Asian Power (July - August 2016)

ISSUE 76 | DISPLAY TO 31 AUGUST 2016 | www.asian-power.com | A Charlton Media Group publication

US$360P.A.

War tATa poWER-DDL’S

against power theft

losses Tata Power-DDL’s CEO Praveer Sinha vows to keep pulling losses down

+

Asia be dammed: Are Asian countries too late in scrambling to harness hydropower?

Is Indonesia mature enough to go for nuclear energy?

Japan keeps splurging on coal power projects overseas

Will funding woes dim Singapore’s solar power prospects?

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FROM THE EDITOR The year has just welcomed the second half, and Asian Power probed two of the emerging power market giants and put them in this issue’s limelight. We found out that Indonesia is ensnared in doubts from energy experts as it plans to foray into nuclear and geothermal energy. Is it really mature enough to take on the grueling challenges and consequences of using nuclear and geothermal power?

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

ADVERTISING CONTACT Rochelle Romero rochelle@charltonmediamail.com

In Thailand, we found out from channel checks with experts that the government is urged to revamp the current feed-in tariff programmes to ensure that various renewable resources can be more effectively utilised to help support the system’s security. Can Thailand make this happen? Flip the pages to find out.

ADMINISTRATION Accounts Department accounts@charltonmediamail.com Advertising advertising@charltonmediamail.com Editorial editorial@charltonmediamail.com

This issue also zeroes in on the current status of hydropower sector in the region.

Most ASEAN Member States (AMS) have relatively high potentials for hydro, thus, harnessing these renewable energy (RE) potentials is a viable option to be explored.

But with droughts, floods, and harsher climate lashing out against the waters, are Asian countries a bit too late in scrambling to harness and maximise hydropower?

Lastly, Asian Power caught up with Tata Power-DDL’s CEO Praveer Sinha amidst the fiery issue of power theft losses. How does he steer the company in handling the problem? Find out as he talks about this and much more.

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ASIAN POWER 1

CONTENT

16

CEO INTERVIEW TATA POWER -DDL’S CEO PRAVEER SINHA IS DEAD SERIOUS IN PULLING POWER THEFT LOSSES DOWN

FIRST

12

AP UTILITY FORUM 2016 - SINGAPORE Why scoring a business case for solar in Singapore has become tougher

22

SECTOR REPORT: HYDROPOWER ASIA BE DAMMED: ARE ASIAN COUNTRIES TOO LATE IN SCRAMBLING TO HARNESS HYDROPOWER?

ANALYSIS

06 Japan’s problematic coal financing

20 Is Asia ready to use thorium as an alternative?

08 Small Vietnam goes big on hydropower ambition

26 Why Indian DISCOMs are urged to zero in on sector reforms

10 Will funding woes dim Singapore’s solar power prospects?

10 “Too lengthy” approval time plagues Philippines’ power project scene

OPINION 30 JOHN GOSS: Processing natural gas for China’s future

COUNTRY REPORT 14 Is Indonesia mature enough to take on the grueling challenges of nuclear and geothermal energy?

18 Thailand’s power sector urged to tighten policies on electricity security

32 WILLIAM BYUN: Post-Paris: Taking another look at thorium nuclear

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

2 ASIAN POWER

For the latest news on Asian power and energy, visit the website

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

IPP

World Bank gives nod to India’s $625m loan for solar programme The World Bank Board approved a $625 million loan to support the Government of India’s program to generate electricity from widespread installation of rooftop solar PV. The Board also approved a co-financing loan of $120 million on concessional terms and a $5 million grant from CIF’s Clean Technology Fund.

IPP

Nuclear generation expected to double by 2040 globally Global nuclear electricity generation is expected to almost double by 2040, according to the latest projection by the US Department of Energy’s Energy Information Administration (EIA). Most of this growth will be in the developing world, it said.

4 ASIAN POWER

ENVIRONMENT , POWER UTILITY

China predicted to exceed wind targets by 2030 China took the global wind market to new heights in 2015, as it represented almost half of the new global wind installations, with a total annual wind capacity of 30.5GW. According to GlobalData, the next largest wind capacity installer in 2015 was the US, with 8.6 GW, followed by Germany, Brazil and India.

IPP

Malakoff’s 1Q16 profit dropped 19% to MYR84m Maybank Kim Eng reported that 1Q16 results were below expectations primarily on cost escalations mainly relating to maintenance. Nevertheless, with maintenance activities tapering off, Malakoff’s earnings outlook should improve in the coming quarters.

ENVIRONMENT , POWER UTILITY

India’s planned 8.76GW additional wind capacity to trump other countries’ records MAKE expects more than 63GW of wind power to be commissioned in Asia Pacific excluding China (APeC) from 2016 to 2025. The three core markets of India, Australia, and Japan will constitute approximately 72% of all new installations. 2016 will be a record year for India and Japan.

IPP

Equis commissions a 108MW wind project in India Equis Pte. Ltd. (Equis), Asia’s largest independent renewable energy developer and investor, has announced the commissioning of a 108-megawatt (MW) wind project in Fatanpur village, Dewas District, Madhya Pradesh, India (FTP Project).

ASIAN POWER 5

FIRST Japan’s problematic coal financing

In what seemed like a slap to governments worldwide being urged to generate clean energy, Japan, which will host the 2016 G7 meeting, continues to be the worst offender when it comes to public financing for international coal projects.

In total, Japan is considering subsidizing coal power plants overseas with a total capacity of over 29 GW, which would contribute a whopping 1.2 billion tons of carbon dioxide to the atmosphere over the lifetime of the plant. The three largest projects under consideration by Japanese lenders are all backed by the public financial institution and export credit agencyJapan Bank for International Cooperation (JBIC): Batang Power Plant in Indonesia (2,000 MW), Tanjung Jati B Expansion in Indonesia (2,000 MW), and Toyo-Thai Power Plant in Myanmar (1,280 MW).

“Pending” to “Finalised” “The new OECD agreement will cover financing from Japan’s export-credit agencies so it will be critical to see if Japan finally turns the corner on its overseas coal financing and avoids moving these projects from ‘pending’ to ‘finalised,’” says Schmidt. Japan Bank for International Cooperation refused to comment on the story.

Meanwhile, energy economist Han Phoumin of the Economic Research Institute for ASEAN and East Asia says ASEAN coal demand is projected to triple from 2011 to 2035, growing on an average of 4.7% per year. “The strong increase in demand for coal throughout ASEAN, particularly to generate electricity, is driven by its relative abundance and low prices compared with alternative fuels and technologies,” he says.

“Coal consumption in ASEAN is projected to overtake natural gas after 2020 to become the second-largest component of ASEAN’s energy mix, with its share reaching 27% in 2035,” he continues.

6 ASIAN POWER

Inconsistencies spook potential investors

Indonesia’s funding woes worry experts

I

INDONESIA

f Indonesia wants its ambitious 35 GW power capacity addition plan to succeed, then it needs to clean up its act when it comes to providing funding options for utilities and independent power producers (IPPs). Despite high investor interest, appropriate access to capital and inconsistencies in government policy post a significant stumbling block which can hinder the success of Indonesia’s steep capacity addition target.

“Great potential projects are happening under the 35 GW program, but there are quite a few difficulties as well,” says Gilles Pascual, Partner, Infrastrusture, Ernst & Young, speaking at the recently-concluded Asian Power Utility Forum in Jakarta. “Coordination is key to make such a large program happen. You need all stakeholders in the room—you need the government side, you need PLN [Perusahaan Listrik Negara], you need to have investors, and you need to have lenders.”

Funding roadblocks One of the biggest challenges to Indonesia’s 35 GW plan is access to funding. Although both foreign and domestic investors are extremely keen to take part in the capacity addition plan, they are hindered by challenges including inconsistent government

Gilles Pascual

Tasnim Ilmiardhi

support for projects, lack of assurance regarding rupiah foreign exchange rates, and the absence of alternative funding solutions such as an active bond market.“There are different forms of government support for PLN obligations. There’s the BVGL [Business Viability Guarantee Letter], the PPP guarantee letter…it varies from deal to deal. There is no consistency. And that is something that the investors are still trying to get comfortable with,” Pascual says. “You have different investors for different deals. If you have BVGL or PPP guarantee, the entire investor universe will be comfortable. For a deal without a guarantee, not all investors will be comfortable to take on the risk,” he adds.

Energy legal practitioner Tasnim Ilmiardhi adds that the consistency of application of Indonesia’s regulation and policy is one of the biggest challenges in the country’s capacity ambition. “In the Electrical Power Supply Business Plan (RUPTL) 2015-2024, total project funding’s timeline needs at least five years in order for the country to reach Rp 1,127 trillion. Rp 512 trillion of which falls under the responsibility of PT PLN (Persero), while private companies will finance the remaining Rp 615 trillion,” Ilmiardhi says.

Stick to Indonesian rupiah In recent tenders, PLN had taken the view that they will pay using the Indonesian rupiah. Although deals will still be indexed to the US dollar, payments will be made solely using the local currency. As a result, projects run the risk of losing investors who are used to closing deals using the greenback.“Investors need to get comfortable that once they get this massive amount of rupiah, in a single day they can go to the market and exchange it in USD,” he adds.

Energy sublines(fuel and electricity subsidies) in the Central Government Budget

Source: Directorate General of Budget of the Finance Ministry, 2012

FIRST

Renewable energy development is booming globally, and tidal power is where wind and solar was 15 years ago.

Waves of potential are hitting Asia

Ocean’s 11: Is tidal power finally catching up with wind and solar?

ASia

W

hen Tim Cornelius, CEO of Atlantis Resources, recalled how wind and solar energy were 15 years ago, he realised that it is the exact same spot tidal energy is sitting in right now.

When harnessed effectively, the ocean stands to be one of the largest reserves of clean and sustainable energy. A report from Transparency Market Research points out that wave and tidal energy are the two major forms of harnessing ocean energy.

Tidal energy in Asia According to Cornelius, there have been significant developments across the

Asian region in relation to wave and tidal energy.

“The industry is in very strong financial shape. Renewable energy development is booming globally, and tidal power is where wind and solar was 15 years ago,” he says.

For instance, the Philippines has huge aspirations for tidal power and aims to install 71 megawatts by 2030 at a cost of $2.5 billion, according to recent figures.

Currently, the country has zero megawatts so this aspiration suggests there will be rapid growth in tidal generation over the next decade. A remarkable addition yo the list is the Sihwa Lake Tidal Power Station with

Tim Cornelius

254 MW capacity in South Korea which replaced France’s Rance Tidal Power Station as the largest tidal power plant in the world.

“All of the best sites in the world are yet to be built out. We are about to see billions of pounds of investment pour into the UK tidal energy sector, and we expect this to catalyse investment in large scale projects across China, South Korea, Japan, India, the Philippines and Indonesia,” continues Cornelius.

Further, the global wave and tidal energy market was valued at US$497.7 million in 2014 and is anticipated to reach US$11,345 million in 2024, expanding at a CAGR of 23.2% from 2016 to 2024.

Relatively new concept Tidal stream power plants are a relatively new technology with ample scope for development, and wave energy is a relatively new concept.

These sectors are likely to see significant market growth in terms of installed capacity and investments in the near future, it continues. There are over 200 companies operating in the wave and tidal energy sector at present.

Global new investment in renewable energy by technology, developed and developing countries

Source: Renewable 2016 Global Status Report

the chartist: DROUGHT SHATTERS INDIAN POWER PLANTS’ PIPE DREAMS There’s no other way to put it—India is being pummeled by one of the most severe droughts ever.

Nearly 7 billion units (kWh) of coal power, with an estimated potential revenue of ~US$350 million, was lost in the first five months of 2016 due to lack of water for cooling. l NTPC, Adani Power, GMR, Mahagenco, Karnataka Power Corp are amongst the companies worst hit.

