Asian Power (April - June 2023)

LEADING THE CHARGE

MALAYSIA’S LEADER ENERGY ACQUIRES NEW HIGH-VOLTAGE TRANSMISSION LINE PROJECT IN CAMBODIA

SOUTHEAST ASIA STRIVES TO OFFSET ‘VERY YOUNG’ COAL FLEET WITH GREEN ENERGY

CHINA-CONCENTRATED CAPACITY DRIVES ASIA-PACIFIC AS HYDROPOWER ‘POWERHOUSE’

PAKISTAN’S ENERGY AND ECONOMIC WOES INTENSIFY AS BLACKOUTS REVEAL DEEP-ROOTED ISSUES

HOW GRID ENHANCEMENTS CAN DRIVE FORWARD MALAYSIA’S SOLAR ENERGY BOOM

Gan Boon Hean CEO, Leader Energy

PUBLISHER & EDITOR-IN-CHIEF Tim Charlton

PRINT PRODUCTION EDITOR

COPY EDITOR

PRODUCTION TEAM

COMMERCIAL TEAM

GRAPHIC ARTIST

Jeline Acabo

Tessa Distor

Charmaine Tadalan

Vann Villegas

Janine Ballesteros

Jenelle Samantila

Emilia Claudio

ADVERTISING CONTACT ADMINISTRATION

ADVERTISING EDITORIAL

Reiniela Hernandez reiniela@charltonmediamail.com

FROM THE EDITOR

Southeast Asia is on the cusp of major renewable energy advances, with 154GW of additional capacity planned for the next five years. If achieved, these developments could offset 55GW of coal power annually, meeting 70% of the region’s electricity needs by 2030. While this is a promising outlook, ASEAN countries still face the challenge of reducing reliance on coal-fired power plants while transitioning to renewable energy sources.

In this issue, we discuss the progress made in Cambodia towards electrifying villages and transitioning to renewable energy sources. Leader Energy CEO Gan Boon Hean shares his insights into the company’s efforts to explore untapped renewable energy sources and Cambodia’s ambitious journey towards sustainability in an interview on page 14.

Accounts Department accounts@charltonmediamail.com advertising@charltonmediamail.com ap@charltonmedia.com

SINGAPORE

Charlton Media Group Pte Ltd. 101 Cecil St. #17-09 Tong Eng Building Singapore 069533 +65 3158 1386

We also explore the ASEAN Centre for Energy’s 7th ASEAN Energy Outlook (AEO7) report which details energy security challenges posed by the region’s reliance on fossil fuels and the need to increase renewable energy sources. Dr. Zulfikar Yurnaidi of the ASEAN Centre for Energy sheds light on these critical findings and their implications in an interview on page 16.

This issue features the esteemed winners of the Asian Power Awards 2022 and the Asian Gas & Oil Awards 2022. See the full list of outstanding companies and initiatives on pages 26 and 42.

Read on and enjoy.

Tim Charlton

HONG KONG

Charlton Media Group Room 1006, 10th Floor, 299QRC, 287-299 Queen’s Road Central, Sheung Wan, Hong Kong www.charltonmedia.com

Can we help?

Editorial Enquiries: If you have a story idea or press release, please email our news editor at ap@charltonmedia.com. To send a personal message to the editor, include the word “Tim” in the subject line. Media Partnerships: Please email ap@charltonmedia.com with “partnership” in the subject line.

Subscriptions: Please email subscriptions@charltonmedia.com.

Asian Power is published by Charlton Media Group. All editorials are copyrighted and may not be reproduced without consent. Contributions are invited but copies of all work should be kept as Asian Power can accept no responsibility for loss. We will, however, take the gains.

*If you’re reading the small print you may be missing the big picture

Asian Power is a proud media partner and/or host of the following events and expos:

EVENT COVERAGE

VOX POP

GENERATION REPORT

OPINION

Daily news from Asia

MOST READ

KS Orka’s gradual development model increases geothermal projects success

When it comes to developing geothermal power plants, the traditional approach is risky and time-consuming. But Indonesian power plant developer KS Orka has found a solution: the gradual development model. This model minimises operational risk and costs, converting any well with a pressure of 4 bar or more into electricity.

