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China scales back on wind subsidies
China’s wind power developers could face lower returns for their projects as the state moves towards grid parity and proceeds with the withdrawal of subsidies with its new 2020 wind power policy. In a report, UOB Kay Hian analysts said that whilst grid parity would be positive to the industry in the long term, there may be transition pains. China’s new wind power policy is encouraging the prioritisation of gridparity wind power projects by having them voluntarily switched from subsidised to non-subsidised. China’s largest wind producer, Longyuan Power, indicated that although some subsidised projects may switch to being non-subsidised, the projects’ internal rate of return (IRR) should also meet the companies’ required IRR. China moves to withdraw subsidies.
Effect on big developers Big developers should not immediately feel the bite of the policy in 2020, according to Shen. Huaneng Renewables (HNR) and Longyuan now own 6.5GW and 4GW of wind power projects that were approved before end-2018 and should be grid connected by end-2020. “Longyuan said that it did not have many approved grid-parity and competitive tender projects in 2019 and it is focusing on the construction of subsidised projects. We believe earnings of HNR and Longyuan should be intact in 2020, given enough subsidised projects in their pipelines. In addition, Longyuan said it heard the rumour that the grid connection deadline may be postponed by half a year. If so, wind farm operators can connect more subsidised projects, which will enhance their earnings,” Shen said.
Orderly construction schedule The withdrawal of subsidies is not the only highlight of China’s new policy. The policy aims to have an orderly construction of wind power projects by not allowing them to surpass the target under the 13th Five Year Plan (FYP). Provinces that have already exceeded FYP targets for offshore projects are to suspend tenders and new approvals.
However, Shen said the cap is not a concern for developers and that there is still sufficient room for capacity additions.
The analyst cited a 2017 paper that projects total wind power capacity to reach 258GW by end-2020; however, actual capacity is still at 198GW as of September 2019. “Note that the government was aiming to cap the annual capacity addition as the connection ability of the grid network is limited, according to Longyuan.”
Even with concerns of lower returns on the horizon, Shen noted developers should look out for positives, like the higher utilisation hour (UH) that would lower the levelised cost of energy (LCOE), thanks to technological improvement and the government’s efforts to guarantee renewable energy’s consumption; and subsidy withdrawals by wind farm operators.
PROJECTS PUSHED BACK
ASEAN
Negative public sentiment is rising
Asian Power talked to YTL Power International Berhad’s CEO Tan Sri Francis Yeoh about the company’s largest projects. Tell us about the company’s most stellar power projects to date and where they are located. At present, we are constructing the first oil shale mine mouth power plant with a capacity of 2 x 235 MW (net) utilising the circulating fluidised bed boilers (CFB) technology in the Hashemite Kingdom of Jordan. The project is located at Attarat um Guhdran which is 110 km southeast of Amman. At a total investment of US$2.1b, it is the largest private sector project in Jordan to date and is expected to meet 15% of Jordan’s annual electricity demand. Attarat Power Company (APCO) which is the project company has entered into a 30-year Power Purchase Agreement (PPA) with the Jordanian national utility and single buyer, NEPCO for the sale of the entire electric capacity and net electrical output. The other project we are currently developing is in Cirebon Regency, West Java, Indonesia. The 2 x 660 MW (net) coal-fired power plant will utilise state-ofthe-art ultra-supercritical technology. The project company, PT Tanjung Jati Power Company has executed a Power Purchase Agreement (PPA) with PT PLN (Persero) in December 2015. We are always on the lookout for new opportunities in generation whether it is bidding for existing assets or investing in new projects. At least three large-scale hydroelectric dam projects in Asia’s developing markets are expected to receive the most pronounced push-backs from civil society organisations, local communities and governments in downstream states through 2020, according to Fitch Solutions. Although uncommon, government pushbacks in upstream countries could intensify for some projects.
In Southeast Asia, the negative public sentiment towards Cambodia, after the collapse of the Xe-Pian Xe-Namnoy dam in 2018 killed about 71 people and displaced 25,000, could prompt the government to view Laotian hydropower construction like the planned Luang Prabang Hydropower Project less sympathetically.
Likewise, the decades-long development of Turkey’s Southeastern Anatolia Project (SAP), which includes Ilisu Dam, has drastically reduced the flow levels in the Tigris and Euphrates rivers, elevating tensions between Turkey, Syria and Iraq.
In particular, dams like Ilisu Dam, which held a long history of inhabitation that often meant that it would have sites of cultural significance, could promote a strong reaction from affected communities. Myitsone Dam in Myanmar may also see similar local opposition.“With very few commercially viable, uninhabited and unprotected sites for prospective hydropower development still available in most of these markets, developers have increasingly been required to develop sites with one or more of these factors at play; motivating pushback on both local and international levels,” the report stated.