Recent events show that existing power plants have struggled to find water to operate without interruptions—the addition of new projects in the region will logically worsen the water crisis.

On the other hand, NTPC’s Solapur power plant is an example of how poor water planning and foresight poses a financial risk to coal power companies, lenders and shareholders.

Krishna River Basin, water stress areas with thermal plants

Energy costs

Source: Greenpeace

Source: AT Kearney analysis

ASIAN POWER 7

FIRST

Small Vietnam goes big on hydro ambition

IPP WATCH

Essar Power’s Mahan plant commences plant operations

I

VIETNAM

f Vietnam is to bank on its 2,000-strong streams and rivers for its small hydropower plants ambition, it could just one day wake up to a dream come true. Small Vietnam has numerous assets that are conducive to help it build SHP plants — to be specific, more than 2,000 streams and rivers that are more than nine kilometers in length.

Plans in the pipeline Based on data from the International Hydropower Association’s 2016 Hydropower Status Report, Vietnam commissioned four hydropower stations totalling 1,030 MW in 2015.

The government also approved last December a strategy to increase hydropower generation from 56 TWh in 2015, to 90 TWh in 2020 (which corresponds to 21,000 MW total installed hydropower capacity), and 96 TWh in 2030. Meanwhile, the US EIA’s International Energy Outlook 2016 says Vietnam has Southeast Asia’s most ambitious hydroelectric development plan.

The report says the country is thinking of increasing total hydroelectric capacity to 21.6 GW in 2020 and to 27.8 GW by 2030.

Historically, hydropower financing

Project advisors are being challenged

was the responsibility of public sector utilities that typically used concessionary finance from bilateral or multilateral sources.

Financing troubles in sight?

Mike McWilliams, head of hydropower at Mott MacDonald, says that with the availability of equity from a variety of sources, the choices available to project promoters is growing.

He also remarks that increasingly, a blend of financial instruments is used to match the needs of hydro promoters through the various stages of development, construction and operation with the appetite and capacity of the financiers.

“Financial advisors are becoming adept at innovating to create bespoke solutions, and this is seen as the key to unlocking the pool of capital that is available for hydropower development,” McWilliams adds.

Mike McWilliams

China blows hard to amp up wind capacity In what may seem like a timely response to pressure from green activists to stop building coal-powered plants, China is revealed to be aggressively ramping up its wind power capacity three times its current size come 2030.

China has the highest wind power globally by far, accounting for a third of cumulative wind power capacity worldwide, followed by the US with 17% of the global share.

Aswani Srivatsava, GlobalData’s analyst covering power, says supportive government policies that include attractive concessional program and the availability of low-cost financing from government banks are the main reasons for the success of the Chinese wind power market.

Srivatsava further says, “China’s quick adoption of wind power can be attributed to a wider global trend driven by depleting fossil fuel reserves, the declining cost of wind power generation and a growing sensitivity towards environmental issues.”

Annual wind power installations may not be as high over the next decade as in previous years, but the market is still expected to be very strong, with average annual installations to 2030 being in the range of 21-22 GW. 8 ASIAN POWER

Essar Power resumed the commercial operations of Unit I of the 1,200 MW (2x600 MW) Mahan power plant. Essar Power MP Ltd, the operator of the 1200 MW power plant, located in Madhya Pradesh, has secured 3 lakh tonnes of coal through a government-conducted special forward e-auction. Essar Power MP won a captive coal mine in Tokisud in Jharkhand state in the recent coal auction.

Jurong Port launches largest port-based solar facility

A 9.5 MWp solar energy generation facility has been successfully installed at Jurong Port.

This is the world’s largest port-based solar energy generation facility and will offset over 60% of Jurong Port’s electricity requirement. With the facility, Jurong Port will be able to reduce 5,200 tonnes of CO2 emissions annually, equivalent to the yearly consumption of 2,500 units 4-room apartment flats.

Drought forces Adani Power to shut units in Tiroda plant

Wind power capacity giants lose to China

Going online soon China has been very quick to adopt wind power

Adani Power shuts down four units of 660MW each at Tiroda Plant in Maharashtra due to acute water shortage.

Only one unit is currently active and working. Tiroda Power Plant gets water under a long term arrangement from Dhapewada Project of Vidarbha Irrigation Development Corporation. Due to drought conditions in the State of Maharashtra, the water dam has dried up and is unable to supply water to the Tiroda Power Plant.

Thought Leadership Article

Why breaking records matters: Powering the world’s most efficient combined-cycle power plant GE and EDF broke barriers with their trailblazing power plant at Bouchain, France.

our joint French, American, and global teams proceeded to invent it. This first HA turbine in Bouchain is a beacon for what is to come – better power, enhanced with the best digital industrial capabilities that will ultimately find its way across borders, deserts and oceans to nations across the globe.

EDF’s power plant in Bouchain, France

T

he history of corporate innovation is one of people and companies trying to outdo themselves (and each other).

After all, the corporate world mirrors the natural world; only the fittest survive.

If we don’t innovate and become the best in the world, someone else might.

I like to think our principle motivation, however, is the need to continue to surprise and surpass expectations for our customers.

In my view, the surest way to disappoint a customer is to just deliver. We must aim to exceed expectations. We have to deliver the future, now.

So we aim for new heights. We recently announced that we’ve been recognized along with EDF for powering the world’s most efficient combined-cycle power plant based on an achieved efficiency rate of up to 62.22% at EDF’s power plant in Bouchain, France.

This is the first ever combined-cycle power plant equipped with GE’s 9HA.01 gas turbine. Together, GE and EDF, are launching a new era of power generation technology and digital integration. Why do these achievements matter?

Solving tomorrow’s energy needs A World Record demonstrates that we are solving tomorrow’s energy needs with the most ambitious and sophisticated technology available today.

The HA is the most efficient gas turbine in history, and has been the cornerstone of

GE’s transformation into the world’s premiere digital industrial company – a billion dollar investment plan for a vision we believe will change the world.

Why is this digital future so important?

Well, there is a global race to integrate renewables into our grids to deliver a more sustainable energy future, to meet the ambitions set at COP 21.

To deliver this, flexibility and efficiency are key. The ability to spin up and spin down traditional power sources like the Bouchain facility is vital for meeting today’s – and future – energy demands.

Powering everyone What’s the bigger picture here? Well, there are over a billion people in the world who still don’t have power and over two billion with inadequate access to it.

What we are doing in Bouchain with EDF plays a critical role in helping Powering Everyone in the most efficient, reliable and sustainable way.

Our founder Thomas Edison said, “I never perfected an invention that I did not think about in terms of service it might give others …I find out what the world needs, then I proceed to invent it.”

We found out what the world needs, and

Being prepared for what’s next As we navigate a volatile global economy and rising power demand from a growing global population, the power industry is being transformed by the introduction of digital technologies.

Close collaboration with our customers, as we have had with EDF for over 45 years, is going to be vital.

Today is about more than winning a world record. It’s about being prepared for what’s next. EDF is ready, GE is ready, and Bouchain is ready. This is only the beginning. We will continue to strive for new records, and new heights.

Reaching for these goals will help us, and our customers, cut through the challenges we face as an industry and help deliver power to everyone, today and in the future. Our work matters!

Steve Bolze President & CEO GE Power Follow Steve on LinkedIn

Steve Bolze, President & CEO, GE Power

“The HA is the most efficient gas turbine in history, and has been the cornerstone of GE’s transformation into the world’s premiere digital industrial company.”

ASIAN POWER 9

FIRST

Will funding woes dim Singapore’s solar power prospects?

SINGAPORE

I

f Singapore’s solar power dreams don’t play out well, banks have some explaining to do.

Singapore is aggressively ramping up its solar energy capacity, but inadequate access to funding for solar generation companies might prove to be a significant roadblock for the city-state’s renewable energy agenda.

“The main challenge for solar financing in Singapore is the familiarity of some financial institutions to the solar PV renewable business model and with that unfamiliarity tends to heighten the risk aversion and less competitive financing terms,” says Camillus Yang, vice president, corporate development and finance at Sunseap, a local clean energy provider.

Jacqueline Tao, energy analyst at the Energy Studies Institute (ESI), notes that solar PV SMEs typically face higher financing costs compared to conventional power generation players. For instance, larger energy players have a debt-toequity ratio of 50/50, much lower compared with 70/30 for solar PV SMEs. “Meanwhile, the cost of equity for traditional players is just 6%, while that for SMEs ranges from 9% to 15%. Banks also charge an interest rate of 4% for conventional players with a credit rating of Baa, but SMEs need to grapple with interest rates as high as 5.6%. Larger firms can also tap bond markets, which are off-limits to solar PV SMEs due to size restrictions,” she notes.

Matthew Peloso, CEO of solar energy generation company Sun Electric, said that they usually have to come equipped with a detailed explanation about their unique business model whenever they approach bankers for loans.

“Our model requires explanation and understanding on the part of the financial institutions. In addition, there is a relatively low supply of capital toward new innovations which are riskier but of higher return,” he explains. Sun Electric’s business model involves connecting rooftop owners with clean energy customers.

Still balanced by support Peloso added that the potentially higher cost for solar firms is partly balanced by good support from Singapore’s various public and private grants, as well as interest in supporting the development of technology, which can bridge a part of the initial funding gap.

“Another point that can be made is in regard the asset size and cost to the financial institutions.

Due to their fixed costs, institutions wish to fund large projects. Given that solar is new and growing, investments are in the low range of capital financings. This is a temporary situation,” he says. Despite existing difficulties, Peloso notes that the industry is making progress when it comes to improving access to funding for solar SMEs. “A local bank has been working hard to

“Too lengthy” approval time plagues Philippines’ power project scene If there is something the Philippines should be lauded loudly for, it has to be its growth in renewables projects.

Among the ASEAN countries, it is now second to Thailand in non-hydro renewables growth. Wind, solar, biomass and run-of-the river hydro plants are all supported by FiTs. FiT for Solar, in particular, at US$180/MWh for 20 years is very attractive. High electricity spot prices support renewable growth and renewable energy get a priority for grid connection and purchase. With a very aggressive COP21 INDC targets of GHG (CO2e) emissions reduction of about 70% by 2030 from business as usual, opportunities for renewables growth with government support can substantially increase in future. Hence, renewables in the Philippines will likely become a healthy investment opportunity.

But if the country has been targeting to shift to renewable energy, then why is the shift taking too long to happen? Dr. Bikal Pokharel, principal power sector analyst at Wood Mackenzie, says that the growth in solar has been higher than the government projections in the last couple of years but capacity caps from the government limit higher growth. “As incentives from FiTs are lowered, the growth will likely become slower. We have seen this happen in mature markets like Germany and the US. However, if the DOE’s (Department of Energy) proposal for fuel mix policy with 30% renewables is approved this year, we might see a shift in renewable energy growth over the next few years,” he says. Project approval process at the central and regional levels have been too lengthy historically, Dr Pokharel adds.

10 ASIAN POWER

Zooming in on the real issue

provide us with a pretty cost effective package.

However, as we are new it has taken time to analyse this. I cannot disclose full details but the facility would be pretty close to the cost of a conventional utility,” he says.

Sunseap’s Yang shared that solar PV SMEs should explore new ways of clinching funding in order to lower costs. “For financing of solar in Singapore and the region, Sunseap is working towards a more sustainable long term portfolio project financing coupled with a concept of a revolving credit facility for in-construction projects,” he says.

Philippines’ planned additions (2015-2016)

Source: EIA

Renewables to make steady gains

Source: BMI Research

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EVENT COVERAGE: AP UTILITY FORUM 2016 - SINGAPORE

Singapore’s solar industry is in need of some sunshine

Why scoring a business case for solar in Singapore has become tougher

Industry experts throw their insights at the inaugural Asian Power Utility Forum 2016’s Singapore leg.

S

ingapore is aggressively ramping up its solar energy capacity, but inadequate access to funding for solar generation companies might prove to be a significant roadblock for the citystate’s renewable energy agenda.