ACEN’s successful ETM deal marks a new era for coal divestment

For years, the Philippine-based energy group ACEN has been working towards divesting the South Luzon Thermal Energy Corp. (SLTEC) power plant. But traditional banks and investors are moving away from financing coal. With the help of ADB’s Energy Transition Mechanism, ACEN was able to divest the plant in November 2022.

Philippines considers nuclear as a solution to baseload power crisis

The Philippines is facing a significant challenge as around 80% of its baseload power is under threat. To address the issue, the country must transition away from coal, and the adoption of nuclear power is the fastest option. It would also make electricity costs affordable, said the Department of Science and Technology–Philippine Nuclear Research Institute.

Reducing green hydrogen production costs hangs on gov’t support

Hydrogen has the potential to transform the global energy landscape, but in order to fully tap into this potential, governments must implement policies such as tax or benefit schemes that support investment and lower production costs. It is crucial to act now in order to fully realise the potential of hydrogen in the energy transition.

Indonesia’s new regulation speeds up energy transitions

The government has issued Presidential Regulation No. 112 of 2022 to limit the coal-fired power plants and gradually reduce coal consumption. It will set Indonesia to undergo a renewed and aggressive commitment to transition to cleaner energy. It will also limit the construction of new CFPPs and encourage the early retirement of CFPPs in Indonesia.

Southeast Asia’s nuclear ambitions dashed by public opinion

After the nuclear disasters at Chernobyl and Fukushima Daiichi, nuclear power has had a negative lasting impact on public perception. Whilst some regions have been able to revive the use of nuclear energy, Southeast Asia has yet to see its first operational nuclear power plant. As of 2023, there are 422 operable nuclear power reactors in the world.

NUCLEAR POWER POLICY SUPPORT AND CAPACITY TO EXPAND IN ASIA

In “Investing in the future of advanced nuclear,” Wood Mackenzie reported that policy support grew in key Asian markets that account for 50% of the global nuclear capacity as of 2022.

Nuclear power in key Asian markets, such as China, Japan, South Korea, and India, is expected to expand as these markets have nuclear projects either planned or in development.

At the end of 2022, for instance, Japan’s Nuclear Regulation Authority outlined new plans to extend the lifetimes of its existing reactors to more than 60 years and to develop and construct new ones. India also has more than 5 gigawatts of nuclear in active development, which the market intends to increase to 22GW by 2031.

Moreover, China is growing its existing and new technologies rapidly; whilst South Korea targets six new reactors.

“Critical to long-term net zero emissions pathways, nuclear power also addresses several challenges facing the world today – the need for reliable, low-carbon energy supply,” David Brown, director, Energy Transition Service for Wood Mackenzie, said.

“Nuclear is a key part of addressing the energy trilemma, by limiting the role of higher cost marginal supply sources, such as natural gas.”

Brown noted more investments in conventional and emerging nuclear technologies are needed, considering 70% of the current capacity was built between 1970 and 1990 which are mostly in the US and Europe.

“New reactors with innovative technologies must be brought online, with the dual target of delivering more low-carbon energies at a competitive price point,” he said.

Increase investments, lower the cost

Brown added increasing investments in advanced nuclear technologies, such as small modular reactors (SMRs), could lower costs to a competitive level.

“We project that by 2030, SMR costs can fall quickly to be competitive with abated thermal capacity. By 2050, SMR costs could fall even further to be competitive with thermal capacity,” he said.

Brown noted this could also improve time to market and make nuclear a “viable competitor” with renewables. As nuclear capacity is expected to grow, Wood Mackenzie also forecast increased demand for uranium.

The demand will in particular remain flat until 2030, but then nearly double to meet its energy transition outlook and triple to meet its accelerated energy transition 2 scenarios.

Wood Mackenzie noted there is enough uranium to meet this demand.

Asian banks’ energy financing remains low

ENERGY FINANCING

The share of renewable energy in Asian banks’ energy financing remained low at only 14% in the past six years with no significant upward trend. In a report, Fair Finance Asia and Stockholm Environment Institute also found that only 21% of all outstanding energy investments by investors in the region were for renewable energy projects, as of September 2022.

