How Asia can get its energy transition right

How Asia can get its energy transition right CAMILLE LEVY

When I arrived in Singapore to look into the growth opportunities in the energy landscape in the Asian Region, I was aware of some of the well-trodden discussions on the challenges that this region faces: “Asia will continue to lag behind Europe and the US in embracing newer forms of energy, especially clean energy”; “policy bottlenecks will make energy transition painfully slow and dependence on oil and gas inevitable.”

Yet, what I find fundamentally different here from my time in Europe is the potential for Asia to borrow from the world’s energy transition lessons—and more importantly its pacing—to set an agenda that balances affordability, reliability and environment.

Before delving into the details on how countries can tailor their transition to renewables efforts to meet their development goals; I would like to give way to some background about the region. The region consists of various economies, ranging from developed to least-dev eloped ones; and not surprisingly, fossil fuels including coal, oil and natural gas, are primary energy resources, occupying 85.2% of regional energy mix in 2014.

Rapid urbanisation, industrialisation, and economic growth have led to an increasing regional demand for electricity. Without any doubt, how the region tackles and balances its energy demands, vi-a-vis their sustainable energy targets under the United Nations’ sustainable development goals, will re-shape the vision, production and consumption of energy across Asia Pacific.

Though electrification has made progress in previous years, the reality is that rural areas still have difficulty accessing reliable electricity at affordable prices. The pressing challenge is to ensure a steady energy supply whilst, at the same time, spur regional economic growth whilst maintaining checks on the environmental impact of the existing and future energy infrastructures.

To further illustrate the point, in 2018, 99 out of the 100 most polluted cities in the world were located in Asia. Extremely high pollution in many Asian cities have raised public concerns about the overall impact to human wellbeing. Therefore, it is essential to take into account environmental and social risks during planning, construction, and operation of energy power plants. Government budgets, especially in developing countries, are often insufficient to address the challenge due to paramount costs of building and maintaining energy infrastructure. Various countries have introduced new energy policy mechanisms supported by initiatives such as public-private partnerships to incorporate the latest technologies to enhance power plants. These partnerships have proven to be the most cost-effective approach to enhance electricity access with more efficiency and lower emissions.

There has also been an increasing investment in renewable energy with most investment pouring in developing and emerging economies in recent years. Yet, the current outlook of the energy infrastructure indicates that the region continues to lag behind in terms of achieving energy efficiency. According to the World Bank, on average, Asia Pacific requires annual investment of $221b to achieve the 2030 SDG 7 on efficiency.

Whilst there is an increased need to reach the sustainable targets, we learned as children that “slow and steady wins the race,” and this adage now seems particularly true for Asian leaders running in what appears to be an ambitious energy race and relentless pressure to achieve sustainable development goals. Australia is an illustrative example where its fast switch to renewables led to a series of blackouts and grid instabilities.

Australia’s experience shows how the path to renewable energy is not so straightforward and likely requires a more balanced approach in line with countries’ available energy sources. The challenge is making sure that we are progressing in the right direction, maintaining our responsibilities to our planet but also not compromising grid stability. This is a conversation I have every day with decision makers across Asia. It often means understanding the total

Regional Leader GE Steam Power APAC

cost of electricity against systems costs, and the quality of power—and finding harmony between the two.

If there is one thing that I have seen leaders in Asia do well, it’s building consensus. Here, more than any other region I have worked in, making sure a potential solution is well accepted is mission critical and building consensus is how that happens.

I recently visited the Manjung 4 power plant in Malaysia. Manjung 4, which was the first unit in South East Asia to use ultra-supercritical (USC) technology, produces stable electricity for nearly two million households up to 10% more efficiently than the global average. And each additional percentage point in efficiency reduces carbon dioxide emissions by 2%.

Many outside of our industry are surprised to hear that this is a coal-fired plant because of the negative associations with coal and environment. But leveraging advanced air quality control technology has allowed the facility to become part of Malaysia’s solution in reducing SO2 and NOx emissions up to 70% compared to earlier Manjung units.

Across the region, leaders are trying to find the right balance. In the Philippines, the debate on how to negotiate existing contracting structures and to continue adoption of cleaner energy technologies while maintaining low electricity prices to fuel economic growth is raging. On the other hand, continued media reports that delays from Japan nuclear restart – or not – may bring 20% to 22% setbacks to its energy mix by 2031 are putting increasing pressure on energy security.