Jacqueline Tao, energy analyst at the Energy Studies Institute (ESI), noted that solar PV SMEs typically face higher financing costs compared to conventional power generation players. For instance, larger energy players have a debt-toequity ratio of 50/50, much lower compared with 70/30 for solar PV SMEs. “Meanwhile, the cost of equity for traditional players is just 6%, while that for SMEs ranges from 9% to 15%. Banks also charge an interest rate of 4% for conventional players with a credit rating of Baa, but SMEs need to grapple with interest rates as high as 5.6%. Larger firms can also tap bond markets, which are off-limits to solar PV SMEs due to size restrictions,” she noted.

Gilles Pascual, partner, ASEAN Infrastructure Advisory, Transaction Advisory Services at EY says that the region is emerging as a hotspot for M&A activity – increasing demand, reforms and privatisations, China activity, and renewables are stimulating transactions.

China domestic and outbound 12 ASIAN POWER

Energy storage is likely to play a bigger role in the utilities of the future, but in what form?

activity dominated, contributing 69% or US$51.7b to the total regional deal value.

As the economy slowed, consolidation remained a focus with larger utilities acquiring smaller companies to increase their customer base, create synergies and drive growth. Chinese outbound investments, primarily in Asia-Pacific countries, continued to rise.

Renewable energy transactions gained momentum during 2015 with higher investor interest driven by energy mandates and policy support. Q4 alone saw renewables deals worth US$19.1, a six-year high.

The push for electrification in markets such as Indonesia is also fuelling the renewables and IPP markets. Energy reforms and privatisations continue to drive activity – with Australia’s US$7.4b sale of state-owned electricity network, TransGrid, a notable transaction in Q4.

Proposed utility unbundling in India and China, retail market liberalisation in Japan, and privatisations in Vietnam, Philippines and Australia offer significant opportunities for investors.

Transformation in P&U Transformation is occurring across the P&U value chain with increasing speed. Utilities in mature markets will

need to manage risk as disruption drives value downstream toward the customer whereas utilities in emerging markets need to balance affordable and reliable energy access against growing sustainability concerns.

The commodification of distributed solar PV is well underway with a significant decrease in its cost. Asia Pacific has become the market leader for installed distributed solar PV followed closely by Europe.

Asia Pacific is expected to more than double its annual installations of distributed solar PV between 2013 and 2018.

Improving economics for advanced batteries will accelerate energy storage applications and magnify the value of solar PV, making going ‘off grid’ an increasingly viable option .

“Energy storage is likely to play a bigger role in the utilities of the future, but in what form? Will it be rolled out as a merchant resource, helping residential consumers save versus retail tariffs? Will it be larger in scale, used to arbitrage wholesale prices? Or, could it be integrated into the utility grid system to allow for improved resilience and security of supply?,” Pascual muses.

The whole value chain over the last five

EVENT COVERAGE: AP UTILITY FORUM 2016 - SINGAPORE to ten years has been shifting downward to the customer because the customer likes being given options. It’s not about switching electricity on this time around, it’s about how they want to live.

There are evolving trends most especially and undoubtedly for people who want to switch to cleaner energy and they are given the option to install whole solar panels and connect their homes.

“It’s now actually about ‘people first,’ what do they want, how do we give what they want,” Pascual says. “The end-customer is now what’s driving the beginning of the chain.”

Making solar happen The market growth also comes from private sector initiatives to put solar panels on rooftops.

These installations could contribute to about 5 percent of the daily peak demand, if panels generate power under optimal conditions. And after 2020 the new development targets for PV are likely to follow.

Anton Finenko, research associate, Energy Studies Institute, says that despite promising opportunities, achieving a business case for solar PV in Singapore is not easy. In fact, it became more difficult compared to two years ago.

The collapse of the oil price has tanked the oil-linked natural gas prices, which is a large component of the price of electricity in Singapore.

While the cost of PV systems has also been declining, the pace of cost reduction could not keep up with collapsing oil markets.

“This situation has put local solar developers under increased pressure by almost eliminating profit margins of their business,” he says.

Energy Studies Institute,’s Tao adds that this mindset, cemented when the oil price was high, is hurting the nascent industry today, because the easiest way for a developer to gain the market share is to continue with discount practices.

It is doubtful whether this approach is sustainable in the long run, as it encourages excessive price competition among companies whose cost-cutting measures may compromise on the quality of delivered projects. Furthermore, a tariff offered at the price below the system’s levelised cost of electricity does not create any long-term profits for the developer.

Price discounts could be a temporary measure for some companies to attract customers while waiting for the oil price to rebound.

Alternatively, discounts could be sustained by keeping a portfolio of other clients who are willing to pay premiums for clean electricity and subsidise the discounts.

Access to financing remains an unresolved issue in the domestic market.

The main obstacle to obtain financing for solar developers would be the small size of the distributed PV projects.

Financial innovation Taking bank loans as an example, the typical term loan in Singapore ranges between SG$50-100 million, which is equivalent to a 30-60MW project size.

Unless developers are allowed to aggregate project capacities, accessing bank financing may be challenging.

The small size of projects in Singapore also limits usage of innovative financial mechanisms such as investment trusts and YieldCos due to high transaction costs and the lack of aggregation capacities.

Options such as crowd- and community financing have yet to pick up in Singapore, further limiting access to suitable investors.

In this ecosystem, the developers are left with high cost options such as private equity. Given the uncertain future of the oil price, we believe that the best bet for already established and new market players would be to diversify revenue streams beyond selling electricity at a discount.

Potential scope of diversification could be providing comprehensive energy management services such as energy audit and consulting services.

Attaining retailer license may be a crucial step for larger solar developers to tap on customers who do not own rooftops but are willing to pay green electricity premiums.

In addition, marketing efforts for solar power should put more emphasis on its ability to hedge against price shocks, instead of promoting its cost benefits.

Innovative pricing arrangements, such as flexible or customised price discounts

Moving into the future, solar PV companies could move beyond purely providing energy and be seen as providers of integrated energy services.

that matches client requirements may also value-add the provision of solar electricity.

Moving into the future, solar PV companies could move beyond purely providing energy and be seen as providers of integrated energy services.

Such concepts include bundling renewables with battery storage and various forms of power arbitrage.

Overcoming market barriers Among Singapore’s biggest problems in the solar market is the market size itself and the low electricity tariff.

It may be time for Singapore to move beyond solely using rooftops for PV and start incorporating floating panels, BIPV when the cost is right.

What makes financing costs for conventional power generation players different from that for solar PV SMEs? Firstly, debt to equity ratio for conventional players stand at 50/50.

When asked what are the recent themes he has learned when it comes to asset utilisation, Stuart McWilliams, former vice president at Senoko Energy, says that one has to look at the revenues that the power company receives and that, then, determines the amount of expenditure poured on these assets.

“When times are hard, you have to manage your maintenance cost effectively.

If it’s a relatively new asset, then you can do more asset maintenance if you have to, especially as the asset gets older. You will have to adjust how you carry out the maintenance as you will eventually be faced with a 25 or 30-year old asset,” he adds.

Peter Cockcroft, non executive director at ERC Equipoise and Tony Segadelli, managing director, OWL Energy also spoke at the forum and delivered their insights on power plant risks and Myanmar’s power sector respectively. The forum was held on May 10 in Singapore.

Proft margins are being eliminated due to reducing costs ASIAN POWER 13

Country report 1: INDONESIA

Indonesia has long been toying with the idea of exploring its further power potential

Is Indonesia mature enough to take on the grueling race to nuclear, geothermal energy?

It may sound too ambitious to experts, but Indonesia has made it clear that these are the new energy targets.

I

ndonesia is planning to produce 6023 MW of geothermal power by 2020, but experts warn that the country may fail to meet its ambitious targets due to regulatory challenges coupled with extremely high exploration costs.

“Cost rises steeply the moment drilling and construction begins. Prior to that, costs are so low it can be funded almost entirely by equity. A single field can cost up to USD 50 million, excluding other costs. Someone has to catch the risk, whether it is the project owner or the government,” said Sugeng Triyono, president director of PT Tangkuban

Manufacturers cannot support Indonesia’s geothermal development.

Its assets are extremely attractive to the private sector.

Electricity demands rising fast, new addition of 55 GW needed for the next 10 years

Source: Center for Nuclear Energy Development BATAN

14 ASIAN POWER

Parahu Geothermal Power, speaking at the Asian Power Utility Forum in Jakarta.

Triyono also argued that Indonesia’s targets may simply be too steep. He pointed out that as of 2016 geothermal energy makes up just 1.1% out the entire renewable energy share; by 2025, Indonesia aims to raise it to 5.8%.

In order to reach these targets, Indonesia will need to add roughly 300 Mw of geothermal energy per year, which translates to drilling around 60 wells per annum.

Are these possible?

“Manufacturers cannot support Indonesia’s geothermal development,” Triyono said.“Indonesian geothermal assets are extremely attractive to the private sector. There are financing solutions for this on a pure non-reocurse basis. For instance ADB can provide funding for exploration, Even IFCs have solutions for these geothermal projects.

Soon financing will be available to geothermal players in Indonesia,” said Gilles Pascual, partner, Ernst & Young, Infrastructure Advisory.

“Clearly what’s missing is the renewable framework. We still don’t have solid regulatory framework for geothermal, for instance,” Pascual added.

Peter Wijaya, vice president commercial and business development at Star Energy, added that risk-sharing for capital-intensive geothermal projects is a key concern for developers and investors.

“Funding for exploration is tough— investors have to take on the full risk,” he noted. As a result, independent power producers like Star Energy have to keep a tight rein on exploration costs, with more budget spared for low-risk, established fields rather than exploring untapped “greenfield” projects.

“First of all, the exploration risk is very similar—though not as high—as oil and gas. However the returns of geothermal is not as high as oil and gas. Geothermal reservoirs are much more complex than O&G. We simply budget the exploration,” he said, adding that exploring a well could cost as much as US$7 million to US$10 million per well.”

“The energy roadmap initially didn’t even include geothermal. Renewable energy is low on the government agenda.

If I were the government, I would say the traffic is attractive. If I were a developer, I would also say so. But the problem is implementation. In order to qualify for the tariff, you first need to prove that you have started exploration. That’s the law.

The risk is entirely on the developer,”

Country report 1: INDONESIA (including nuclear) and renewable energy options.”

Top geothermal electricity producers and capacity holders (2014)

Bret Matts

Gilles Pascual

Source: U.S. Energy Information Administration

Wijaya noted.

Apart from Indonesia’s geothermal energy prospects, experts at the forum also discussed the best practices to implement efficient maintenance strategies on Indonesian plants.

“Operations should be taken into consideration even during a power plant’s development phase. Thinking about longterm optimization typically means that capex is 3-5% more, because you need to put long-term equipment in capex,” said Harry Salzwedel, project advisor, PT Central Java Power. “Maintenance is not maintenance: it’s asset performance enhancement. We don’t just fix it, we improve it,” he added. Ari Frantsi, vice president at Bekasi Power, stressed that proper plant maintenance begins with a work culture in which people support disciplined structured processes.“Operators need uniform key performance indicators (KPIs), and establish a standardized reward system based on these indicators,” he said.

Current state of play Results can take some time to achieve in mercurial Indonesia, and there are few better examples than in the developing nation’s nuclear industry. Gaining serious traction in the 1980s, Indonesia remains bereft of an operational, commercial nuclear power plant. The feeling amongst experts is however, that the nation’s energy sector may not need to wait much longer before NPPs are rolled out. Challenges remain, of course, the stakeholder matrix, which includes a complex set of relationships between local and central government authorities, local and international investors and international agencies such as the IEAE, is difficult to navigate. But where there’s a will, there’s a way.

