks of the world’s largest

becoming ever cheaper, quicker to

largest technology companies. Almost

producers, overtaking competitors in

charge and able to hold more energy

the entire taxi fleet uses electric

the US and Europe.

for the same amount of weight.

cars made by hometown producer

Tesla chief executive Elon Musk has

BYD, the world’s largest electric car

Now Beijing hopes to do the same for

dismissed fuel cells and hydrogen as

manufacturer that is backed by Warren

fuel cells — which along with electric

“mind-bogglingly stupid”.

Buffett’s Berkshire Hathaway. The buses are also all electric.

vehicles could help decarbonise the entire transportation fleet and reduce

The power of China’s subsidy machine

China’s vast reliance on imported oil.

can be seen in the southern city of

Almost half of all battery and plug-in

While fuel cells are unlikely to compete

Shenzhen, which grew from a fishing

hybrid vehicles sold this year will be

with batteries for small passenger cars because of the latter’s continued reduction in costs, they could play a role in larger vehicles such as trucks and buses, as well as in ships and trains.

“If you look at what China did in solar, in wind and in battery electric vehicles the subsidy tap was opened and it brought a lot of capital and companies to these new markets, which resulted in China being the leader in all three of these segments,” says Randy MacEwen, chief executive of Canada’s Ballard Power, one of the world’s largest fuel cell manufacturers. “We expect to see something similar with the fuel cell industry.”

How a typical fuel cell works

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FEATURE: CHINA BACKS FUEL CELL TECHNOLOGY

sold in China. Thanks to government rules that restricted domestic car companies from buying batteries from foreign producers, Chinese battery maker CATL has become the world’s largest producer, overtaking rivals LG Chem and Panasonic. Based in Ningde, in southeastern Fujian province, CATL this year signed deals to sell batteries to BMW and Daimler and announced plans to build a factory in Germany.

China is a market that has proven that with subsidies they will drive production capacity and volume and see significant cost reductions.

initially run on buses using compressed natural gas before the hydrogen infrastructure is built, he says.

“While we talk a lot about these technologies in Europe the Chinese government is actually pushing ahead,” Mr Caldwell says. “They can create the market and create the demand and drive these technologies down the cost curve.”

the US Hybrid Corporation on a Just as it was in batteries five years

hydrogen-powered fuel cell bus to run

Ballard says its joint venture with

ago, China is a laggard in fuel cells,

in Honolulu airport. And in November

Weichai will aim to make at least

behind Japan and South Korea as well

Weichai Power, China’s largest state-

2,000 fuel cells a year for commercial

as the US and Europe. Toyota has

owned diesel engine maker, spent

vehicles by 2021 — the largest planned

consistently bet on the technology

$184m on a 20 per cent stake in Ballard.

deployment to date. The company

and launched its first fuel cell car, the

This month Weichai also paid £48m for

says the total cost for customers to

Mirai, in late 2014, It sells for about

a 20 per cent stake in UK-based fuel

buy and operate a fuel cell bus will

£65,000. Hyundai’s Nexo fuel cell

cell maker Ceres Power.

be the same as for a battery-driven vehicle by 2020.

model goes on sale this year for a similar price.

Phil Caldwell, Ceres chief executive, says the size of the Chinese market

“If you look at the costs we’re

To overcome that laggard status,

was too big for his company to ignore.

[currently] at a premium [compared]

Chinese companies last year began

The company plans to transfer its

to battery electric vehicles,” says Mr

a concerted effort to acquire and

technology to Weichai and jointly invest

MacEwen. “What hasn’t happened yet

integrate foreign technology. In May

in a manufacturing facility in eastern

in the fuel cell market is the power

BYD announced it was working with

Shandong province. The fuel cells will

of volume. China is a market that has

Hyundai’s Nexo fuel cell model goes on sale this year for a similar price

40 | POWER INSIDER VOLUME 10 ISSUE 1


FEATURE: CHINA BACKS FUEL CELL TECHNOLOGY

proven that with subsidies they will drive production capacity and volume and see significant cost reductions.” Benny Oeyen, a former executive for General Motors in Shanghai, stands next to a fuel cell bus made by Feichi Bus in Yunfu and watches the water

Under the current scheme, manufacturers of fuel cell vehicles are guaranteed to make a profit.

come out of the exhaust pipe.

State-owned companies have also started to build hydrogen refuelling stations, with China Energy, the country’s largest power company, building one of the country’s biggest in the city of Rugao in eastern Jiangsu province. The price of hydrogen is also heavily subsidised, often making it cheaper

“I think this is the answer to the

vehicles two years early — around the

energy challenge of mankind,” says

same number of vehicles as California.