Such debates mirror those that I have heard over and over again in Europe, where hasty energy policies have led to unintended consequences. Germany for example has spent 160 billion euros on the shift to renewables in the last five years alone, and CO2 emissions have remained stagnant at 2009 levels for many years. In the meantime, German consumers have seen their bills soar, as Germany’s electricity price has risen to be the second most expensive in the European Union.

A recent study suggests that CO2 emissions have dropped in 2019, but also saying that they may rise again as factors like wind conditions are not predictable and renewable capacity isn’t growing as fast as needed. Some argue, Germany has failed in its “Energiewende”, because its targets were so ambitious. As I take part in Asia’s energy transition, I am inspired by the pragmatic conversations I continue to hear on striking that right balance of energy sources with a mindfulness of the long game of affordability, reliability, and sustainability. What others might call ‘painfully slow’, I see as a region being deliberate in its energy transition and learning from the global experience. I look forward to seeing what 2020 brings and contributing as much as I can to its success.

ENGIE and local conglomerate Filinvest Group have tied up to replace a business park’s power intensive airconditioning with high-efficiency, centralized chilled water cooling systems. Inside ENGIE’s 42MW district cooling system in Manila

Philippines DCS Development Corporation

Utilities are pressed to find efficient and sustainable alternatives to emissionintensive airconditioning systems as demand for district cooling systems (DCS) in the Asia Pacific continues to grow. Setting the path for innovation in this space, the Asia Pacific unit of French power utility ENGIE tied up with local conglomerate Filinvest Group in 2015 to build a 42MW DCS that now serves Northgate Cyberzone, an IT park in Muntinlupa City.

The Northgate Cyberzone DCS is the largest of its kind in the Philippines. Its developer, the Philippine DCS Development Corporation (PDDC), a joint venture by ENGIE-Filinvest Group, is also a certified utility enterprise under the Philippine Economic Zone Authority (PEZA). In July 2019, members of the Asian Power team had an extensive look inside the plant to understand its functions and how it serves the IT park. The DCS uses chilled water in place of

refrigerants, which have been traditionally used for airconditioning of buildings but are being phased out due to their significant contribution to ozone depletion. The Northgate Cyberzone DCS has gotten this down to a science by operating in a cycle: its cools its water supply, sends it to the buildings through a 3.4-km underground distribution network of steel pipes, and then receives it back as water heated via the buildings’ heat exchangers.

This hot water becomes chilled again for another round of use in the system. The temperature of the hot water sent back from the heat exchangers gets cooled down from 12 degrees to 6 degrees celsius.

The DCS plant is a brownfield project with 61% of the existing load connected. Nelson Lebato, energy engineer at the plant, said the plant’s performance is assessed through key indicators such as guaranteed efficiency, Chilled Water & Hot

“ENGIE and Filinvest have initially invested $29.47m (PHP1.5b) into the project as part of its capex.”

Water (CHW) supply temperature, and equipment availability. Having a unified cooling system has also resulted in a 13% overall cost savings for their clients as well as a 39% reduction in electricity consumption per year. The system also saves up to 12,000 tonnes of refrigeration (TR) and slashes carbon dioxide emissions by up to 11,500 tonnes. Currently, the distribution network is connected to 14 buildings, most of which are occupied by Business Process Outsourcing (BPO) companies. By 2020, PDDC eyes adding four more buildings to the network. The installation of the DCS has made cooling more convenient and continuous for the buildings, which hosts firms like call centres. The rest of the plant is compactly installed within the IT park. The building’s Ground Floor is utilised to hold a chiller with a cooling capacity of 4x2,000 TR. The DCS is powered by 2x2.5MW diesel generators as a back up located next to a 2x7.5MVA power substation.

Work in progress Even if it has already done substantial strides in saving energy consumption and emissions, PDDC is far from done with their landmark DCS in the Philippines. The project is still going through three phases of completion. In 2017, it had already a total installed cooling capacity of 8,000TR. It will have an additional 1x2,000TR by its second phase in 2020, and another 1x2,000TR by its final phase in 2022.

ENGIE and Filinvest have initially invested $29.47m (PHP1.5b) into the project as part of its capex. According to ENGIE, this will eventually add up to $58.96m (PHP3b) after 30 years. PDDC is now riding on the back of the success of the Northgate Cyberzone DCS in order to develop more projects for more IT parks and developments of scale, and boost their tenancy prospects with the usage of clean energy.