“Indonesia has been preparing the infrastructure for nuclear power plants since the 1980s,” says Yarianto S Budi Susilo, the director of the Center for Nuclear Energy Systems (PKSEN) at

BATAN, the national research and development agency which guides and recommends stakeholders (government, private sector and public) on how to best provide reliable nuclear technology.

Yarianto is tasked with nuclear power plant energy planning and plant infrastructure preparation in Indonesia.

“In terms of human resources, I believe the nation is ready. We have been safely running three research reactors for more than 40 years and have the necessary technical experience in reactor operation and its supporting facilities such as fuel fabrication, spent fuel handling and radioactive material management.”

Yarianto adds that comprehensive feasibility studies were conducted during the period 1991 to 1996 for the Muria NPP site and 2011 to 2013 for the Bangka Island NPP site.

Limited fossil woes Experts agree that with relatively limited fossil energy resources, an enormous and growing population, the development of the nuclear energy sector will secure and ensure energy sustainability and economic development (of course improving the quality of human life), it will require alternative energy to replace a part of fossil energy role. In terms of the environment, alternative energy is expected to reduce the environmental impact (green house effect, pollutant) due to the use of fossil energy on a large scale.

Yarianto’s chairman, Dr Djarot S. Wisnubroto, agrees. Speaking exclusively with NFA, Indonesia’s nuclear industry elder statement states that the fundamental challenges confronting the Republic are the twin pressures of population and economic growth, 1.2 and 5% respectively. “At the same time decreasing of fossil fuel sources, and environmental aspects, specifically reducing the carbon emissions are leaving us with only choice: to reduce the dependency on the fossil fuel (oil, coal, and gas) sector, in favour of new

Harry Salzwedel

Peter Wijaya

Political challenges While both men unequivocally agree that by most measures Indonesia is ready, the IEAE concurs with a few exceptions, and the Indonesian public agree (over the past six years, BATAN has conducted public surveys, and in 2014 and 2015 the survey results showed that more than 70% of the public supported the use of nuclear energy) the political and bureaucratic machine must move in the right direction before the nuclear machine can. “The challenge for Indonesia remains garnering a positive political decision from the President to declare to ‘go nuclear’.

Unfortunately, we still have to wait for that declaration. So without that decision, it is difficult for us to move forward, but this may be the final piece, the government has made significant investments, we have candidate sites for the location of nuclear power plants, we have competent human resources, a choice of financial schemes, and huge support from the public,” Wisnubroto says.

Apart from achieving political assent, experts suggest that Indonesia must first establish an NEPIO (Nuclear Energy Program Implementation Organisation), a national team that can make policies decision concerning the ownership system of nuclear power plants, the share, if any, the Indonesian Government will enjoy, the financial schemes, etc.

According to Dr Djarot, the establishment of an NEPIO is the penultimate step before the elusive decree of Presidential “go nuclear” status.

While there is no doubt that nuclear energy is the future for Indonesian energy sustainability, the nation needs all stakeholders, bodies, agencies and policy-makers to align. This is perhaps the greatest challenge: harnessing political will and ensuring that an indisputable case is placed before investors at the right time. With reports from Marianne Estioco and Simon Hyett

Target of national energy mix 2025

Source: Center for Nuclear Energy Development BATAN

ASIAN POWER 15

Praveer Sinha

CEO & MD Tata Power-DDL 16 ASIAN POWER

CEO INTERVIEW

Tata Power-DDL’s CEO is dead serious in keeping and pulling power theft losses down CEO Praveer Sinha vows to never lose sight of keeping AT&C losses down while taking Delhi power to new heights with Smart Model Villages across the country through innovative and cost-effective services.

D

elhi is among India’s most notorious areas when it comes to aggregate technical and commercial losses (AT&C). AT&C losses, a combination of power loss during transmission and through theft. Tata Power-DDL is at the forefront of combating AT&C losses, all while successfully meeting the record peak power demand of 1764 MW without any network constraint and power outage as Delhi touched an all-time high of 6188 MW in May this year.

Asian Power caught up with Tata Power-DDL CEO Praveer Sinha, a professionally trained Electrical Engineer who holds a Masters of Business Law from National Law School, Bangalore. He has nearly 32 years’ experience in developing and setting up of greenfield power projects in India and abroad and has been at the helm of running successfully a public utility service in India’s National Capital City of New Delhi. Four years after joining the company, he has taken the firm to several milestones.

commercial consumers, improving the sub-standard and dilapidated distribution network system using state of the art technology and processes, reducing AT&C losses from 53 per cent during the takeover to less than 9% now, improving system reliability so as to be comparable with the best utilities in India and abroad.

Changing the consumer perception and tackling the nexus between people with vested interests and power thieves who were responsible for theft were also among many challenges that needed immediate attention. Further, in current context, I think the biggest challenge is in sustaining what our company has already achieved. We have reduced the AT&C losses by 53% to 8.88% and now reducing even by few percentage points each year will be an uphill task. But with our new Initiatives of Smart Metering and Technical Loss reductions, we are confident that we will continue our journey of further loss reduction.

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

In the previous assignment at Tata Power Company Ltd., I was the Executive Vice President & Project Director and was looking after developing and implementing many Power Generation Projects in India and abroad. I was spearheading Tata Power’s growth plans by developing new Greenfield and Brownfield Power plants coming up in various parts of India like the states of Jharkhand, Orissa apart from Hydro Projects in Nepal, Bhutan and India. At Tata Power, I had the opportunity to commission four plants totaling 1400 MW. I was also involved in the project development and implementation of nearly 8000 MW Greenfield Power Projects.

This enriched experience has helped me to develop an expertise in handling issues relating to land acquisition, project engineering, contract finalization, project execution activities and rehabilitation facilities.

What is TPDDL’s biggest plan to date? What should the industry be excited about?

With agreement on the new Sustainable Development Goals (SDGs) and the accord reached at COP 21 in Paris, the world today has an updated paradigm in which clean energy is a subset of climate change. We need both speed and scale for technology for the war on climate change. Tata Power-DDL is preparing itself through collaborations with Technology Partners & Research Institutes in Innovations in areas like Renewable Energy Generation, Micro-Grid, Home Automation, automated Demand Response, Smart Meters & Smart Grid, E-Vehicle Charging etc. towards this challenge.

One major focus area is innovation for Solar Micro-Grid which is very pertinent for access to electricity in India as well as in most other Asian countries. There are three dimensions of this initiative: 1) Improved Storage - Tata Power-DDL is exploring different Battery Technology and Inverter Technology in 100 KWp Solar Test Bed with improved battery performance and longevity (vs. conventional lead-acid): high ambient temperatures, deep discharge, and extended partial charge; 2) Integrated “utility-in-a-box” - Integrated Energy Management System leading to “Smart Micro-Grid” to be tested in Bihar state Micro-Grids in collaboration with MIT and GE, and; 3) Affordable energy-efficient appliances - Tata Power-DDL is exploring opportunities for financing and other business-model innovations of Energy Efficient Appliance. A new family of affordable, energy-efficient appliances (e.g., refrigerator, fan, TV, etc.).

Tata Power-DDL is partnering with the Massachusetts Institute of Technology, GE and Tata Trust for developing two rural micro-grids in Bihar. We are also taking part in an initiative run by the President of India’s Office wherein “Smart Model Villages” are to be developed in five villages in Haryana State. The objective of this initiative is to replicate the model of Smart Township to rural areas. We intend to plan for commercially viable, large-scale rural electrification with reliable and cost-effective energy through this initiative.

I strongly believe that our journey of excellence in Delhi can be replicated in Smart Model Villages across the country through innovative and cost-effective services.

What are your top three priorities for TPDDL? I am prioritising the following under my leadership: 24x7 power to people along with world class services and technology implementation; increasing the distributed energy resources portfolio - promotion of renewable energy and energy efficiency, and; reducing regulatory assets and making tariffs cost reflective.

What are the biggest challenges TPDDL is currently facing and what motivates you in making sure these challenges are being overcome?

Non Cost Reflective Tariff, Higher Power Purchase Cost and Liquidation of Regulatory Overhang have long been a serious bottleneck, impacting overall power sector of the country.

However, Tata Power-DDL due to its operational efficiencies, reduction in losses and financial prudence has been able to partially overcome these challenges in recent years. Some of the key challenges that the company initially faced since the acquisition in 2002 includes dealing with rampant theft of electricity in slums as well as industrial/

We have reduced the AT&C losses by 53 percent to 8.88 percent and now reducing even by few percentage points each year will be an uphill task.

ASIAN POWER 17

Country report 2: Thailand

If Thailand wants to go forward, tighter policies must be focused on

Thailand’s power sector urged to tighten policies on electricity security The country’s split ownership structure scares investors despite it teeming with investment potential.

T

hailand’s power market and institutional structure aligns well with its strong commitment to electricity security. Thus states the International Energy Agency in its report, Thailand Electricity Security Assessment 2016. There, it goes on to mention that power sector development plans are best developed in an open, transparent fashion, where responsible parties are given sufficient capacity and an appropriate level of independence.

As long as policy goals are clearly articulated and responsibilities clearly delineated, the resulting plan should strike an appropriate balance between security, economy and environment, says the International Energy Agency.

A complex system In its assessment, the International Energy Agency states that having a high reserve margin may be entirely appropriate for the Thai power system, in particular if the expectation is that reliability standards are to be tightened in the future.

However, it also mentions frontloading generation investments in the expectation that they will be needed later could lead to overinvestment. An additional complexity of the Thai power system is the fact that only a proportion of projects are directly owned and operated by EGAT. Further, the group points out that approximately half of domestic generation 18 ASIAN POWER

The situation is compounded by the fact that PPAs are negotiated by the MoEN, but EGAT is responsible for integrating IPPs into the power system.

and all projects developed outside of Thailand involve independent power producers (IPPs) contracted under long-term power purchase agreements (PPAs). EGAT, however, also has minority stakes in certain IPPs through its various subsidiaries.

This split in ownership structure between EGAT and the various IPPs has the potential to create uncertainty, both in terms of investment and in terms of operations if not properly co-ordinated.

Conflicts of interest could potentially undermine both the investment environment and the security of day-today operations, notes the assessment.

PPAs and electricity security Meanwhile, the International Energy Agency also takes note of the relative inflexibility of PPAs can also affect longand short-term electricity security.

Long-term, fixed-price PPAs offer a degree of certainty to both the investor and the purchaser (in this case, EGAT), but limit the ability of developers and system planners to respond to market developments. This is particularly challenging, states the assessment, in an environment that mixes utility-owned generation and IPPs. In Thailand, the situation is compounded by the fact that PPAs are negotiated by the MoEN, but EGAT is responsible for integrating IPPs into the

power system, observes the International Energy Agency.

Over the short term, it continues, such PPAs may lead to inefficient dispatch decisions due to an increase in anticipated fuel costs and/or if anticipated demand growth is being overestimated, which could potentially result in power system instability.

Developing sustainability According to a country assessment by the Asian Development Bank (ADB), threats to a competitive and stable energy supply include the rising market price of oil and gas, scarce and dwindling domestic resources, uncertain reliability of nondomestic sources of energy, and increasing domestic demand.

It goes on to mention that the Thailand Power Development Plan (PDP), 2010–2030 forecasts that total system capacity will need to increase to 70,686 MW by 2030 from 32,395 MW as of mid-2012. During 2012–2019, installed capacity is expected to increase by 23,325 MW—35% from renewable energy, 22% from cogeneration, 28% from combined cycle, and 15% from thermal.

For the development of a sustainable sector to occur, however, there needs to be the following, says the ADB: diversification, to the extent possible, from the heavy reliance on oil and natural gas; good governance and supply-side

Country report 2: Thailand will avoid the release of more than 1.3 million tons of greenhouse gases into the atmosphere over the next 25 years.