Mr Oeyen, now head of market

Industry participants say China could

Fuel cells have a number of advantages

development for platinum group

hit a target of 2m fuel cell vehicles by

for China. They can help reduce the

metals at Anglo American. “It’s no

2030, about 5 per cent of the total

country’s reliance on imported energy

longer pie-in-the-sky PowerPoint

vehicle fleet.

as well as raw materials. While lithium-

presentations.”

than diesel.

ion batteries require a host of metals Under the current scheme,

such as cobalt, lithium and nickel, most

All told, China will have spent about

manufacturers of fuel cell vehicles

fuel cells only require platinum, of

Rmb85bn ($12.4bn) on supporting fuel

are guaranteed to make a profit. They

which there is an abundant supply, as a

cell powered vehicles last year, in a

can receive as much as $30,000

catalyst, at a level of around 0.5 to 0.6

mix of national and local subsidies. The

from the central government per

grammes per kilowatt.

technology received high-level support

vehicle — provided it is driven at least

in October when Wan Gang, a former

20,000km and meets minimum

“In terms of resource adequacy, it’s a

minister of science and technology who

power requirements. They can also

lot easier to see how you do it for fuel

is considered the father of China’s push

receive a local government subsidy

cells than for lithium-ion batteries,”

into electric cars, said “the next era

that varies by region.

says Paul Gait, an analyst at Bernstein.

“If you go to the northern rim of the

belongs to fuel cell technology”. “With the current subsidies the

Bushveld [in South Africa] there’s

While Chinese subsidies for battery

producer of the fuel cell bus is making

enough platinum to electrify the

electric vehicles are expected to be

money from day one,” says Mark Sun,

entire auto fleet.”

phased out by 2020 they will continue

head of marketing in Asia for Anglo

for fuel cells to at least 2025, according

American Platinum, which is looking

China may also have a solution for

to some in the industry.

to boost demand for platinum

being self-sufficient in hydrogen. While

through its use in fuel cells.

most hydrogen is created from fossil

Powered by hydrogen 8,000 - Estimated Chinese national and local subsidies to support fuel cell powered vehicles in 2018

fuels such as methane and used in The subsidies have prompted a

the refining and chemical industries,

host of Chinese companies to start

another method is to produce it using

producing fuel cell vehicles, including

electricity to split water, a process

the country’s largest car manufacturer,

known as electrolysis. This process

SAIC Motor, and its largest electric

is not an efficient use of energy, but

1m - Beijing’s target for fuel cell

bus maker, Yutong Bus. Yu Yi, head of

it makes sense when the cost of

vehicles on the road by 2030. The US

fuel cell research at SAIC, says that

electricity is free.

target for that year is 800,000 (IEA)

when the company reaches a target

The money has helped China reach its annual target of 5,000 fuel cell

of 10,000 fuel cell vehicles the “costs

Beijing’s huge investment in renewable

can be reduced substantially”.

energy over the past decade has caused a lot of electricity to be wasted, since

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FEATURE: CHINA BACKS FUEL CELL TECHNOLOGY

intermittent wind and solar power

“It gets more difficult for fuel cells

Mr Ma in Yunfu is hesitant when asked

cannot be properly integrated into

— it’s not a matter of catch-up,

if he can survive without subsidies.

the grid. China can use some of that

it’s catching up with something

“Subsidy dependence is hard to get

wasted energy to generate hydrogen

that’s moving ahead of you all the

rid of,” he says. Adding that if the whole

cheaply, says Nick Ni, general manager

time,” says Peter Harrop, chairman

experiment fails “the best fuel-cell

of Nantong Angstrom Renewable.

of consultancy IDTechEx. “China is

vehicles are still scrap metal”.

backing all horses just in case.” But he insists that once his company

It is estimated that around 150 gigawatts of renewable energy

Sceptics also warn that China’s push

can produce more than 100,000 fuel

generating capacity is abandoned in

into fuel cells could end up repeating

cells stacks a year, up from the current

China every year because it cannot be

its experience with electric cars, where

2,000, its buses should be competitive

integrated into the grid. That could be

government spending has created

against battery-powered rivals.

used to power 18m passenger cars, says

huge amounts of production without

Ju Wang, deputy secretary-general of

making sure there is real demand. There

the International Hydrogen Fuel Cell

are more than 100 domestic electric

if you can purchase 100,000 vehicles I

Association. “China does not need to

vehicle makers in the Chinese market.

can give you a price 30 per cent lower

“I said to the Guangdong government,

than electric vehicles,” Mr Ma says.

worry about hydrogen supply.”

