Commentary

So, hence my interest to find answers and solutions on some of our key and pressing question(s):

Electricity market reform moves slowly in Japan. Recently, however, the Japanese government further clarified its position and called for legal unbundling in the sector – one of the options previously proposed for breaking up the electricity industry.

We live in interesting times. Our world civilisation is experiencing an accelerating and dynamic change. Through technology, through innovation and through social changes.

Interest in the Asian power game has shifted to Southeast Asia for thermal and renewable power. These nations are mostly emerging markets with a mix of fuel options and underserved markets.

At the recently concluded climate change summit in Doha, Qatar, world leaders met and extended the carbon markets till 2020.

Development of hydropower projects in Asia, especially small and medium scale, has received significant interest over the past decade as important advantages for power system generation expansion are being recognized. Importantly, hydropower provides predictable long term energy cost, after the initial capital investment during construction is completed. As a source of renewable energy, hydropower offers lower carbon energy with the attendant global benefits while having no exposure to fuel pricing uncertainty. From the perspective of the power system, hydropower projects offer dynamic benefits such as frequency regulation, reserve capacity, and peaking capacity. If some storage can be provided there can be significant energy storage potential that can assist with the scheduling of other renewables such as wind and solar energy. Energy storage provides the opportunity to increase the value of renewables by converting non-scheduled generation from the off-peak to on-peak periods. Small hydro will often be distributed through a power system, which can provide some advantages in the cost and operation of the power transmission grid.

In November, the government announced early elections, funny way of expressing this as all elections in Japan can be considered “early”. The government also created the NRA (Nuclear Regulation Authority), which has the task of defining the new safety regulations for the Japanese Nuclear Industry as well as making assessments of its implementation. In short, NRA needs to approve any reactor startup. Within weeks of establishing this entity with “enhanced independence” it was revealed most of its senior management are or very recently have received contributions from the same Nuclear Industry they are supposed to assess. The lack of Nuclear power being operational is increasingly showing its impact on the financial situation of 9 out of 10 Japanese Utilities, with only Okinawa having no Nuclear power reporting positive results. Utilities are lobbying hard for further tariff increases as well as reactivation of their nuclear cash cows. At the same time hardly any progress has been made in the restructuring of the Utility environment in Japan. The outgoing government intended to implement a new energy policy, but the final document was not endorsed due to strong objections from Utility and Industry representatives. The “Society not dependent on Nuclear power” document was reduced to a policy paper, which can be easily mothballed by the new government. On a positive note, the new FIT implemented in July is potentially proving to be a game changer. From July to October a total of more than 2GW PV FIT applications have been approved, of which mega-solar (>1GW) accounted for about half. To put this into perspective, up to July this year a total of around 5GW of PV was installed in Japan. The PV boom is a clear evidence that the current 42Yen/kW is very attractive, both for domestic as well as overseas players. Even the March 2013 first revision of the rate is not expected to dampen the enthusiasm, as the market forecast still remains in the range of 3GW to 5GW annual for next two years. The government target of 28GW PV power in 2020 seems to be very much in reach. With such an increase in renewables the challenge of the utilities will be to best integrate these highly decentralized and intermittent resources in a cost efficient way. Considering the lack of restructuring in the utility industry, this will become one of the bottlenecks to achieve a higher renewable portion in the overall energy mix. Competition in the transmission market is one critical element to reduce cost for the consumer. Procurement is another element. So far only Tokyo Electric (TEPCO) has prepared a number of public tenders in a bid to reduce procurement cost. Behind the scene driver is the fact that TEPCO is now under control of the government, who injected huge amount of cash in the company to prevent it from going bankrupt, and as such must comply with the World Trade Organization (WTO) guidelines. It makes more than common sense other Utilities follow suit to do their part to reduce cost. A new 300MW HVDC connection that is being planned in the near future can provide some indication. The respective Utility is not TEPCO and international market prices for such a link are substantially lower than what is available by Japanese manufacturers. In the interest of the consumers this can be the next game changer, let’s keep our fingers crossed. The views expressed are mine alone and do not necessarily reflect the views of my employer.  

After Japan announced a generous feed-in-tariff (FIT), Japan has become one of the hottest new PV markets in the world. Like all significant PV markets where there is also domestic manufacturing, the issue of protecting that fragile manufacturing base in a hostile solar market is bound to come up. The U.S. and Europe have to take on competing countries head-on by proposing – or implementing, in the U.S. – import tariffs on Chinese cells and/or modules and China is retaliating. Rumors from manufacturers in Taiwan suggest that Japan will announce more stringent efficiency standards on imported modules: reportedly increasing minimum monocrystalline (c-Si) module efficiencies to 18.2%, and multicrystalline (mc-Si) to 17.4%. Other examples of indirectly incentivizing domestic content are present – for example, wind projects in Brazil can only access low-cost financing from state banks if they contain 60% domestic content.