Fuel mix for power generation

Tony Segadelli

Source: Energy Policy and Planning Office, Ministry of Energy, Thailand

regulation; and implementation of pricing mechanisms to provide sound market signals that adjust consumption to reflect the true cost of production and environmental externalities.

Renewed renewable energy sector After a delay caused by the political upheaval, Thailand is starting to move forward again on the renewable energy (RE) front, says Tony Segadelli, managing director of OWL Energy.

A tendering process was held in April that resulted in cooperatives being awarded 281MW of solar PV. Many of these cooperatives have teamed up with experienced solar PV companies to implement their projects.

Meanwhile, the FIT has been kept at THB5.66/kWh for 25 years, and more PV tendering is expected towards the end of this year or early next year. In terms of other RE opportunities, the first MSW project in Bangkok had its opening ceremony in May. It can generate 5MW. This bodes well for other MSW projects in Thailand.

Further, Thai peak power demand increased in 2016 by 8% to a new record of 29,618.8 MW. This is despite the economy growing at only 1.8%, and is also hopefully an indicator that the economy will start to grow stronger.

Although the National Energy Policy Council (NEPC) is in the process of tendering new gas concessions and PTT is expected to build an additional LNG terminal, Thailand is expected to continue increasing the capacity and percentage of RE in the country. The government has a stated policy of reducing reliance on natural gas, in part because of shrinking reserves.

In relation to Thailand’s RE sector, the International Energy Agency says the country can afford to be more ambitious in its renewables goals.

Thailand should take advantage of the rapidly declining costs of solar PV and

the inherent flexibility of its power system by significantly increasing its renewables target. To ensure that various renewable resources can be more effectively utilised to help support the system’s security, the government should revamp the current feed-in tariff (FIT) programmes.

Private sector and RE The private sector could also aid in the further development of Thailand’s RE sector. The Asian Development Bank, in a country assessment of Thailand, observes that credible and transparent tariff setting with sound long-term electricity offtake arrangements may attract greater private investment. The organization cited the closing of several commercially financed solar energy project transactions in Thailand as bases. It also noted that greater private investment will, as a result, lead to sustained private sector participation, which will trigger more competition, improve service quality, and stimulate innovation.

Further, according to ADB’s “Sun, Partnerships Power Thailand Solar Project” case study, the Natural Energy Development Company built the first large-scale solar power plant in the country and the largest in Asia — a project that manifests the feasibility of large, private sector solar farms. The 55-megawatt photovoltaic solar plant was constructed in just 18 months, ahead of schedule and under budget.

The case study noted that ADB assisted in obtaining long-term financing and helped the project register and prefinance certified emission reductions under the Clean Development Mechanism. This, it said, attracted several local lending partners, including Bangkok Bank, Kasikornbank, and Siam Commercial Bank. The solar farm began feeding power to EGAT in late 2011, and now generates enough clean electricity to power 70,000 households, says the case study. By replacing fossil fuels, the plant

Thailand should take advantage of the rapidly declining costs of solar PV and the inherent flexibility of its power system by significantly increasing its renewables target.

Points to ponder The ADB country assessment notes that the power subsector comprises several public sector stakeholders and statecontrolled utilities. Overlaps in functions result in some lack of coordination and redundancy, providing scope for institutional reform and improved cooperation and accountability among stakeholders.

Further, Thailand’s PDP targets a 25% reduction in energy intensity by 2030, based on energy savings programs and promotion of energy efficiency, says the assessment. The government is working to develop and implement policies and measures to encourage investment in energy efficiency, particularly in transport and industry, it also notes. Government programs (for peak clipping, loadshifting, and energy conservation) that influence available consumer choices could be expanded, the ADB suggests.

Lastly, ADB suggests appropriate pricing policies for the electricity tariffs charged by agencies.

Thailand’s non-hydro renewables capacity

Source: BMI Research

Share of renewables in Thai energy mix

Source: IEA Thailand Questionnaire, 2015

ASIAN POWER 19

analysis 1: Thorium as AN alternative

The vast capacity of thorium is yet to be explored

Is Asia ready to use thorium as an alternative?

As aspiring nuclear countries search for ways to reduce fossil fuel dependence, debate is raging over the use of the lesser-known radioactive element thorium and its application to the nuclear fuel cycle.

F

ar more abundant than once thought, thorium may well provide a future alternative to the traditional nuclear reactor fuel, uranium. Naturally occurring in quantities comparable to lead and three times that of tin, thorium deposits are not difficult to find. As such, some experts predict that thorium will one day replace uranium as the nuclear reactor fuel of choice.

But its application comes not without challenges with experts saying that thorium nuclear reactors are decades away from large scale roll-out. For the India’s Nuclear Power Capacity

Source: World Nuclear Association 20 ASIAN POWER

We do not think thorium will be a [nuclear fuel] solution until perhaps 2035.

moment and for the next generation of reactors, well-trusted uranium will remain the fuel of choice.

Application is decades away Abundant as it may be the ostensibly conservative nuclear engineering industry does not posses a great deal of hands-on experience with thorium, it also lacks certain technical elements that make it less suitable and less reliable than uranium in the nuclear fuel cycle.

For instance, despite the element’s great plus — quantity — it is more challenging to prepare as a nuclear fuel; irradiated thorium is more dangerous in the short-term compared to uranium (something the post-Fukushima world does not want to hear) and it is not easily adaptable in “fast” reactors. In terms of fuel replacement in the nuclear energy industry, the research and development process can take generations.

Thorium is, at least compared to the thorium-plutonium fuels cycle, a relatively new concept, as explained by Mohd Zamzam bin Jafaar, CEO of the Malaysian Nuclear Power Corporation, “We do not think thorium will be a [nuclear fuel] solution until perhaps 2035.” Zamzam does believe that thorium has potential, it may in fact be a long-term solution to uranium use (uranium being only 30% as abundant and in decreasing supply, but this process of replacement

will not be for at least two decades.

“Furthermore, we need to bear in mind that current nuclear plants and plants in the production pipeline have a very long lifespan. Plants being built today will be operating for the next 60 years or more; so these plants will require uranium for 60 years or longer.”

Apart from the lack of operational experience with the thorium fuel cycle, compared with the decades of uranium experience garnered by the leading technology vendors, there is a concern according to ZamZam that thorium aids weapons proliferation as it is more adaptable to nefarious uses than uranium — one very strong incentive as to why investment into thorium may not be forthcoming in the near future.

Thorium in India The rapidly developing nuclear energy industry in India provides a perfect example of one flooded with thorium but cannot transition to a successful commerciality or NPP application.

SP Singh, former head of the Nuclear Safety Division of the Atomic Energy Regulatory Board of India, an expert with 50 years experience (including with the IEAE) in nuclear project and plant safety and quality assurance, describes the conundrum.

“Thorium is simply not an alternative in the short-term,” SP Singh adds.

Thought Leadership Article

OWL Energy glides through Thailand’s revitalised RE sector

It is riding the ebb and flow of renewables and is even eyeing one of the most promising power markets, Myanmar.

A

fter a delay caused by political upheaval, Thailand is starting to move forward again on the renewable energy (RE) front. A tendering process was held in April that resulted in cooperatives being awarded 281MW of solar PV. Many of these cooperatives have teamed up with experienced solar PV companies to implement their projects.

In terms of other RE opportunities, Bangkok’s first municipal solid waste (MSW) project, which can generate 5MW, had its opening ceremony in May, boding well for other MSW projects in Thailand.

Thai peak power demand increased in 2016 by 8% to a new record of 29,618.8 MW. This is despite the economy growing at only 1.8%. It is hopefully an indicator that the economy will start to grow more strongly.

Embracing change Amidst the positive developments surrounding renewable energy in Thailand,power consultancy company OWL Energy is at the forefront.

“The company is continuing to be possibly the largest consultant in the solar PV sector,” says OWL managing director Tony Segadelli.

“We are working on many of the new PV projects with roles as diverse as EPC(M) and Lenders’ Engineer.”

“We are known for our cradle-to-grave business model and this is being borne out by our role in two decommissioning projects for thermal plants, which is an unusual role considering how young the overall age of the power plant fleet is in Thailand and across SE Asia.”

In the almost seven years that OWL has been in business, one of its key initiatives has been to diversify.and allowing them to be thicker.

To further enhance its energy focus, OWL is the Japanese representative for a Thai company that is entering the biomass pellet market.

Wood waste will be converted in Thailand into pellets and then exported into the Japanese biomass market which is on the start of a major boom.

Comprehensive and diverse solutions “OWL’s business model is to provide energy solutions and we are spreading our wings across the energy sector including beyond the power industry,” explains Segadelli.

These roles range from sub-MW to hundreds of MW and include fossil and RE technologies. In addition, they also include a wide range of associated sectors, such as bio-ethanol and coal mining.

“The other interesting aspect is that OWL is taking varying levels of risk depending on the project’s requirement including the standard consulting method of OE / LE through EPC(M)to brokering international fuel transactions,”Segadelli notes.

Expanding outside Thailand More than just Thailand, OWL has its eyes onother countries, such as neighbors Myanmarand Cambodia.

OWL is working on a wide range ofprojects in Myanmar that cover the powertechnology spectrum.

Segadelli notes solar -- including two plants that will both be the largest solar plants in Southeast Asia upon completion -- and CCGT. OWL is also the technical advisor on the first foreign acquisition (the 50x1MW

Hlawa reciprocating engine project acquired

by Gunkul), and Segadelli also mentions coal mine (JORC) studies for Thai investors for a minemouth coal project.

“Although there will be a lot of medium- to large-scale projects (in Myanmar), there will also be a lot of industrial estates that require localized solutions to their power needs. This means that there will be opportunities across the capacity spectrum in both RE and fossil technologies,” Segadelli also says.

The PPA structure that was used for Myingyan, which OWL helped write, is a process that is likely to be replicated through multiple rounds of tendering on both coal and CCGT projects. OWL is also the Lenders’ Engineer for Myingyan.

In Cambodia, meanwhile, OWL is working on both thermal and RE projects. Its coal project is an enhancement of an operational plant while the solar project is a feasibility study for solar PV supplying power to industrial estates.

Equipped for the future The power market in Southeast Asia continues to grow and as it does so, Segadelli says OWL will continue to expand around the region, which will enable it to further enhance its service-based consulting.

“The drop in crude oil prices had limited impact on RE and the normalization of crude prices is enabling the biofuel sector to reignite,” says Segadelli. “These trends should result in a bright future for the power industry in Southeast Asia, and OWL is wellplaced to make the most of this.”

“The other interesting aspect is that OWL is taking varying levels of risk depending on the project’s requirement including the standard consulting method.”

ASIAN POWER 21

sector report: HYDROPOWER

Asia’s strong hydropower potential is raging

Asia be dammed: Are Asian countries too late in scrambling to harness hydropower?

Reliability of hydropower projects are questioned amidst threats of increasingly frequent droughts and floods and intensifying climate change.

W

hen the average of hydropower projects dropped to 0.044 USD/kWH with the lowest value hitting 0.029 USD/kWh, Asian countries clambered to get projects funded and approved. Most ASEAN Member States (AMS) have relatively high potentials of hydro, thus harnessing these renewable energy (RE) potentials is a viable option to be explored.

From the total of 232 GW potential, only 41 GW are being utilised throughout ASEAN region. The share of hydropower in total ASEAN electricity generation in 2014 was 16% and 21% in total installed power capacity.

Hydro is indeed the largest source of renewable electricity generation in ASEAN, which accounted for 71-78% of all renewable electricity generation between 2006 and 2014. Some AMS like Cambodia, Myanmar and Vietnam have more than 50% of their electricity supplied by hydro. Even Lao PDR is almost 100% dependent on hydro power.

Dropping costs According to Dr Sanjayan Velautham, executive director of ASEAN Centre for Energy, hydro is one of the most affordable resources, which is another reason for AMS to develop hydropower for electricity generation. “The results from our levelized cost of electricity (LCOE) study showed that the average of hydro project is 0.044 USD/kWh, with the lowest value reaching 0.029 USD/kWh. However, with the increased availability and the decreased costs of other RE technologies in ASEAN such as solar and wind, the AMS are starting to boost efforts to develop other RE technologies.”