“Can we identify electric car and fuel

“Our target from the first day was to

Despite this optimism, fuel cells will

cell producers that will survive the

survive beyond government subsidy

face fierce competition from batteries,

inevitable consolidation? At some

and support. Our goal is to keep costs

given the amount of money that is

point there will be a war of attrition,

down and completely commercialise.”

going into that sector. The global

and I’m not clear how they are going

battery market is expected to increase

to go about that,” says Scott Kennedy,

“The government has given a promise

10-fold by mid-century to $500bn,

a senior adviser at CSIS.

to the world that we have to reduce

according to Bernstein Research,

pollution,” he adds.

with costs expected to fall to parity with petrol engines by 2023. That is without any government subsidy. Carmakers from Tesla to Daimler have also launched electric trucks that will compete with fuel cells.

“The government has given a promise to the world that we have to reduce pollution,” he adds. 42 | POWER INSIDER VOLUME 10 ISSUE 1


POWERex Asia 2019


Asia’s Hydrogen Highway Japan’s hydrogen highway system was brought into place because of the 4-year Japan Hydrogen & Fuel Cell Project ( JHFC). Twelve hydrogen fueling stations have been built in 11 cities in Japan. Two hydrogen fuelling stations that

Sagamilhara, Yokohama-Asahi,

were built for Expo 2005 in Seto-

Kawasaki, Yokohama-Tsurumi,

North and Seto-South have been

Yokohama-Daikoku and Kimitsu-shi.

moved to the Chubu International Airport where only one is in operation

The Ome-shi hydrogen station

now. Eight Toyota / Hino FCHV buses

operates by reforming natural gas,

were refuelled at these stations for

hydrogen made by reforming kerosene.

which is readily available. The Ome-

the World Exposition Fair of 2005.

The station built by the Idemitsu

shi station is also a mobile station and

The stations dispensed 1,300 kg of

Kosan Company required extensive

services areas not covered by the fixed

hydrogen gas during the Expo.

desulfurization technology.

hydrogen stations. The Senju station is

One hydrogen fueling station that

The other Japanese cities that

Gas and Nippon Sanso.

had been operational in the city of

currently have operational hydrogen

The Kasumigaseki hydrogen fuelling

Hadano in the Kanagawa Prefecture

fueling stations include Ome-

station is a mobile station located

was the world’s first station to dispense

shi, Senju, Kasumigaseki, Ariake,

near Tokyo. The components of

an LPG reforming station run by Tokyo

44 | POWER INSIDER VOLUME 10 ISSUE 1


this hydrogen refuelling station are

it would oversee the construction

million-$4.7 million), well above 100

brought inside and night and moved

and operation of the new fuelling

million yen for a gasoline station.

outside for use in the morning hours.

stations, nearly doubling the number

The Ariake hydrogen refuelling

at present.

station is equipped to dispense both

The path to adopting hydrogen has been dogged by the difficulty in

gaseous and liquid hydrogen. This is

As countries seek low emissions

driving widespread take-up given

one of only two stations capable of

energy sources to power vehicles,

high costs of fuel-cell vehicles (FCVs),

dispensing liquid hydrogen in Japan.

homes and industry, Japan is betting

limited production capabilities and

heavily on becoming a “hydrogen

low numbers of fuelling stations.

The Sagamilhara hydrogen fuelling

society” despite the high costs and

station was the first of its kind

technical difficulties of a process that

Only a handful of automakers currently

installed at an existing LP gas station.

creates electricity from a chemical

market FCVs, including Toyota, Honda

The station uses alkali diaphragm

reaction of fuel and oxygen.

Motor Co and Hyundai Motor Co.

water electrolysis to generate

Toyota has sold only 5,300 units of

hydrogen gas. The Yokohama-Asahi

its Mirai FCV since its launch in 2015,

hydrogen fuelling station is the first station in Japan to reform high-purity hydrogen from naphtha. The Kawasaki hydrogen fuelling station is the world’s first station to reform methanol in order to attain the hydrogen gas. Methanol reforming is

Japan wants to have 160 hydrogen stations and 40,000 FCVs on the country’s roads by March 2021.

safer than natural gas reforming in that

while it has sold a total of around 11.5 million gasoline hybrids since launching the Prius 20 years ago. Japan wants to have 160 hydrogen stations and 40,000 FCVs on the country’s roads by March 2021. By 2030, it aims to have 900 stations to service some 800,000 FCVs, buses

it can be done at lower temperatures

JXTG Nippon Oil Senior Vice President

with less energy expended.