India’s specialised developers get boost as market for open access PPA doubles INDIA India’s specialised project developers have shown a growth in market share as the open access PPA solar market grew 2.5 times to 2.9GW for the past two years. With the growth of the open access market, large-sized IPPs with a national presence, such as ReNew and Avaada, and other specialised project developers, such as CleanMax, Amplus and AMP Solar, have begun to considerably increase their market share. According to a report by the World Business Council for Sustainable Development, these national developers have the competitive advantage of having access to large corporate buyers as well as financing sources with a lower cost of capital.
But the market share of regional players has contracted. They have been responsible for structuring most early open access renewable PPA projects, as they had easier access to land and was better placed to deal with local DISCOMs and regulators. India remained the second largest market for corporate PPAs with a global share of 7.4% or 440MW installed, but estimates suggested that the annual corporate PPA renewable addition in India contracted 30-35% for the full year. Source: JMK Research Note: This chart includes only open access PPA solar projects, not captive projects. Power supplier segmentation for open access solar markets in India Installations and project pipeline for key developers under open access and group captive models, as of 31 August 2019 Source: JMK Research
The award-winning solution from Indonesia to improve performance through control system redesign
PT. Pembangkitan Jawa-Bali receiving the Power Utility of the Year - Indonesia at the Asian Power Awards
The Generation Unit and Combined Cycle Power Plant (CCPP) Muara Karang, which was established in 1992, is a power plant that supplies electricity needs in the State Capital of Indonesia, namely, the Jakarta Special Capital Region.
The CCPP itself is owned and managed by PT Pembangkitan Jawa-Bali or PT PJB, one of the subsidiaries of Indonesia’s top state-owned enterprise, PT PLN.
As the centre of government, The Jakarta Province is a priority area in fulfilling electricity supply in Indonesia, such as the State Palace, the MPR/DPR Building, Soekarno Hatta Airport and Halim Perdanakusuma Airport.
CCPP Muara Karang Block 1 operates with a 3-3-1 configuration—three gas turbine generators (GTG), three heat recovery steam machinery. GTG uses the GE Speedtronic Mark VIe control system that was built in 2012. The HRSGs use the ABB Infi 90 control system that was built in 1992. The STG control system uses the GE Speedtronic Mark V control system that was built in 1995.
All of these control systems must be well integrated in a system called the Distributed Control Integrated System (DCIS). DCIS functions for monitoring, controlling and safety of generating machinery so that they can operate safely and reliably.
At present, the integration of the DCIS GTG Control System and HRSG is experiencing performance degradation. Performance degradation can result in suboptimal unit operations, such as STG Trip or Derating, HRSG Trip, and GTG Trip or Not Ready to Start.
On the key performance indicators (KPI) side, the performance contract value is not achieved based on the unit’s readiness (i.e., equivalent availability factor or EAF) benchmarks and unit reliability (equivalent forced outage rate or EFOR and sudden outage frequency or SdOF) at PT PJB UP Muara Karang in 2016 and 2017. One of the causes of KPI not being achieved is due to the disruption of the control system integration design.
Performance degradation comes from the complexity of the control system integration architecture design that is configured serially. The complexity of the design occurs because of differences in technology implementation between GTG and HRSG.
Based on the problems of the design of the integration of the GTG and HRSG control systems, an improvement is needed by implementing the “Re-Design of the Integration of the GTG and HRSG Control Systems.”
PT PJB said that a strategic study of “ReDesign of Integration of GTG and HRSG Control Systems” is important to do because it has several advantages. First, the control system integration design is very simple. Meanwhile, Ethernet-based control system integration technology has a high-performance speed module and very low implementation costs, without causing shut down to CCPP Muara Karang Blok 1.
After an alternative recommendation was made to redesign the integration of the GCG and HRSG control systems, it was found that the redesign was able to prevent disruption and solve the disruptive technology problems of the GTG and HRSG control system integration. In addition, the redesign is also proven to increase the readiness and reliability of CCPP Muara Karang Block 1.
generators (HRSG) and one steam turbine generator (STG).
Each GTG has a maximum power production capacity of 107 MW, whilst the STG has a maximum power production capacity of 185 MW so that the total electricity production power is 500 MW.
Each power plant engine has a control system in controlling the operational
Since I was appointed as CEO in 2018, we have been busy expanding our portfolio with a 45% increase in operating capacity and integrating our capabilities across the region, leveraging the unique strengths we have in each of the nine countries where we have a presence, to be an integrated growth engine.