Solar energy potential in ASEAN is in the range of 3.6 to 5.3 kWh/m2/day with sun shines throughout the year. Annual growth of solar power capacity in ASEAN had flourished much higher than other RE sources, with a compound annual growth rate of 62.3%, while others are about 31.2%.

Biomass source generated electricity in ASEAN was up to 22 ASIAN POWER

Many experts do warn however, that there are so many confounding uncertainties and we are still too temporally close to the accident that it is difficult to make useful predictions.

14,297 GWh in 2014, about 8.5% of total renewable electricity generation. These results show that ASEAN has the desire and is doing efforts to integrate various RE technologies to address Energy Security, Accessibility and Affordability in the Region.

Huge waves of challenges For large-scale hydro, the main challenge is on the social and environmental impacts: how to ensure that hydro power development will not bring any harm to biodiversity, natural and cultural resources.

In addition to that, social acceptance due to community relocations who are affected by the project should also be carefully taken care of by the governments. Raising public awareness could be one way to address this issue.

Dr Velautham adds that for small scale hydro, finding the best business model to access finance is the main challenge, because small hydro can be more expensive than large hydro with longer payback period.

Huge investments needed upfront cannot be allocated only by state budget or private investors. In ASEAN, small-scale hydro powers are usually for the purpose of rural electrification, which is not really attractive for investors. International investment should be welcomed to overcome this challenge. Governments also need to create more investment-friendly policies by providing more incentives and financial supports for project developers. Public-private partnership should be encouraged by the governments for this purpose.

“Another important challenge we may see in the development of hydro power is connectivity among ASEAN Member States (AMS). The grid integration will boost hydro source deployment in the region. With better and higher grid integration, one Member State with abundant hydro potential can more easily export electricity to another Member State. This is already in place on a bilateral basis among some ASEAN Member States,” he says.

sector report: HYDROPOWER Percent of power capacity by water availability for India, Malaysia, Philippines and Vietnam

Source: China Water Risk estimates, CEC, 12FYP, NEA Research Affiliate State Council, NBSC

Source: World Resources Institute

It shouldn’t be surprising that at the forefront of all scrambling efforts to maximise hydropower is China, being the world’s leading builder of dams. Debra Tan, director at China Water Risk, says the nation’s own hydropower installed capacity has more than doubled from 2005 to 280GW in 2013, comprising 258GW of conventional hydropower and 22GW of pump storage capacity. With around 45,800 small dams, small-scale hydropower has dominated hydropower growth over the last decade but large-scale dam building has stepped up.

Is it too late?

Further expansion is expected as this relatively cheap carbonfriendly fuel source helps China meet its 2030 emissions commitments. However, seasonal variability impacts river flow resulting in fluctuations in hydroelectricity generation that require smoothing.

Analysis shows that due to coal-fired power’s dominant role in smoothing, China’s hydroelectricity production demonstrates a strong correlation with non-nuclear thermal power generation.

Achieving efficient coal-fired power is therefore key. With extreme weather brought on by climate change, reliance on fluctuating river flows means the viability of hydropower comes into question.

Expected increasing frequency of droughts and floods in the future might diminish its power generation ability as water is held back in reservoirs to provide drought or flood relief. In such cases, more coal will be required to balance hydropower’s diminished capacity.

Regardless, China will plough ahead with hydropower dam building as these serve multiple functions beyond power generation such as water flow management, rural electrification and provision of water for irrigation. These functions will become increasingly important to mitigate climate risk causing concerns for China’s neighbours due to its plans to tap transboundary rivers.

Water-related issues’ impact Amanda Sauer, senior associate in the Envest project at World Resources Institute, remarks that the potential financial impacts of water-related issues for the power generation sector include: lost revenues and increased costs of goods sold (COGS).

She also says water-related disruptions such as prolonged droughts and heat waves can lead to low reservoir levels and insufficient cooling water, resulting in load losses or outages that often coincide with periods of heavy demand, thereby forfeiting revenues.

Water shortages can necessitate temporary water and power supply measures that increase production costs and therefore COGS. Water shortages are episodic in nature and can occur in any timeframe, although their frequency and severity are

2015-2050 Conventional and pump storage hydropower Installed capacity forecasts (GW)

projected to increase over time. Impacts on shareholder value will vary by business model and power purchase contracts.

Higher capital expenditures (CAPEX).

As water availability and quality declines, companies may need to invest in water infrastructure projects to secure supplies (such as pipelines, dams/reservoirs, and desalinization facilities), water treatment systems (for plant influents or/and effluents), and/or more advanced cooling systems (such as air, seawater, wastewater reuse, or condensed water cooling).

The need for such investments will increase in the future, with the impact on the industry determined by regulations and financing terms. Project execution delays and constraints on growth. As water shortages become more acute, policymakers are likely to respond by requiring more stringent water efficiency and usage requirements.

This could increase permitting and development periods for new plant projects. As a result, financing may become more difficult and expensive. New plants may be restricted in water scarce regions by government decree or by lack of financing if water supply cannot be secured at an attractive rate.

These risks are currently present in some Indian states where signed MOU’s for new power capacity are believed to exceed available water resources. Over time these risks will increase in severity and geographic scope.

Debra Tan

Dr Sanjayan Velautham

Amanda Sauer

India’s water woes Indeed, a case study by HSBC on India notes that water scarcity is already impacting power projects in the country, causing delays and operational losses. For example, the National Thermal Power Corporation’s (NTPC) Sipat plant was shut down in 2008 due to lack of water supplies from the state of Chattisgarh.

Thermal plants under construction in Orissa state are also reportedly witnessing delays due to water allocation problems.

Utilities can take a range of measures to protect themselves from water scarcity risks. They could, for instance, incur capital costs that include building back-up supply resources such as canal network or pipelines. Another approach is to identify coastal locations for future plants to tackle the problem of increasing freshwater shortage by installation of desalination plants. However, such measures are costly and affect a company’s bottom line.

The financial impact of these additional costs may be limited if they can be passed on to end-customers through tariffs. This case study assesses the financial impact of water scarcity on the internal rate of return (IRR) of a typical coal-based plant at two stages of the project life cycle: Project development stage, when water scarcity can delay project execution, leading to loss of revenues, profits and hence project IRR; and operating life of the project, when water scarcity can reduce the plant load factor, thereby affecting profitability and valuation.

ASIAN POWER 23

sector report: HYDROPOWER Power is bought and sold under long-term contracts in India.

While typical buyers include unlisted state-owned distribution companies, sellers include listed players such as NTPC and private listed developers such as Reliance Infrastructure, Tata Power, and Lanco Infratech. Under current regulations, the risk of revenue loss due to water scarcity may be limited over the short-term as power is sold under long-term contracts, and virtually all costs - operating as well as capital-related - can be passed on to the buyer.

Power purchase agreements (PPAs) typically compensate the power generator if it is unable to operate a plant due to water scarcity, which is deemed to be the responsibility of the State electricity board (SEB). (For other inputs such as fuel, a utility will typically sign a back-to-back agreement with the fuel supplier for making up for any losses that may occur due to a disruption in fuel supply.)

Scarcity of water could result in reduced power output, or even shut downs. If water supply is the responsibility of the operator and the state does not compensate for any loss of revenue associated with reduced water flow, and therefore profits, the drop in output will result in loss of revenues, profits and cash flows and hence lower the valuation of the project.

Hydro period past prime?

Further, civil rights organization South Asia Network on Dams, Rivers and People (SANDRP) recently wrote in its blog on India’s hydropower sector that the country’s hydropower generation dropped by up to close to 20% compared to previous year in some of the months this year even as installed capacity of hydropower projects keeps climbing relentlessly.

The group also mentions that according to monthly generation figures from Central Electricity Authority, even as installed capacity of hydropower projects went up by 1516 MW in last one year, the power generation from hydropower projects dropped by 10.82%, 19.19%, 17.7% and 15.92% during February, March, April and May 2016 respectively at all India levels, compared to the figures in the same months in 2015.

While reduction in power generation from hydropower projects during drought years is expected, the quantum of reduction, of up to 46% regionally and 20% nationally should be raising concerns, says SANDRP. When there is such reduction year and year, the group continues, the reliability of hydropower projects in comes into question since in changing climate, both droughts and floods are going to increase in frequency and intensity. Lastly, SANDRP points out that even as USP of hydropower projects is touted as peaking power and when how much of power generation from hydro projects is during peaking hours is being monitored, where is the case for adding more capacity for peaking power.

India’s Union Power Minister recently declared that for the first time in history, India will be power surplus in 2016-17 and

will not need any additional power capacity for next three years, states SANDRP. India’s renewable power (solar and wind totaling 42850 MW) installed capacity has already gone past the hydro installed capacity (42783 MW) on April 30 of this year. Since the renewable installed capacity is increasing at much faster rate, SANDRP says, hydro installed capacity is bound to remain at much lower level than renewable installed capacity for years to come.

The group also argues that we have gone past the peak hydro period globally. It cited Peter Bosshard of International Rivers, who wrote: “According to the 2016 Renewable Capacity Statistics of the International Renewable Energy Agency (IRENA), the world added 63 GW of wind and 47 GW of solar power in 2015.

In comparison, only 22 GW of large hydropower capacity was added during the same year – down from 38 GW in 2013 and 32 GW in 2014… In 2015, a full $271 billion were invested in new wind and solar facilities, compared to $130 billion in fossil fuels and $23 billion in large hydropower.”

What this means for the world, SANDRP claims, is that in 2015, hydropower added only a fifth of the installed capacity added through solar and wind, but as investments in solar and wind are rising much faster, they are eating into the available investments for hydro among others, so this trend of diminishing hydro capacity addition is only going to accentuate.

Under current regulations, the risk of revenue loss due to water scarcity may be limited over the short-term as power is sold under longterm contracts, and virtually all costs can be passed on to the buyer.

Select Southeast Asian countries’ hydroelectric generating capacity (2012-20)

Source: EIA

24 ASIAN POWER

Tapping the Mekong Given that, however, hydropower in Asia is still seen as an option. According to Fred Mayes of the US Energy Information Agency, many countries in Southeast Asia are planning to access the immense hydroelectric potential of the lower Mekong River, which flows through or borders China, Myanmar, Laos, Thailand, Cambodia, and Vietnam.

He says China has constructed six major dams along the upper portion of the Mekong River. Hydroelectric power potential in the Greater Mekong Region (which includes Mekong tributaries) is estimated between 175 GW and 250 GW. As of 2010, Mayes says, 71 Mekong hydroelectric dams were proposed for completion by 2030. Vietnam, Indonesia, Bhutan, and Laos are four of the many Southeast Asian countries with significant planned hydroelectric additions, from projects in the Mekong region as well as projects centered on other hydroelectric resources, he notes. China’s substantial development of hydroelectric power, including the largest power plant in the world at Three Gorges Dam, has overshadowed the relatively large hydroelectric expansion plans of other Southeast Asia countries, claims Mayes. Combined, the smaller countries of Southeast Asia plan to construct 61 gigawatts (GW) of new hydroelectric generating capacity through 2020. If all planned projects are completed, he says, these countries will more than double their 2012 hydroelectric capacity of 39 GW. China’s water security role China is clearly on track to meet its 2015 target of 260GW conventional hydropower installed capacity. Hydropower expansion during the 12FYP has been mainly in water rich provinces, with 80% of expansion in Yunnan and Sichuan.

However, these provinces are exposed to seismic risk, which raises concerns regarding further expansion. Moreover, although there are no concrete links between dam building and earthquakes, concerns exist.