“The conclusions from our new report confirm that no meaningful shift in energy financing and investments across Asia is contributing to neither a just nor any actual transition since the Paris Agreement,” Bernadette Victorio, Program Lead, FFA, said.

“Funding decisions toward continued fossil fuels financing, as well as unambitious plans to achieve net-zero emissions by Asian governments, derail Asia from aligning with the 1.5 degrees Celsius target. FFA calls on the Asian financial sector and leaders to develop and urgently implement policies that facilitate a real shift from fossil fuels to renewables, while ensuring that the rights and well-being of the most vulnerable communities are safeguarded.”

The report assessed 13 Asian markets, particularly Cambodia, India, Indonesia, Japan, Pakistan, Philippines, Thailand, Vietnam, Bangladesh, China, Malaysia, Singapore, and South Korea.

It found that on average, the respondents from the 13 key markets depend on coal, oil, natural gas to meet 77% of their electricity needs and more than half relied on fossil fuels for at

least 80% of their power generation.

Some of the challenges faced by those countries to implement their energy transition include their climate commitments that do not result in a “sizeable” reduction of their greenhouse gas emissions.

Other problems also include the struggle of archipelagic countries such as Indonesia and the Philippines and nations in the Mekong region with their underdeveloped national and cross-border power grids. The report added that very few Asian financial institutions have fully committed to halting coal financing.

Energy addition

The report said the region is experiencing “energy addition” instead of “energy transition” because of the slow implementation of climate and energy policies adopted by policymakers and financial regulators. Under this, the new renewables installation are added to the “dirty and fossil-intensive” grids and do not result in the reduction of global greenhouse gas emissions.

“Adding renewable energy alternatives alongside more coal-fired power plants will not limit global temperatures from rising above 1.5 degrees Celsius,” said Niall O’Connor, Centre Director, SEI Asia.

“Without stronger government policies that chart a clear, inclusive, and equitable path from fossil fuels to renewables, Asia will continue to experience an ‘energy addition,’ as opposed to a ‘just energy transition.’ The most vulnerable and underprivileged communities are already paying the greatest price.”

To expedite the energy transition in the region, the report recommended that there should be no financing for new coal projects for electricity generation and existing coal-based power generation should be phasedout. Countries should also develop a “time-bound” transition” away from other fossil fuels and have an active investment in renewables.

They should come up with longterm plans and strategies to mitigate the adverse environmental and social impacts of renewables. There should also be respect for land rights and Free, Prior and Informed Consent (FPIC), and clear policies for community participation, gender sensitivity and consultation with civil society organisations in large energy projects. The rights of workers should be protected, whilst the health, livelihoods, culture and heritage of communities affected by continued fossil fuels use must be safeguarded. Engagement and participation of women in the energy transition and investment in access to electricity for all should be ensured.

Asian gov’ts must urgently implement policies that facilitate a real shift to renewables

No meaningful shift in energy financing and investments across Asia is contributing to any actual transition

Bernadette Victorio

Niall O’Connor

Indonesia could install around 550MW wind capacity by 2027

Indonesia is expected to install 450 megawatts (MW) of wind capacity between 2023 and 2027, but if deployment is accelerated and barriers are removed, it could add 550MW capacity, according to a report by the Global Wind Energy Council (GWEC).

The country has 150MW of installed onshore wind capacity and is expected to deploy around 75MW to 100MW a year under the business-as-usual scenario. However, the wind sector is facing barriers to policy frameworks, transmission infrastructure and permitting schemes which if resolved, would enable Indonesia to install 26% more onshore wind energy capacity in the next five years.

GWEC cited the inadequate project screening in Indonesia as projects can secure offtake deals without the need to show permitting, feasibility, or sufficient need sources. Alongside this, there is also a lack of penalties for those who failed to deliver, resulting in projects that are not credible or robust securing offtake agreements. “This presents a challenge to Indonesia’s ability to hit its renewable energy targets and potentially damages trust in the wind industry,” it said.