Vena Energy grows renewables portfolio to 11GW CEO Nitin Apte eyes adding more projects in massive Asian energy markets like South Korea, Japan, and India. I n the span of seven years, Asian independent power producer (IPP) Vena Energy has grown its portfolio capacity from 92MW in 2012 to 11GW in 2019 spread across several landmark solar and wind projects in various phases of development. In 2019, the IPP was able to build the 70.2MW Mingus Solar Project in Taiwan’s Chiayi County, which is now the country’s largest ground-mounted solar project. In an interview with Asian Power, Vena Energy CEO Nitin Apte shares his strategies in leading the company to its key projects, milestones that the company has reached, as well as forays into Asia’s power giants, South Korea, Japan, and India. Can you tell us about your experience that led you to become CEO of Vena Energy? Prior to joining Vena Energy last year, I had been associated with businesses around the world in the specialty materials industry for GE, SABIC and most recently as President and Chief Executive Officer of Materia, a specialty materials company. Apart from the fundamentals of running a business, which have been quite translatable to the renewables, the most relevant experience I have brought to Vena Energy is to scale a growth business to integrate a loosely collected set of diverse country platforms focused on the development of solar and wind farms into a sustainable growth leader in renewable energy across the Asia Pacific region. What strategies have you employed to drive Vena Energy to success over the years? Since I was appointed as CEO in 2018, we have been busy expanding our portfolio with a 45% increase in operating capacity and integrating our capabilities across the region leveraging the unique strengths we have in each of the nine countries where we have a presence, to be an integrated growth engine.
This has meant using our well-established capabilities of developing projects locally, from initial concept through to construction with local management teams, to provide expertise in origination, development, land acquisition, grid assessment, permitting, system design and investment feasibility; and utilising our scale to drive synergies across the company as “One Vena”. This has yielded dividends in efficient procurement, best practice translation in project and construction management, operational efficiency and customised financing solutions. What are you working on for the rest of 2019 and 2020? Vena Energy is a development business—so we are always working on progressing projects through the pipeline and calendar years don’t really matter! Currently, we have several projects that are in construction in Japan—continuing our growth in solar and adding our first Japanese onshore wind projects that are about to commence construction.
We are also adding to our robust wind portfolio in India with construction commencing for 97MW in Amreli, Gujarat. In other parts of Asia, we have advanced projects that will go into construction in the coming months—including our first energy storage projects in Australia. This activity requires us to recruit and develop talent and so we are constantly on the lookout for high energy individuals. What were your company’s milestones for the past 9-10 years? We started out in 2012 with just 10 solar projects totalling 92MW in Thailand. Fast forward to 2019, we have grown to 11GW of solar and wind assets in operation, construction and various stages of development across the Asia-Pacific region. The commissioning of the 132MW Pollo Solar Project in 2016 was a significant milestone, as it was—and still is—the largest ground-mounted solar project in the Southeast Asia region. In 2017 we commissioned what was back then the largest ground-mounted solar project in Taiwan, the 5MW Davis Solar Project. It has since been dwarfed by the recently commissioned 70.2MW Mingus Solar Project in Chiayi County.
Our team in Japan grew to over 100 associates as we have built 15 solar plants using our own engineering and construction management teams and operate them with an internal staff of operations and maintenance professionals.
We reached financial close for the 127MW Tailem Bend Solar Project in Southern Australia in 2018, and it was commissioned the following year in 2019. This year we also completed our first projects in Indonesia with 114MW across five solar and wind assets including the impressive Tolo wind farm in South Sulawesi.
We opened an office in Seoul, South Korea, in October 2018 with an experienced team on the ground, and we have already added several projects to the pipeline. What challenges has the company faced in terms of supplying power to its key markets? We operate in nine jurisdictions across Asia Pacific and have been one of the renewable pioneers in many of these markets. This presents some unique local challenges that we need to creatively address. For example, we experience adverse events such as typhoons, earthquakes and storms across some of our projects. Our operating teams are equipped to respond to these events in a safe and effective manner.
For example, our plants in North Japan have experienced record snowfall during the last two winters which could have impacted generation—however, our teams have deployed snow removal strategies such as expanding our fleet of owned and leased equipment as well as reinforcing our local O&M team with seasonal additions, all of which resulted in no material snow accumulation. Being an early mover means we have had to develop supply chains and bring engineering, construction and financing capabilities together to execute projects. We have also had to work with regulators with permitting processes for many “firsts” such as land conversion. What are the most important lessons you’ve learned from operating in huge (and crowded) markets like Japan and India? Every market we operate in is unique to a large extent—Japan has had rapid growth in the solar sector whilst onshore and most recently offshore wind is starting to develop—and is transitioning from a feed in tariff regime to competitive tenders. On the other hand, India has been running central and state auctions in both solar and wind, with projects being significantly larger in size.
Hence, the most important lesson for us is to approach each market with a team that understands local regulations and can adapt to the conditions that allow us to develop and build the most competitive projects for that market. At the same time, we utilise our experience to bring best practices such as plant design, equipment selection and asset monitoring across all our projects. What are your ambitions for Asia and what do you think are the key factors to achieve these? We are one of the largest IPPs in Asia-Pacific and we are purely focused on clean renewable energy. Our ambition is to continue to be the engine that accelerates the transition of the energy sector to sustainable renewable sources in the region, and we are committed to grow our presence whilst empowering and enriching local economies and communities.