Since the beginning of the power sector reform in India, several initiatives have been taken for commercial performance improvements of distribution companies; however, the desired results have not been achieved even after significant investment in the sector during last ten years. Situation is unlikely to go for a rapid change until there is a strong regulatory enforcement, effective project management and accountability at all levels. Our recent experience with government utilities portray that key challenges in the sector during pre-reform was lack of investments and smart technological solutions, which has been shifted over time to the lack of commercial process acumen, project management skills, inefficient asset and technology utilization and ineffective monitoring tools during post reform era.

Market change has been a force for evolution in Asian power companies in this new millennium. Reviewing how these forces are playing out leads to some interesting conclusions about where companies and the industry as whole is heading.

My friends at Asian Power asked if I would do another article so I decided to do a follow up to my May article on Rotating Equipment Condition Monitoring and Condition Based Maintenance (CBM), in May 2012.

On a planet that is nearly 75% covered with the stuff why would we ever say that?

According to BBC's report , a tiny country with 1500 of population in South Pacific called Tokelau claims that it will be the first country in the world to 100% meet its electricity need with solar power.

Singapore’s Prime Minister Lee Hsien Loong recently stated at the inaugural Singapore Summit that for Singapore to continue on its growth trajectory, the country has to evolve into a smart city.

In the wee hours of Sunday, July 29 2012, India witnessed one of its worst power failures in over a decade. An inter-connect substation near Agra tripped, followed by the automatic shutdown of all power generation plants in the Northern region.