Yutaka Kuwahara said on Monday

and forklifts.

that a lack of users and high costs to

By then, it expects the price of

The Yokohama-Tsurumi hydrogen

build and operate fuelling stations had

hydrogen to fall to around 30 yen per

fueling station is Japan’s first off-site

slowed construction in Japan, delaying

normal cubic meter, from up to 100

station that refuels fuel cell vehicles

a government target to build 100

yen now.

through a trailer. The Yokohama-

stations by March 2016. Other companies involved in Japan H2

Daikoku hydrogen station uses steam reforming of de-sulfurized gasoline

Japan currently has about 90 stations,

Mobility include Honda, Nissan Motor,

to produce hydrogen. Behind the

with at least 40 operated by JXTG

Idemitsu Kosan, Iwatani Corp, Tokyo

station is a showroom and garage for

Nippon Oil, and another 10 are in the

Gas, Toho Gas, Air Liquide Japan Ltd,

hydrogen fuel cell vehicles.

planning or construction stage.

Toyota Tsusho.

The Kimitsu-shi hydrogen station

“We must lower costs, which will

South Korea aims to install 100

uses coke oven gas (COG) to mass-

remove many of the bottlenecks to

hydrogen filling stations by 2020

produce liquid hydrogen. The

developing more stations,” he told

Nel-Deokyang, a subsidiary of Nel

by-product COG is produced in the

reporters at a briefing.

ASA in South Korea, has received a purchase order for an H2Station

steel-making process and everyday this facility manufactures 0.2 tons of

By about 2020, the Japanese

hydrogen fuelling solution from Joong

high-purity liquid hydrogen.

government aims to roughly halve the

Do Gas, a retail company involved in

Japan H2 Mobility LLC, whose backers

cost of building a hydrogen fuelling

sales of LPG fuel in South Korea.

include Toyota Motor Corp and JXTG

station, which is currently about 400

Nippon Oil & Energy, said on Monday

million yen to 500 million yen ($3.8

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FEATURE: ASIA’S HYDROGEN HIGHWAY

The 2 million euro (US$2.4 million)

Hydrogen fuel breakthrough in

The membrane breakthrough will allow

purchase order marks the first installation

Queensland could fire up massive new

hydrogen to be safely transported

in Korea, and the first compact filling

export market

and used as a mass production energy

station solution to follow a new gas law and local standards.

source. Australian fuel could soon be in high demand for hydrogen-powered cars

“This is the breakthrough we have

across Asia

been working intensively with over the course of the last year. As the first pure H2Station® delivery from Nel, not only in Korea, but in Asia in general, this is a landmark achievement for Nel, as we continue to position ourselves as a truly global hydrogen company,” says Nel CEO Jon André Løkke.

“We are certainly the first to demonstrate the production of very clean hydrogen from ammonia,” Dr

Tipped as the future of green motoring, hydrogen cars are virtually emissions-free and both simple and fast to refuel.

In April, the South Korean government

Dolan said.

“Today is the very first time in the world that hydrogen cars have been fuelled with a fuel derived from ammonia — carbon-free fuel.” Program leader David Harris said Australia has a huge source of renewable energy — sunlight and

established a special purpose company

wind — that can be utilised to

(SPC) which would expand the country’s

It’s the first time hydrogen cars have

hydrogen infrastructure by installing

been powered with a fuel derived

hydrogen filling stations at the most

from ammonia.

produce hydrogen. But the highly flammable element is difficult to ship long distances because

travelled roads and highways in the

of its low density.

capital city Seoul and other major cities.

Both Toyota and Hyundai have

Nel-Deokyang takes part in the SPC

invested millions of dollars into

along with other participants from major

hydrogen-powered cars

CSIRO researchers found a way to

South Korean corporations, state-run

CSIRO principal research scientist

turn Australian-made hydrogen into

utilities and automakers.

Michael Dolan said it was a very

ammonia, meaning it could be shipped

exciting day for a project that has been

safely to the mass market of Asia.

“South Korea is currently one of the

a decade in the making.

fastest movers within the industry,

As of now, there are only five such

with an ambition of having 100

“We started out with what we

cars in Australia, but there are tens of

hydrogen fuelling stations online by

thought was a good idea, it is exciting

thousands across Japan, South Korea

2020. We are very happy to kick-

to see it on the cusp of commercial

and Singapore.

start our deliveries in South Korea

deployment,” he said.

and expect to continue to further

“The key here is we can transport

penetrate the market as we move

What’s the fuss about?

the hydrogen from the place where

forward,” Løkke concludes.