Indonesia is also facing challenges in grid planning which is “complicated by the nature of the country’s archipelagic geography,” the report read, adding that having a centralised is difficult and

RAPID GROWTH SEEN IN ASIA’S OFFSHORE WIND CAPACITY: REPORT Asia’s

offshore wind capacity is expected to “rapidly” grow by an annual rate of 15.3% to 109 gigawatts (GW) in 2031, Fitch Solutions reported.

This is up from only 27GW by the end of 2021. Fitch noted this will be underpinned by some 128GW of offshore wind projects underway.

In this light, Asia is considered as amongst the key growth drivers of offshore wind in the region. Fitch said it is home to several large coastal cities that provide opportunities for offshore wind developments close to demand centres, and has a supportive policy environment. “We expect Asia and North America and Western Europe (NAWE) to drive growth as established markets in these regions expand on existing capacity and newcomer markets emerge with their first projects,” the report read in part.

Globally, installed capacity is projected to climb to 228GW in 2031. This is driven by the declining project costs and technology improvements which raises the attractiveness of the projects to developers globally. The sector’s growth is also supported by the increasing

policy support of governments that plan to ramp up their low-carbon power capacity and decarbonise their power sectors. Per market, Mainland China and the US are expected to see the rapid deployment of offshore wind, with China expected to see the offshore wind sector reach 97GW in 2031 and an annual growth rate of 14.3%. Its capacity will account for about 87% of Asia’s total and 39% of the global growth over the forecast period. Western Europe is also expected to add some 60GW of installed capacity, estimated to account for 40%.

“The EU has a set a target of 60GW of installed offshore capacity by 2030 and 300GW by 2050,” the report also said.

“This was recently increased by the North Sea Energy Cooperation Group, a collection of seven nations which agreed to non-binding targets of just under 80GW of installed offshore wind capacity by 2030 and 260GW by 2050.” On the other hand, markets lacking regulatory frameworks to attract investment will see slower growth in offshore wind.

impractical for the country.

“An opportunity from this would be to implement smaller decentralised micro grids with wind energy as a key generator. This allows for the reliance on fossil fuel generators to be negated and increase energy security within these isolated regions,” GWEC said.

Indonesia’s Law 112 of 2022 addresses bottlenecks in renewables development and lays down the framework for renewable energy procurement. This allows state-owned electricity firm PLN to enter offtake deals of up to 30 years with generators of selected projects. The law also prohibits new coal-fired plants and establishes a framework for the early retirement of coal assets, amongst others.

Accelerating wind deployment

The council said Indonesia should have more comprehensive pre-qualification criteria set to participate in procurement rounds as this would help assure a more viable project pipeline for the country. The criteria should cover metrics related to resource analysis, permitting status, stakeholder engagement status, site control and procurement, transportation, and logistics plans.

A government-funded study should also be commissioned to identify suitable locations for wind energy projects which could be ringfenced for wind development only. GWEC said this will not only increase investor confidence but will also give developers ample time to plan and develop their projects.

The government should also increase spending commitments grid modernisation and expansion to promote a reliable operations and prevent bottlenecks. Diversification fo the energy mix and competitive procurement processes should also be promoted to assure a lowcost renewable energy supply to achieve decarbonisation commitments.

POWER UTILITY

Indonesia currently has 150MW of installed onshore wind capacity (Photo from GWEC.net)

Globally, installed capacity will climb to 228GW in 2031

[Inadequate project screening] potentially damages trust in the wind industry

CARBON CAPTURE DEVELOPMENT TO DRIVE BLUE HYDROGEN MARKET

Renewable energy investments in Australia increased by 9.8% year-on-year

ENERGY FINANCING

The deployment of carbon capture projects will serve as a “key catalyst” for the development of the blue hydrogen sector, particularly for markets that have sufficient natural gas reserves and expertise.

In a report, Fitch Solution said that implementing carbon pricing schemes will also improve the economic viability of carbon capture projects, supporting blue hydrogen development.

Globally, the Asia Pacific region is the second leading in the carbon capture market, accounting for 14.6% of the total share.