Aside from environmental and social risks, there are also geopolitical concerns as more than 20 riparian countries share China’s international freshwaters. China has identified ten large rivers for hydropower expansion; three of the ten are transboundary raising geopolitical risks. Although China’s 2015 transboundary hydropower capacity is only 6.5% of the nation’s conventional hydropower installed capacity, this could grow to 28% by 2050.

NUCLEAR FORUM.ASIA STORIES

file:///E:/ISSUES/AP/2016/JulAug2016/AP%20FIRSTS/Japan-Ikata_NPP_0.jpg

POLICY & INFRASTRUCTURE

Japan’s Chugoku submits decommissioning plan for Shimane According to World Nuclear News, Chugoku Electric Power Company has submitted an overview of its decommissioning plan for unit 1 of the Shimane nuclear power plant in Japan’s Shimane prefecture to the country’s nuclear regulator. The company expects dismantling of the plant to take 30 years to complete.

SAFETY & ENVIRONMENT

South Korea’s Wolsong no. 1 nuke reactor shut down after technical issue Thankfully there were no leaks.

Reuters reported that South Korea’s Wolsong No.1 nuclear power reactor was automatically shut down after the system detected a technical problem, an official at the reactor’s operator said on Thursday.

POLICY & INFRASTRUCTURE

Cambodia, the next to enter the nuclear family?

In a historic move for the Southeast Asian nation, the Kingdom of Cambodia has signed two memoranda of co-operation with Russian State Corporation for nuclear energy, Rosatom. The Kingdom is aiming for energy independence. Building a national nuclear energy complex has been put into limelight.

POLICY & INFRASTRUCTURE

Nuclear power plant grid connections doubled in 2015: IEA Improvements in nuclear construction times are now making climate goals more achievable than previously thought, according to a new report from the IEA. It stresses the need for a broad range of clean energy technologies to achieve full benefits.

NEW BUILD

Nuclear plants for South China Sea not a distant possibility China is slowly making maritime nuclear power platforms a reality that could support projects in the disputed South China Sea. The Global Times, a tabloid run by the ruling Communist Party’s official People’s Daily, said nuke power platforms could “sail” to farflung areas and provide ample and stable electricity.

SAFETY & ENVIRONMENT

Japanese regulator approves Ikata 3’s operational safety programs The operational safety programs for the Ikata NPP have been approved by Japan’s nuclear regulator, moving unit 3 one step closer to restart pending final inspections. The regulator has also confirmed Takahama units 1 and 2 meet new safety standards.

ASIAN POWER 25

analysis 2: Indian distribution companies

Pressure is mounting for Indian DISCOMs

Why Indian DISCOMs are urged to zero in on sector reforms

Power distribution, as the most important component in India’s power sector value chain, has been left thirsty with much needed policy reforms and regulatory tweakings as distribution issues mount.

P

ower sector reforms in India have brought major changes to the sector’s operating environment.

It has led to commercial approach, setting up of independent regulators, restructuring, and formation of separate generation companies, transmission companies, and distribution companies (DISCOMs).

They have changed the role of engineers from a purely government controlled technical management to business management in a corporatized framework. Many new technologies and commercial practices have also emerged in the distribution sector subsequent to

Certain provisions in the Electricity Act, 2003 have been introduced, and encouraged competition in the Indian power sector.

Customer’s expedition with FLM Technical Skills

Source: Suresh Vishwakarma and Dr Ruchi Tyagi

26 ASIAN POWER

reforms. Engineers of future will have to be able to do everything that engineers do today— and much more. They will have to design, build and operate generators, transmission & distribution lines, manage the networks for reliable operations, and do all this safely and with security against attack designed in from the outset.

They will have to do this within an environment which is much less friendly and forgiving than the environment which their predecessors faced.

Additionally, each decision on new capacity and operations will have to be made with a view to its costs and expected revenues.

Competitive scenario Certain provisions in the Electricity Act, 2003 such as open access to the transmission and distribution network, recognition of power trading as a distinct activity, the liberal definition of a captive generating plant and provision for supply in rural areas have introduced, and encouraged competition in the Indian power sector.

Power distribution is the most important component in the power sector value chain which interfaces with end customers, and provides revenue for the

entire value chain. There are over 146 million electricity customers of different categories in India.

Frontline managers in Indian DISCOMs are the field officers mainly Assistant Engineers and Junior Engineers.

They are posted in operation & maintenance offices in the town, suburban, and rural areas.

They are the key persons who practice most of the technologies and approaches to benefit customers of different categories. Middle managers (Executive Engineer and Superintending Engineers) at DISCOMs are above frontline managers and below departmental heads in the hierarchy. Frontline managers directly report to them. They are a vital link between top managers and frontline managers. Their role in DISCOMs is instrumental.

Frontline managers’ role in customer satisfaction Customer satisfaction is increasingly important to retail electric utilities.

Satisfying customers was important during the old days of utility regulation, when utility customers had little if any choice concerning their electricity supplier. It’s even more important today,

analysis 2: Indian distribution companies power distribution companies in central India concluded that reforms in the Indian power sector have changed the roles of lately formed DISCOMs. The emergence of new technologies in the electricity distribution sector subsequent to power sector reforms have alarmed the need of upgrading the competency at frontline management in energy audit, demand side management, losses reduction, system efficiency, technical analysis, distribution generation, and other technologies for efficient operations as well as improved customer services.

Competency gap in frontline managers

Source: Suresh Vishwakarma and Dr Ruchi Tyagi

when customers can invest in equipment to bypass the grid in whole or in part, and it will inevitably be more pronounced in the future, when distributed generation options become more widespread and affordable.

Frontline managers head field offices, which are basically a miniature of DISCOM in the remote areas. A large number of customers of different categories frequently approach field offices to get electricity services and redress of their grievances. Frontline managers therefore play a very significant role in DISCOMs. They act as an inter-face between customers / public and DISCOM. They interact with public and customers on a daily basis.

Training improves the overall organization profitability, effectiveness, productivity, and revenue and other outcomes that are directly related to the training in improving the quality of services.

Training enhances the employees’ capacity to contribute the optimal performance of the organization. Results of IBM’s Smarter Workforce study confirm that best performing companies invest in training and training helps in achieving the objectives fast.

Reforms galore World Bank’s report says that Restructured Accelerated Power Development and Reforms Programme initiatives can be successful only if the capacity of the utility staff is improved through appropriate skills and requisite training.

Also, the distribution utilities need to focus on enhancing customer satisfaction by providing efficient and reliable service in India where 20% of customers account for 80% of the revenue.

Frontline managers heading DISCOMs’ field offices are the key persons who practice most of the technologies and approaches to benefit customers of different categories.

If they not adequately trained, there will be an adverse impact on customer

services eventually resulting in customer dissatisfaction and inefficient DISCOM operations.

The study revealed that workplace environmental factors significantly impact the performance of DISCOMs’ frontline managers.

Clarity at management on who needs training and kind of training, conducting training with proper planning and adequate budget, getting resources to use learned skills, networking possibilities etc. positively impact their performance, whereas antagonize by colleagues, pressure from external and internal sources to change work related decisions have an adverse impact.

Customers’ expectations from DISCOMs have also considerably increased in the post-reform era.

Customers not only expect quality electricity supply but also educating them on energy efficiency, energy savings, usage of energy efficient appliances, and safe usage of electricity.

They also expect DISCOMs to educate them on different schemes and initiatives of Government announced time to time for the benefit of customers.

With an understanding that frontline managers shall be provided training on the managerial skills, technical skills and customer services we conduct the O-T-P analysis of Indian DISCOM’S and the outcome of discussions with the top management compel us to find the other factors effecting the performance.

We decided to find the effect of nontraining issues, the work environment factors.

The mediating effect of the nontraining issues were our findings leading to our transition from being firm believer to the statement, “Training improves organization’s performance” to “nontraining issues like work environment have a mediating effect on performance besides training.”

Lessons learned The interpretations of data using various statistical tools for the training needs assessment of frontline managers in

Customers’ expectations from DISCOMs have also considerably increased in the post-reform era.

Increasing expectations Customers’ expectations from DISCOMs have also considerably increased in the post-reform era. Customers not only expect quality electricity supply but also educating them on energy efficiency, energy savings, usage of energy efficient appliances, and safe usage of electricity.

They also expect DISCOMs to educate them on different schemes and initiatives of Government announced time to time for the benefit of customers. The study revealed that non-training issues also significantly impact the performance of DISCOMs’ frontline managers.

Clarity at management on who needs training and the kind of training, conducting training with proper planning and enough budget provisions, availability of resources to use learned skills, networking possibilities etc. are the few identified factors which have a significant impact on the performance of frontline managers.

Antagonise by colleagues, pressure from external and internal sources to change work related decisions adversely impact frontline managers’ performance at work.

The data analysis and findings of the study recommends considering employees’ relations factors to the adopted O-T-P Model of TNA of McGehee and Thayer as shown in fig. 2 The management and policy makers of DISCOMs operating in the Asian region may use the findings of this study while assessing manpower’s training needs in their company.

Suresh Vishwakarma is associated with the electric utility sector for the past 28 years. He has a degree in electrical engineering and MBA and holds Professional Engineer status in Canada and Chartered Engineer in UK. Ruchi Tyagi is Assistant Professor (Selection Grade) in the Department of Human Resources & Organizational Behaviour of the University of Petroleum and Energy Studies, Dehradun, India. She has a doctorate degree in management.

ASIAN POWER 27

event coverage: FORTUNA PLANT combined-cycle units.

In addition, the Co-Start technology is also used to increase Fortuna’s warm starts, meaning unit re-start after a weekend shutdown lasting typically up to 48 hours.

The difference for warm starts lies, however, in the temperature and pressure conditions in the heat recovery steam generator considered by the instrumentation and control system after the longer period of shutdown.

Fortuna plant in Lausward, Germany

Siemens bags three world records with new German plant When utility firm Stadtwerke Dusseldorf (SWD) set out to revamp its Lausward power plant, Siemens stepped up to meet the challenge.

U

nder SWD and Siemens’ partnership, the Lausward Power Station evolved from a coal-fired plant into combined-cycle gas turbine (CCGT). The station came to house the CCGT unit Fortuna, which hails from Siemens’ H-Class line of turbines. Thanks to Fortuna, the Lausward power plant economically generates environmentally friendly electric power as well as district heat.

Breaking world records The Fortuna unit boasts electrical efficiency of 61.5%. This exceeds even Siemens’ previous world record of 60.75% net power-generating efficiency set in May 2011 by the Siemen’s Ulrich Hartmann combined-cycle unit at located in Irsching in the south of Germany. The efficiency is achieved thanks partly to a triple-recovery steam generator that heats steam to temperatures of up to 600°C at 170 bar.

In addition, the Lausward plant pairs a 422-MW producing Siemens H-class turbine together with a downstream steam turbine from Siemens SST5-5000 series. During the test run before SWD’s acceptance of the unit, the two turbines achieved a maximum electrical net output of 603.8 MW, which is unmatched by any other single-shaft combined cycle configuration in the world.

Lastly, the Fortuna unit prevents any waste heat to go unused. To supply the city of Düsseldorf with city heat, steam 28 ASIAN POWER

Overall, the plant’s fuel efficiency of the natural gas clocks in at roughly 85%.

is extracted from the low-pressure steam turbine section in volumes of up to 300 MW of thermal energy in a combinedcycled operation—the most thermal energy extracted from a single power plant unit anywhere in the world.

Overall, the plant’s fuel efficiency of the natural gas clocks in at roughly 85%, thanks to the plant’s electrical efficiency combined with its use of heat generated in the power production process.

Accelerated hot starts The Fortuna unit utilises Siemens’ CoStart technology, allowing the power plant to simultaneously start the gas and steam turbines.