Tipped as the future of green

it is produced from renewable

motoring, hydrogen cars are virtually

energy — let’s say maybe that is in

The H2Station solution will be installed

emissions-free and both simple and

outback WA — and we can ship that

alongside conventional fuels on the

fast to refuel.

form of ammonia anywhere in the world,” Dr Harris said.

existing forecourt of an LPG station, which also marks a first in Korea. The

For the past decade, researchers

station is supported by the Korean

have worked on producing ultra-

Independent industry association

Automotive Environment Association,

high purity hydrogen using a unique

Hydrogen Mobility Australia said

and installation will commence towards

membrane technology.

the technology has the potential to

the end of 2018.

46 | POWER INSIDER VOLUME 10 ISSUE 1

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FEATURE: ASIA’S HYDROGEN HIGHWAY

“From an energy perspective, the ability to move solar energy or wind energy from one place to another using ammonia opens up doors that previously would have been closed because of the difficulties of transporting hydrogen.”

Australia’s next export boom The CSIRO team has already received expressions of interest from Japan, cell electric vehicles (FCEVs) with low-

in three minutes like a normal car and

South Korea and Europe, with industry

emissions hydrogen produced in Australia.

had a range of up to 800 kilometres.

players looking at taking up supplies

“Hydrogen powered vehicles,

“So they are just like driving a normal

including buses, trucks, trains,

car but there will be zero emissions,”

forklifts as well as passenger cars

he said.

initially to fuel commercial vehicles like

are being manufactured by leading

buses, taxis, trucks and trains. Dr Dolan said a million hydrogenpowered cars were expected to hit the

automotive companies and deployed

“Working in and out of South Korea

worldwide as part of their efforts

quite regularly, I know Hyundai has a

to decarbonise the transport sector,”

massive contract to provide hydrogen

Currently hydrogen-fuelled cars sell

she said.

buses to the Korean Government.”

for about $80,000, but, as with

streets by 2025.

electric cars run on power-grid charged

“In parallel, local and state

“It just announced 16,000 hydrogen-

batteries, the price is expected to fall as

governments have also committed

powered cars will go on the road and

production increases.

to build hydrogen refuelling

310 hydrogen refilling stations across

infrastructure with stations set

the country under a five-year plan.”

to come online in the next 12 to18

Mr Nargar said they expected to see price parity with petrol and diesel cars

months,” she said.

“They need to power those cars

Hydrogen-powered cars could be on sale

renewable hydrogen from Australia?”

within a decade.

from somewhere so why can’t it be as good as current gasoline cars, so

in Australia within the next two years.

‘A massive step for Australia’

“But the efficiency of the car is twice

Toyota spokesman Matthew Macleod

you can actually drive twice as far on

said the breakthrough was exciting

a tank,” he said.

because it addressed one of the key Both Toyota and Hyundai have

challenges with hydrogen.

seen as Australia’s next export boom.

invested millions of dollars into hydrogen-powered cars.

Dr Dolan said renewable hydrogen was

“It is a game-changer,” he said.

“It could potentially rival our LNG export industry,” he said.

Today’s road test will be on Hyundai’s

“When it gets to where it is going

flagship eco car the Nexo SUV, and

they can actually pull the hydrogen

“As of this year Australia is the world’s

out using the CSIRO technology,

biggest natural gas exporter. Hydrogen

which opens up fuel cell technology to

could be in the same position in the

Hyundai spokesman Scott Nargar said

markets that previously did not have

next couple of decades.”

the main advantage of hydrogen over

the technology.”

Toyota’s Mirai.

electric cars was they could be filled up

48 | POWER INSIDER VOLUME 10 ISSUE 1


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FEATURE: SPI CONSULTING

Hydrogen for better lives Renewable energy consumption in the Eurozone has been growing, 8.5% in 2008 16,7% in 2015( eurostat), with the goal of achieving a 20% reduction by 2020 and 27% by 2030. The renewable plants are differently

The gas once produced and stored can

spread in every country, some countries

be used to:

have more photovoltaic other eolic, by

Green mobility

the way all renewable energies have

Electricity production

a common problem: they are not on

Thermal energy production

now becomes a source of

demand energies, the production rate

For industrial application

financial gain.

risk diversification, as it can enhance hydrogen in different ways are not tied to a single market.

it’s not related to production request.