Our demand for energy, especially electric power, is forecasted to continue to increase. For example India's energy demand has grown an average of 3.6% per annum over the past 30 years. To help accommodate this expanded need while reducing emissions, renewable energy has become a worldwide initiative. Rewables energy sources include wind, solar, hydro and other sources of non-emitting power. For example, the Chief Minister of Gujarat recently dedicated the 300 MW Gujarat Solar Park, covering 3,000 acres of desert and one of the largest solar parks in Asia. But many utilities worldwide are finding that energy conservation is the cheapest source of alternative power. To improve the reliability of our electric power grids and simultaneously enable the integration of distributed intermittent renewable energy, utilities worldwide are working to make our grids smarter. Smart grid technology involves empowering consumers; integrating renewable energy, adding sensors such as synchrophasors, and automating distribution networks. In the United States the top priorities for electric power utilities in 2012 not only include traditional smart grid related technologies such as distribution automation, analytics to manage big data, support for electric vehicles (EV), electric power storage, and solar PV, but also smart buildings. Japan invested in technology in the 1990's to improved the reliability of the transmission and distribution grid. Both Japan and South Korea have joint smart grid projects underway with U.S. jurisdictions including New Mexico and Chicago. China plans to invest $490 billion in grid upgrades by 2020, including about $90 billion in smart grid technology. India is projected to soon become the world's fifth largest economy, but to achieve this India needs to increase its electric power generation. To address these challenges in May 2010 the Union Government created the India Smart Grid Task Force, chaired by Sam Pitroda, advisor to the Prime Minister, one of whose priorities is improving the energy efficiency of the Indian power grid. Smart buildings Smart buildings means buildings that not only use less power, but are able to manage peak load. Globally the International Energy Agency (IEA) estimates that residential, commercial, and public buildings account for one-third of the globe's total final energy consumption. In the U.S. in 2008 buildings accounted for 72 percent of U.S. electricity use. In the future the proportion of energy consumed by buildings is expected to increase as emerging economies develop, rising temperatures increases demand for cooling buildings, and rising personal wealth increases consumer demand for appliances. This has made improving the energy efficiency of buildings, both existing and new structures, a global priority. According to a recent study by Global Insight currently only 6% of worldwide construction activity incorporates green technology. Driven by regulation, owner and investor demands, resource cost, security concerns, and third party standards, it is projected that by 2020 this could increase to 75%. The European Union (EU) has taken a leading role in improving the energy efficiency of buildings. The EU has mandatory carbon emission reduction standards, referred to as the 20-20-20 standard, which among other things requires the EU to improve energy efficiency by 20% by 2020. In 2002 the European Commission promulgated the Energy Performance of Buildings Directive (EPBD) which requires all EU member states to upgrade their building regulations and to introduce energy certification schemes for buildings. About a year ago the European Commission (EC) proposed a new Energy Efficiency Directive (EED) , also known as the EPBD recast, which imposes a legal obligation for all member states to establish energy saving schemes, with the public sector leading by example. Japan‘s announced mid-term emission reduction target is to cut Japan's GHG emissions by 25% by 2020 compared with 1990, subject to international negotiations. Energy saving measures for commercial buildings are urgently required, since the commercial sector including office buildings consumes more than half of total energy consumption in the residential/commercial sector. Moreover energy usage growth in the commercial sector has been more striking than that of the residential sector. The Chinese government has established a goal of having green buildings account for 30 percent of new construction projects by 2020. The Ministry of Construction (MOC) is responsible for the development of a national energy efficient design standard for public buildings which was adopted by the MOC in 2005. It sets a target of 50% energy reductions compared to pre-existing buildings for commercial and residential buildings. Zero energy buildings A major area of focus in the EU is “nearly zero energy” buildings. A nearly zero energy building on average generates as much energy from renewable energy sources as it consumes. For new buildings, the EPBD recast fixes 2020/2021 as the deadline for all new buildings to be designed to be nearly zero energy. For public buildings the deadline is even sooner, by 2018/2019. The Government of Japan put forward its ZEB target in April, 2009 which is to acceleration the development of zero emission buildings with the aim that all new public buildings will be zero emissions by 2030. This is a similar objective as the U.S. Energy Independence and Security Act of 2007 (EISA 2007) that requires that by 2030, all new Federal facilities must be “net zero energy” buildings. Pike Research has projected that as a result of the recast EU EPBD Directive and similar legislation in other parts of the world, such as Japan, worldwide revenue from nearly zero energy building construction will grow at an annual rate of 43% over the next two decades, reaching $690 billion by 2020 and $1.3 trillion by 2035, with much of the growth occurring in the EU. Municipalities, electric utilities and energy efficient buildings In many jurisdictions around the world, government and regulators are mandating energy conservation measures. In Ontario, Canada the Ontario Energy Board's (OEB) Conservation and Demand Management Code for Electricity Distributors (CDM Code) sets out the obligations and requirements for all provincial electricity distributors. The OEB has set an aggregate target of 1,330 MW of provincial peak demand reduction by the end of the four-year period and 6,000 GWh of reduced electricity consumption accumulated over the four-year period. In addition for businesses there are a number of programs developed by the Ontario Power Authority (OPA) to help reduce both peak demand and consumption including demand response (DR) programs and for new buildings a High Performance New Construction (HPNC) program that provides financial incentives for building owners and architects who exceed the electricity efficiency standards specified in the Ontario Building Code. Building information modeling A key technical advance that is transforming the architecture, engineering and construction (AEC) industry is model-based design, or building information modeling (BIM). BIM is an intelligent model-based process that helps owners and service providers achieve better business results by enabling more accurate, accessible, and actionable insight throughout project execution and lifecycle. BIM also helps enable building energy performance analyses of new and existing structures that can reduce significantly the energy footprint of buildings. Improving electric power efficiency of new buildings 3DEnergy is a small building energy performance analysis firm that works with architects and engineers to optimize energy usage for new buildings. An energy performance analysis typically starts either with a simplified version of a BIM model of the building provided by the architect or 3DEnergy creates the simplified model from architectural drawings. The simplified BIM model contains the key elements of the building that are required for the energy performance analysis including walls and floors, room bounding elements, complete volumes, and window frames and curtain walls. The simplified BIM model is exported as a Green Building XML (gbXML) file. gbXML provides an industry standard schema for transferring building properties stored in 3D BIM models to energy performance analysis applications. The energy performance analysis uses the geographical location of the building and local environmental conditions to conduct thermal, lighting and airflow simulations to compute an estimate how much energy the building will consume in a year and test different design options and draw conclusions on energy use, CO2 emissions, occupant comfort, light levels, airflow, and LEED certification level. By conducting energy analyses and testing alternative options, it is possible to reduce annual energy consumption and power bills by up to 40%. As an added benefit and important motivation, in Ontario the OPA will pay for up to 100% of the cost of the energy performance analysis. In additon reducing the expected electric power usage of a new building compared to code generates an immediate payback of betweeen $400 and $800 per kW from the OPA's High Performance New Construction (HPNC) program. Improving electric power efficiency of existing buildings For an existing structure, it is necessary to measure how the building is currently performing. This typically involves compiling information from historical photographs, construction drawings, and field observation. High definition laser scanning can be used to collect accurate three-dimensional physical and spatial information and an dimensionally accurate building model (BIM) can be created in a fraction of the time that it would take to perform field measurements or interpret the design from existing construction drawings. Information which would impact the performance of the building such as glazing types, material thermal properties, HVAC zones, and occupancy patterns is incorporated into the BIM model. With this information, together with the geographic location and orientation of the building, energy performance analysis can be performed that incorporates local historical insolation and weather information including temperature, moisture, wind and psychrometric data and specific energy reduction improvements designed and ossessed. For example, the combined annual energy use of an historic, 140 year-old, large government building was calculated at around 5.5 million kWh. Space heating and cooling, equipment loads and lighting comprise the largest energy demands. It was estimated that by with strategies such as zoning, enabling natural ventilation, daylighting and advanced lighting systems, decoupling interior spaces, and solar photovoltaic, it is possible to reduce the building's annual energy consumption by as much as 60% per year. The convergence of model-based design, geospatial technology, and 3D visualization breaks down traditional repositories of information. Interoperability between disciplines makes it possible to model the energy performance of our building infrastructure, which currently consumes one third of the world's energy, and significantly reduce the energy footprint of residential and commercial buildings, providing a large and relatively inexpensive source of “alternative energy” to be used in other critical sectors of Asia's economies.