The gas turbine starts and runs up, boosting the power plant’s output at the steepest gradient possible right up to full load. The plant does not need to wait for staggered startup of the steam turbine, as customarily practiced by conventional

Combined-cycle gas turbine from Siemens’ H-class line

Rapid shutdown system To accelerate the shutdown process, the Lausward power plant’s gas turbine is shut down as rapidly as possible independently of the steam turbine. In addition, the gas turbine shuts down without regard to customary waiting periods and holdpoints observed in conventional combined-cycle plant operations.

Siemens notes that in test runs, it verified that its Quick-Stop technology allows for a massive cut in the shutdown time of a CCGT plant to 25 minutes— nearly half the usual shutdown period of 45 minutes.

Decoupling heat, power generation Dusseldorf’s district heating system is poised to be expanded this year to include a large hot-water district heat accumulator system. It is slated to commence operation as of January 2017.

The principle of the thermal energy storage is simple—if more thermal energy is extracted from the power generation process than is currently required by the city of Dusseldorf, the district heat accumulator stores the surplus thermal energy. Meanwhile, if power demand reaches a low while simultaneous demand for heat is high, the accumulator storage system can cover the increased demand.

The system allows temporary decoupling of heat and power generation from the city’s demand for thermal energy, and climate friendly plant operation can continue while fulfilling the given market demand in the intended manner.

With reports from Czarina Engracia.

ASIAN POWER 29

OPINION

JOHN GOSS

Prioritising natural gas for China’s future

john.goss@aod.com.hk

A

few years ago the Chinese business and trade media were heralding the cleaner air benefits of natural gas for the factories and power plants across China. The country’s air pollution had become so serious from the uncontrolled burning of all grades of coal that the Central Government became involved. Since then there has been a steady improvement of fuel utilization towards cleaner and greener fuels.

In recent years China has become a leading global installer of renewable energy and the utilization of less polluting cleaner and greener fuels. Natural gas soon became a popular choice for many industries and cities. In the past cheap coal had been the fuel of choice for industry, fossil fuelled power generation, district heating systems in cities and large towns and general heating and cooking. To satisfy the ever growing demands for the cleaner fuel in the country natural gas pipelines were being announced and built from the west and south west of China and from the east as well. These pipelines were built

quickly and commissioned. Soon the natural gas was soon flowing into the energy hungry country where the cleaner fuel was being welcomed by both the authorities and users.

A new drive for natural gas As the large renewable energy technologies were being discussed and reported in the media and at trade fairs across China, natural gas was not being promoted or discussed much too much. There is now a resurgence of gas project reporting in the Chinese media and on a number of Chinese energy company’s websites. It has just been reported in China Daily that China National Petroleum Corp.

(CNPC) is planning to prioritize natural gas over the next five years.

CNPC is a State owned company that is currently supplying over two-thirds of China’s natural gas.

CNPC says that it is planning to sell more than 750 billion cubic meters of the gas between now and 2020.

This target sales growth represents a 40 percent increase upon the past five years of CNPC’s natural gas activities, said Zhao Zhongxun, the Deputy Director of CNPC’s planning department at a recent “green development” forum in Beijing.

The way to go for natural gas Zhao is reported as saying that “the energy company’s top priority now is to increase the domestic supply of the natural gas. Then, we will fine-tune the imports of the gas based upon demand.

“We aim to expand CNPC’s pipeline network and overall capacity of handling and delivering the gas. At the same time we will be expanding and developing our pipeline network and capacity of our LNG terminals”.

The report said that this blueprint would suggest that by 2020, CNPC’s gas pipeline network is expected to have exceeded 60,000 kilometers with an annual natural gas transportation capacity of something like 180 billion cu m.

There are also 12 more gas-storage sites planned to handle these growth demands.

Zhao went on to say that it is a fact that the oil majors have all reduced their overall spending on future projects as the recent plummeting prices of crude oil have seriously reduced their profits. A spokesperson for CNPC, Qu Guangxue said that in the future there will be an even greater promotion of gas-fired power plants and the utilization of natural gas powered vehicles.

SURESH VISHWAKARMA & RUCHI TYAGI

Staying ahead in an era of changing electricity customers’ expectations

C

ustomers’ satisfaction is now gaining vital importance at power distribution companies (DISCOMs) around the globe.

Electricity customers of yesterday are much engaged, empowered, and informed today. They know how and where to voice their grievance to draw immediate attention of their DISCOM. They are actively participating in voicing their opinion on social networks and other forums. Not only the electricity customers are getting a choice of choosing their supplier now but also an additional option of investing in their own power generating equipment.

Apart from availability of electricity supply on 24 / 7 basis, electricity customers now expect ease in getting new electricity connection, advice on most suitable category of supply, timely meter reading, billing, and handling of grievance. They also expect their DISCOM to educate them on a regular basis on different schemes and initiatives of government for customers’ benefit.

A report titled Greater expectations: Keeping pace with customer service demands in Asia Pacific from 30 ASIAN POWER

the Economist Intelligence Unit says that there is room for customer service to become a key source of competitive advantage in Asia. Companies in Asia are currently not putting enough emphasis on customer service.

Empowering the customers Power sector reforms have empowered the electricity customers a lot. Although customers’ satisfaction was important at erstwhile electricity boards but the customers hardly had any choice of choosing their electricity supplier before. Losing customershasalargeimpactonunitrates.Attracting and retaining customers to keep electricity prices affordable is therefore more important now for DISCOMs than ever.

To find out what electricity customers of today expect, a study was undertaken to know the perception and expectation of different categories of electricity customers of four power distribution companies operating in two states of India with a total customer-base of above 10 million. Validity of the questionnaire was established using data

reduction technique. The questionnaire was also tested for convergent and discriminant validity.

Variables under investigations were reduce to categorized factors. The results of the study were amazing. Data analysis indicated that customers’ expectations from DISCOMs have considerably increased in the post-reform era. Today’s customers not only expect quality electricity supply but also expect DISCOMs to educate them on energy efficiency, energy savings, usage of energy efficient appliances, and safe usage of electricity.

They additionally anticipate their DISCOMs to educate them on different schemes and initiatives of government announced time to time for their benefit.

The results of the study send an alarming note to DISCOMs’ management and policy makers to review their plans in the ongoing scenario, keeping in mind to meet their customers’ expectations.

DISCOMs need to stress on managing effective and efficient operations today, which would inturn impact on their customers’ satisfaction on the day after.

ASIAN POWER 31

OPINION

William Byun Taking another look at thorium nuclear

B

eing active in the renewable energy and climate change sector for over the past decade has meant witnessing many changes in the field. Renewables became fashionable, then fell off the table post the 2008 financial crisis, then became fashionable again.

A lot of investment funds were raised to target it – but much now languishes as excess dry powder or as investments with a tricky exit. Another major driver was the Kyoto Protocol – then it wasn’t – but may be again due to the recent Paris Agreement on climate change.

Especially with respect to climate change, the concerns were urgent and immediate post Rio. And then urgent and immediate again post Kyoto.

And urgent and immediate again every year – while inexorably, greenhouse gas (“GHG”) levels have steadily marched ever higher. The arguments have remained relevant and even more so, that without serious and sizeable action to stem such rising GHG levels, we are in effect killing ourselves through destroying our world.

Yet – despite clear knowledge otherwise, people do still smoke, get fat, pursue harmful addictions, and make unwise life decisions despite clear links demonstrating we are indeed “killing ourselves” quite directly via emphysema, Type II diabetes, heart attacks, etc.

Reality check Like eating whole grains and exercising more was to lead to a healthier regime, a move towards renewables was to provide the alternative and healthier choice to combat the GHG crisis. Yet in practice in emerging Asia, the deployment of renewables was simply not sufficiently in scale to satisfy the significant increases on the power demand side. While the rollout of renewables has made some meaningful additions to national grids (sometimes), overall, each 10MW biomass plant or 5MW solar plant or even 100MW farm simply could not reduce the increasing supply/demand shortfall that a 1000MW thermal plant could.

To have sufficient scale would be ruinous in other

Agostinho Miguel Garcia

Why solar parks are paying off

T

he solar park concept is similar to an economic zone dedicated to the generation of power through solar energy and also to the manufacturing of solar energy components.

A Solar Park will hold a number of solar power plants and manufacturing outfits, each developed by separate or the same groups/promoters.

The concept aims to accelerate the development of solar power generation projects, by providing to developers an area that is well characterized, properly infra-structured and where the risk of the projects can be minimized as well as facilitation of the permitting process.

The deployable technologies are PV with and without tracking, CPV and CSP. The manufacturing hub can be for any of the components of these technologies or for the whole assembly of products or systems – PV, CPV and solar field of CSP technologies.

Concentrated zones of development may serve also as centres for the deployment of new technologies to be scaled up by setting up 32 ASIAN POWER

appropriate research and development facilities and may also provide targeted economic and employment opportunities, and growth for specific locales or regions.

A Solar Park will apply any of the same principles as an SEZ. Generally speaking we will have one or more blocks of land will be designated and pre-permitted as a concentrated zone for solar development; Individual solar plants will be constructed on the land in a clustered fashion; Common transmission and infrastructure; Economies of scale; Use of less expensive, domestically-manufactured components: structures, pressure vessels, turbines; Manufacturing of components locally, and; Largescale demand.

Indian solar parks As part of plans to end blackouts, India aims to set up solar parks with a combined capacity of 22 gigawatts. The Solar Energy Corporation of India (SECI) on behalf of Government of India and the

ways: with absurd results such as to have Singapore go solar meaningfully would mean covering the entire island in panels; or tragically ironic results such as a massive rollout of biomass would mean that for the next 70-100 years, there would actually be a huge increase in carbon at least until the new growth locks back in that released carbon.

Facing renewables with a reality check, given the present technology, renewables alone are not the solution. And just like the seriously overweight, we cannot simply kill ourselves with a knife and fork while waiting for some new diet technology to come eventually.

The elephant in the room… nuclear Just the mention of nuclear though evokes a visceral wince. Yes, the MWs are plentiful and in scale, but other attendant issues – the weaponisation/ proliferation, the catastrophic scale potential such as from a Fukushima, the 20,000+ years waste storage needed – the nuclear issues are too starkly defined by such flashpoint markers. In such case, we may need to revisit nuclear again with fresh eyes and, in that respect, a fresh look at the technologies too. We do not need to solely consider granddad’s nuclear plant, technologies have also progressed since the present generations of plants were built.

Newer, safer configurations exist, passive failsafe systems, new fusion works. Yet as more incrementalist in nature, these directions may not be as allaying, although there are various national initiatives to passive nuclear energy systems via thorium rather than uranium/plutonium.

Ministry of New and Renewable Energy handles the funds to be made available under the Scheme for development of Solar Parks and Ultra Mega Solar Power Projects. In Rajastan the Rajasthan Renewable Energy Corporation Limited (RRECL), the State Nodal Agency of the Government of Rajasthan, through a SPV Company called “Rajasthan Solarpark Development Company Ltd.” (RSDCL) developed Bhadla Solar Park.

Initially with the support of Clinton foundation and continued by the Asian Development Bank with technical assistance has achieved two records in tariffs: Phase I with 100 MW only under bid achieved 75 MW of IPPs in 2013 with a tariff of 6,45 INR (0,10 USD), the lowest under the phase I of the National Solar Mission.

Phase II with 420 MW under bid achieved the tariffs of 4,34, 4,35 and 4,36 INR (~0,065 USD) in early 2016, the lowest under the phase II of the National Solar Mission (until this stage), beating another solar park in Andrah Pradesh that achieved 4,61 INR end of 2015.

Solar parks have also changed the landscape in Dubai when the Mohammed bin Rashid Al Maktoum Solar Park of 1000 MW, developed by DEWA, achieved a remarkable 0,0299 USD this year becoming the lowest PV tariff in the world when they bid the third phase of 800 MW. The lessons learned indicate that Solar parks are a good investment and should be considered when substantial capacity exists to be procured and the solar resource is good or very good.

ASIAN POWER 33

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