Solution

What before was being wasted

improved overall efficiency of the system for the use of surplus.

See Fig 1

SPI Consulting proposes to use

AEM Technology (anionic exchange

hydrogen generator to transform

Using renewable energies and hydrogen

the surplus of renewable energy into

together, they lead you to realize a

hydrogen gas, which can be exploited in

stand-alone energy island without

different markets.

create a very expensive net.

Advantages

Environmental advantages

Combine a hydrogen gas generation

The average renewable energy

system to a renewable energy source

consumption stands at 16.7% this

has several advantages.

means that the energy produced is

Economic advantages

greater, whereas not all the energy produced is used, then being able to

membrane)

The benefits of Transforming the

also use the surplus there would be a

Spi Consulting suggests to use the

surplus electricity into hydrogen are:

net reduction of nuisances.

surplus of renewable energy to produce

hydrogen via electrolysis of water.

breakeven point much more accurate

See Fig 2

Figure 1.

50 | POWER INSIDER VOLUME 10 ISSUE 1

Figure 2.


FEATURE: SPI CONSULTING

SPI Consulting is an engineering

Expertises

Enstack electrolytic stack

Company founded on 31 March 2011

Completed and under construction

SPI Consulting produces an Alkaline

by Ing. Alberto Valli and Mr. Emanuele

projects

Electrolytic Stack with an innovative

Castioni, President and Chief Operating

Design and manufacturing of

technology. Our anionic-exchange

Hydrogen Generators

polymeric membrane splits the

Officer and registered at the Chamber of Commerce of Verona. The Company is

Fuel Cell System integration

hydrogen and the oxygen directly

involved in the research & development

Manufacturing of Range Extender

during their generation permitting

for the production of hydrogen gas by

hydrogen-based for electric

an high differential

water’s electrolysis, and these studies

vehicles Hydrogen FC bycicle

pressure

Design and manufacturing a

between

power unit Hydrogenbased

anode and

Power Unit design and

cathode

manufacturing for Drone.

up to 20 bar(2MPa).

have led to significant achievements

such as the creation of a system for the production of hydrogen by water’s

electrolysis. The Company designs energy systems based on renewable

UPS fuel cell based

/ alternative energy, having also done

Energetic Audit for industrial plant

research and developed the concept of

Industrial design for a on-site

small smart-grid where in the following

MANUFACTUR

The Corporate’s core business is the manufa The Company also designs and produce Hy

Enstack Series

concrete plant

areas: •

Home

Manufacturing and Sales

Small residential construction

The Corporate’s core business is the

Automotive

manufacturing of electrolytic stack

Small electric boats

to provide hydrogen. The Company

The modus operandi developed has

also designs and produce Hydrogen

G-Enstack

Generators, with compressor (optional).

Hydrogen generator with integrated

led the Company to achieve important

compressor up to 300 bar.

results in terms of operating and

Some features: AMES ELECTROLYTIC

organizational structure:

Consulting produces an Alkaline Electrolytic Stack w • SPI Hydrogen production 500Nl/h Our anionic-exchange polymeric membrane splits the • during Compression 15:1 permitting an high differenti their generation cathode up to 20 bar(2MPa).

High Know- How on several engineering field

Scientific update

Some examples of our achievements

Water Maker

Remote Control

STACK

G-ENST During these years the Company

Hydrogen

has created an extensive network of

Financial Analysts

Market Analysts

Radio Broadcasting

Mechanical industries

System integrator

The current management team is composed of founding members, Eng. Alberto Valli and Mr. Emanuele Castioni, which is accompanied by Eng. Mauro Gamba, with many years of experience

g-enstack

in various sectors such as:

national and international relationship

in logistics and organization.

FOLLOW US ON TWITTER: @PIMAGAZINEASIA WWW.PIMAGAZINE-ASIA.COM | 51

Some featu Hydrog Compre Water M Remote


Hydrogen, Instrumental in Diversifying the Energy Mix in Asia The potential for the widespread use of hydrogen as a zero-emission fuel is gaining traction in Asia Governments and investors in Japan,

Achieving the Hydrogen Council’s

funding are planning new utility-

China, South Korea and Australia are

target will require investments of up

scale renewable projects to produce

increasingly turning to hydrogen as a

to $25bn annually through 2030

hydrogen for export to Asia.

long-term alternative to fossil fuels,

to double hydrogen production,

suited to a decarbonised world.

provide distribution infrastructure,

“Making the two-degree scenario a

and produce equipment such as fuel

reality will require hydrogen solutions

Hydrogen’s range of potential

cell electric vehicles (FCEV), trains,

across the whole energy system,” the

applications include diverse forms of

heating equipment and components at

global chief-executive-led Hydrogen

energy use from power generation

decreasing costs.

