Commentary

Winston Churchill is famous for many reasons, one of which was his remarkable facility with the English language. Churchill’s pithy phrase about the power of mis-direction is worth keeping in mind for any analyst of the Indonesian power sector.

Just in the last four months, July to October 2018, seven earthquakes with magnitude greater than 5 have hit Indonesia. Two of them were very powerful and caused a lot of damages and fatalities. One with 6.9 magnitude occurred in Lombok Island on 5 August 2018 causing more than 500 fatalities, 1,300 injuries, widespread damages and displacing over 340,000 people. The other with 7.5 magnitude occurred in Central of Sulawesi Island on 29 September and eventually triggered a tsunami that caused more than 2,000 fatalities, 10,000 injuries, 5,000 people to be initially reported missing, and 70,000 homes destroyed.

This commentary submission was co-written with Natalie Lau (Reed Smith), Lucia Yiou and Mindy Huang (LCS & Partners). 

China’s reported trillion-dollar One Belt, One Road (OBOR) initiative is something we have all heard a great deal of, over several years now. With certain projects already having been completed, and as others get underway or proceed towards completion, we consider the likely impact of the OBOR initiative on regional cooperation within Asia and the ASEAN region, and the potential diversification of trade routes for traditional energy sources. OBOR presents a tremendous opportunity for fostering regulatory, economic and legal cooperation amongst ASEAN states and beyond.

Widely known to have vast solar potential, Southeast Asian countries have used a variety of methods to drive solar deployment in the last several years. However, the timing and efficacy of each country’s initiatives have varied considerably, leading to vastly different levels of historical solar growth. Thailand, for example, implemented pioneering programs years ago, generating a considerable number of solar projects, but currently provides very little support for new solar. Vietnam and Malaysia, on the other hand, have just recently ramped up their solar efforts, but are doing so with what appears to be considerable success.

The future of offshore wind energy will combine the application of global experience and local expertise to deliver projects tailored to the needs of the market. As the industry expands beyond its origins in the European market, the power of this combination will become clearer to see.

Last year, while presenting Singapore’s budget for 2017, the Singapore Finance Minister announced that Singapore will impose a tax on greenhouse gas emissions starting from 2019. At the time, the government announced that the tax would lie in the range of S$ 10 – 20 per tonne of carbon dioxide equivalent emissions.

Utility-scale solar PV continues to grow at a breakneck pace, driven by continually falling prices, including 19.7 USD/MWh in the recent Mexico auction and 17.9 USD/MWh in the recent Saudi Arabia auction – price levels that were nearly inconceivable even just a few years ago.

One of the major issues in solar power that is usually overlooked and is so fundamental to our life is water. Concentrated solar power (CSP) uses a whopping amount of water per MWh produced, totally driven by the need to cool the steam out of the turbine, key to achieving a good turbine efficiency and thus be able to generate as much electricity as possible.

I decided to stop my recipes on PV projects this month. We all seem to enjoy seeing more and more of programmes about cooking on TV, but we should also have some change to it. I would like to go back to a topic that I have addressed in one of my earlier articles: PV rooftops. Utilities are particularly worried with the rooftops and specially when no subsidies are involved as it is the case right now in most countries. Utilities fear the canibalization of their revenues and in particular for most of the Asian countries (and not only in Asia) that the slice of the paying consumers better-off will be the ones interested in installing PV rooftops due to expensive electricity bills. This happens mostly due to cross subsidies and without actually removing them, the problem is not on PV rooftops, but on the structure of subsidies.

Internet of Things (IoT) is billed as the next industrial revolution, Industry 4.0. The concept of IoT can be encapsulated as the capability to sense the environment with multitude of sensors, process all the data, make intelligent decisions and act in real time. At a high level there are three use-cases of IoT in the power sector: a) operational optimization resulting in improved economics and reduced carbon emissions, b) asset performance management (APM) for higher reliability and lower cost of maintenance, and c) customer engagement with the objective of lowering cost, and supporting local production, storage and usage of electricity.

Continuing my series on recipes for procedures to support Asia to develop PV capacity I am devoting this one to the tariffs. I mentioned on one of my earlier recipes that tariffs should be obtained from the market and FiT should be avoided or treated very carefully. I am now going to expand a bit on this issue. This recipe will require to consider 2 objectives:

For emerging economies in Asia and beyond, ‘business as usual’ is no longer enough for hydropower development. Instead, transparency, inclusiveness, benefit sharing and environmental and social responsibility, are the key actions that stakeholders and project-affected communities are looking for when it comes to private sector operations. Likewise, investors exploring new opportunities in emerging markets want a clear understanding of their project’s environmental and social risks.

As renewables markets mature, renewables investors are looking to new markets for their next source of growth. Solar photovoltaic (PV) generation has great potential and has been the most attractive renewable energy source amongst the Southeast Asian nations. Annual solar radiation levels in the region ranges from 1,460 to 1,900 kWh/m2/per year. Growth prospects are tremendous in Southeast Asia with a combination of fast-growing economies with resulting investment in manufacturing, transportation and energy infrastructure, rapid growth in electricity demand and good solar resource.

Offshore Wind Market size will surpass 60 GW by 2024, as reported in the latest study by Global Market Insights, Inc. Increasing measures to reduce the greenhouse gas emission along with growing electricity demand will significantly drive the global offshore wind market size. In 2016, the member countries of the European Union announced their plan to achieve 21% renewable energy targets by 2020 through concurrently reducing the GHG emission level to 26% from 1990 level. Rising investment towards the development of clean energy sources from financial institutions including International Finance Corporation (IFC), Asian Development Bank (ADB) and the World Bank will upsurge the market share. The Government of UK has established the Offshore Wind Investment Organization (OWIO) to promote investments towards sustainable energy resource integration. The country has further acknowledged the green investment bank to raise and circulate funds across clean energy projects.UK offshore wind market will witness strong growth subject to favorable government measures to support the development of sustainable technologies. Regulators have introduced Contracts for Difference to ensure long term stable revenues from electrical infrastructure projects across the country. The Reform further lays provisions to ascertain viable returns to investors along with encouraging investments through leveraging schemes.High-end research initiatives to cater to the competitive energy industry through efficient and cost-effective technology will drive the market size. In 2017, German Federal Network Agency launched an offshore wind tender for 1.5 GW to lower the generation tariff. The government of Netherlands is also targeting to reduce the overall cost by 40% over the next decade. In 2017, Siemens and Statoil in collaboration have established a 30 MW floating wind farm across Norway under the “Hywind Scotland” project. Wires and cables in 2016 accounted for over 2% of the offshore wind market revenue share. Expanding microgrid networks favored by advancing distributed generation technology will embellish the business landscape. In 2016, Belgium’s Tideway awarded USD 14.1 million contract to Prysmian for supplying 33 kV inter array submarine cables for a 309 MW power project.China market is set to expand to over 12 GW by 2024. Clean energy capacity addition target accompanied by exponentially rising energy demand will uplift the industry size. Increasing government aided funds coupled with asset and financial leveraging facilities towards development of sustainable energy projects will further stimulate the business outlook. In 2017, State Power Investment Corporation announced its plan to develop 800 MW wind farm across coast of Yancheng and Jiangsu. Favorable government polices coupled with increasing investments towards the expansion and enhancement of sustainable energy will foster the U.S. offshore wind market. The National Ocean Industries Association (NOIA) in 2017, have established the country’s first offshore wind farm. Key players across the offshore wind market include Doosan Heavy Industries & Construction, Adwen, MHI vestas, Senvion, Sinovel Wind, and Siemens.Source: https://www.gminsights.com/industry-analysis/offshore-wind-market

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