Council noted in its November 2017 report Hydrogen Scaling Up. This sets

to transport, heating and industrial processes. According to the Hydrogen

About 20 countries—led by Japan,

out a pathway to achieve significant

Council, the international hydrogen

South Korea, Germany, China and the

hydrogen penetration by mid-century,

market could be worth $2.5 trillion by

US state of California—are initiating

including requirements for hydrogen

2050, meeting 18% of total global

the market scale-up through public-

infrastructure and manufacturing

final energy demand, provide 30m

private partnerships and targeted

capacity, as well as the steps needed

jobs globally and reduce CO by 6

incentives.

to achieve competitive costs and mass

2

gigatonnes per year.

market acceptance. In Asia, China is targeting the

The International Energy Agency has

installation of 1,000 hydrogen

Fuel for transport

identified hydrogen as instrumental

refuelling stations (HRS) by 2030

Hydrogen has long been considered

in diversifying the global energy mix

serving over 1m FCEVs. By 2025, it also

a pariah as a transport fuel following

and reducing emissions, while Shell

expects to have transformed the city

the May 1937 Hindenburg passenger

is predicting that hydrogen will be

of Wuhan into the country’s leading

airship disaster. But technological

a major energy carrier from 2040.

hydrogen hub.

advances mean it can now be produced, transported and used for

By the end of the 21st century, it’s envisaged that hydrogen could supply

Japan expects to have over 900 HRS

power generation, heating, industrial

a quarter of all transport energy

operating by 2030 and South Korea

processes and transport in a stable,

demand, according to KPMG advisory

around 310 by 2022. In Australia,

sustainable and cost-competitive way.

service.

investors backed by government

52 | POWER INSIDER VOLUME 10 ISSUE 1


Himoinsa Far East

HIMOINSA FAR EAST 101 Thomson Road, #15-05 | United Square | Singapore 307591 Tel.: +65 6265 10 11 | Fax: +65 6265 11 41


FEATURE: DIVERSIFYING THE ENERGY MIX IN ASIA

On the production side, the falling cost and widespread deployment of utility-scale wind and solar photovoltaics, provide the opportunity to generate hydrogen with zero emissions. Norway and Australia are leading the field, with both looking to produce hydrogen

The overarching appeal of hydrogen is that, when burnt in pure oxygen, its only by-product is water.

Japan expects to have over 900

In Asia, Japan is leading the field in policy, regulatory and infrastructure investments to support the transition to a fully-fledged hydrogen-based society. The aim is to improve air quality, significantly cut emissions from generation and transport, reduce reliance on imported fossil

from renewable power on a scale for export in large volumes.

Rising demand in Asia

a stable cryogenic liquid state, albeit

fuels and improve emergency

at even colder temperatures than

response capabilities.

liquefied natural gas. As outlined in its Strategic Roadmap

hydrogen refuelling stations operating At present, ammonia is considered

for Hydrogen and Fuel Cells, Japan’s

the most promising hydrogen

Ministry of Energy, Trade and Industry

Target markets are countries which

carrier due to its relatively low

(METI) is coordinating a long-term

face obstacles in decarbonising their

cost, high energy density and ease

strategy to accelerate the uptake of

heat and power processes. Some

of liquefaction. In 2017, Japanese

FCEVs, fuel cell buses and hydrogen-

lack the space to install renewable

researchers also discovered a new

fired power generation facilities, both

generation capacity on their own.

method of producing hydrogen from

small and large-scale. METI expects

Others, with off-grid markets, rely on

ammonia at room temperature, giving

Japan’s annual consumption of

imported diesel or heavy fuel oil to

a significant boost to hydrogen’s long-

hydrogen will grow from 4,000 tonnes

generate electricity.

term potential.

in 2020 to 300,000 tonnes by 2030

by 2030

and 5-10m tonnes by 2050. The potential for large-scale

On the consumption side,

renewable-to-hydrogen production

technological advances in fuel cells

Since 2013, Japan has been

is supported by advances in liquefied

and other combustion technologies

developing a network of commercial-

natural gas transport, which has

mean hydrogen can be used in fuel

purpose hydrogen refuelling stations

proven that gas can be shipped

cell batteries for large and small-

to support FCEV uptake through

safely in large quantities around the

scale power generation, heating and

JHyM Japan H2 Mobility, an alliance

globe. Carrier compounds such as

transport. The overarching appeal of

of 16 utilities and car makers set up to

methanol, formic acid and ammonia

hydrogen is that, when burnt in pure

coordinate and expand the network.

enable hydrogen to be transported in

oxygen, its only by-product is water.

54 | POWER INSIDER VOLUME 10 ISSUE 1


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FEATURE: DIVERSIFYING THE ENERGY MIX IN ASIA

The roll-out will support Japan’s plan to have over 40,000 FCEVs on the road by 2020, when Tokyo will host the Summer Olympics and Paralympics, rising to 200,000 by 2025 and 800,000 by 2030. At least 1,200 fuel cell buses are also expected to be on the roads by 2030. In terms of pump pricing, METI expects FCEV owners will be able to buy imported hydrogen for approximately Y30 ($23) per normal cubic metre by 2030—equal to around $3 a gallon of petrol-falling to Y20/normal cm by 2050. At present, pump prices for imported hydrogen in Japan are tracking around Y100/normal cubic metre. In power generation, Japan is looking at switching from coal and imported LNG to hydrogen for its gas-fired power plants and coal gasification stations, using liquid import shipments

High investment in peak renewable energy production means Australia has considerable scope to develop hydrogen as an export product.

Development (AHEAD) project is being developed by Japanese companies Mitsubishi, Nippon Yusen, Chiyoda and Mitsui, with Brunei’s Sungai Liang Industrial Park to produce hydrogen from gas from Brunei LNG.

Australian production potential The investment is one of many taking place in Australia, which is also waking up to its vast geographic potential

from Brunei and Australia. To this end, Japanese companies such as

liquefied hydrogen to Japan through

to supply hydrogen produced from

Kawasaki Heavy Industries, Iwatani,

a $375m Hydrogen Energy Supply

renewable energy sources.

J-POWER and Marubeni are investing

Chain (HESC) project. This will gasify

The existence of vast swathes of

in hydrogen production projects in

brown coal to extract hydrogen with

available land for renewable facilities,

Australia and Brunei.

carbon capture and storage (CCS).

plentiful solar and wind resources, and

The coal-to-liquids project is targeting

high investment in peak renewable

In Australia, Japanese groups are

commercial start-up by 2030.

energy production means Australia

partnering with AGL Energy and Shell

In Brunei, the Advanced Hydrogen

has considerable scope to develop

to establish a supply chain to import

Energy Chain for Technology

hydrogen as an export product.

56 | POWER INSIDER VOLUME 10 ISSUE 1


FEATURE: DIVERSIFYING THE ENERGY MIX IN ASIA

The overarching appeal of hydrogen

Neoen and Megawatt Capital are

In Western Australia, the Asian

is that, when burnt in pure oxygen, its

already partnering with Siemens and

Renewable Energy Hub project is

only by-product is water.

Hyundai to build a small 1.25MW

considering using part of its planned

hydrogen electrolyser, which converts

utility-scale wind and solar project

In South Australia, French renewable

electricity to hydrogen, in the

in the Pilbara region to split water

developer Neoen recently announced

Australian Capital Territory.

into hydrogen and oxygen using

plans to build a hydrogen super-hub

electrolysis. Backed by CWP Energy

at Crystal Brook to export renewable

Asia, Intercontinental Energy and

hydrogen to Asia. The 50-megawatt

Vestas, the $15bn project is targeting a

hydrogen electrolyser would be

final investment decision by 2021 and

powered by a 300MW wind and solar

is also anticipating exporting power

farm and 400 megawatt hours of

to Southeast Asia through a subsea

battery storage, and could produce up

cable.

to 20,000kg (20 tonnes) of hydrogen a day.

In recognition of Australia’s potential to become a world leader in hydrogen exports, the Commonwealth Scientific and Industrial Research Organisation Hydrogen Utility (H2U) and Germany’s

(CSIRO) is investing $10m into

Thyssenkrupp are also planning

hydrogen fuel research through its

to build a renewable-hydrogen

Future Science Platforms.

electrolyser plant at Port Lincoln in South Australia with a 5MW hydrogen

As Karl Rodrigues, CSIRO’s Deputy

fuel cell and a 10MW hydrogen-fired

Director for Energy, put it “we could

gas turbine fuelled by wind and solar.

literally bottle our sunshine through electrolysis and sell it”.

“We could literally bottle our sunshine through electrolysis and sell it” FOLLOW US ON TWITTER: @PIMAGAZINEASIA WWW.PIMAGAZINE-ASIA.COM | 57


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