It is behind North America which holds the lion’s share of 59.6% of the total carbon capture market as of November 2022. The share of Latin America in the market is at 11.6%, the Middle East and North Africa (MENA) at 9.5%, and Europe at 4.7%

The US and Canada hold the majority of expertise in carbon capture projects, whilst Europe is expected to see the largest growth in carbon capture capacity supported by the announced large cluster projects funded by consortia of oil and gas, power and manufacturing firms.

If all projects in Europe become operational, it could catch up with North America and become the second-largest carbon capture market.

China leads in APAC

Meanwhile, China is the leading market in the Asia Pacific region, ranking third in Fitch Solutions’ Blue Hydrogen Sustainability Index with a score of 80.17. China is behind the leading markets US and Canada with an index of 90.22 and 80.79, respectively.

The North America and Western Europe region is at the top region of the index, followed by MENA, and Asia.

“The latest Fitch Solutions Blue Hydrogen Index remains largely unchanged, with the US and Canada holding the top spots, but the overall growth in projects has stalled since our last report as concerns mount over blue hydrogen’s competitiveness in cost of production,” it said.

“The incumbent advantages of a welldeveloped natural gas industry continue to support the adoption of blue hydrogen. The market leaders also hold distinct advantages in both supportive policies and investment in renewables, while having an existing base of hydrogen demand that would form a ready market for any form of low carbon hydrogen,” it added.

The index is based on the following criteria: blue risks, renewable country risks, project risk index, hydrogen industry rewards, and blue rewards.

Other countries from the Asia Pacific that were in the top 20 markets were Australia, Malaysia, Kazakhstan, India, Indonesia, Japan, and Vietnam. Markets in the Middle East were the United Arab Emirates, Qatar, Saudi Arabia, Iran, and Kuwait.

Renewable energy investments in Australia increased by 9.8% yearon-year (YoY) as of 2022 to reach around US$4.5b (A$6.73b), but more would be needed to ramp up the capital for the country’s renewables capacity. Of the amount, around US$4.4b (A$6.56b) worth of projects started construction during the year and around US$1.7b (A$2.53) worth of projects reached the final commissioned phase. For the whole year, New South Wales has the highest financially committed projects with its five generation projects with a total capacity of 1,559 MW, and 5,700 MWh storage spread across six projects. Meanwhile, Victoria and Queensland contributed five projects each, whilst Australia had three projects. Investments in the fourth quarter reached around US$2.9b (A$4.29b), which is the highest quarterly investment since the third quarter of 2018 with the financial commitments for large-scale generation and storage project, according to the Clean Energy Council. The country saw six generation and storage projects with installed capacities of 1,923 megawatts (MW), and 800 MW-hour, respectively, reach financial close during the fourth quarter.

Chief Executive Kane Thornton said adding that the result shows the investors are responding to a “more positive political and policy environment.” Despite the encouraging uptick, however, he said

Vast Solar’s VS1 gets $45.2m funding

Investors are responding to a more positive political and policy environment

JERA completes Formosa 2 project

that one quarter does not indicate a trend. “Australia is deploying new large-scale generation – wind and solar farms – more slowly than needed to reach the 82 per cent target for renewable energy on the National Electricity Market,” Thornton siad.

“The fact remains that the rolling quarterly average investment over 12 months has not risen above $2 billion since the second quarter of 2019,” he said, adding that the country needs to do more as significant shifts in capital overseas were implemented such as the US’ Inflation Reduction Act.

The council also said that the need to increase effort for renewable projects is in line with Australian Energy Market Operator, which noted that all mainland states in the National Electricity Market are seen to breach the reliability standard from 2027 if there are no new significant investments amidst the retirement of coal-fired stations.

TotalEnergies’ 4th solar plant is online

The Australian Government has granted US$45.2m (AU$65m) in funding for the construction of Vast Solar’s VS1 project, a 30-megawatt (MW)/288MWhour concentrated solar power (CSP) project located in Port Augusta in South Australia.

The funding is conditional upon the reaching of financial close which is expected by late 2023, according to the Australian Renewable Energy Agency. The project is seen to start commercial operations by late 2025. The project aims to showcase the CSP technology at the utility scale to attract more investments.

JERA announced it has completed the installation of 47 wind turbine generators at the Formosa 2 offshore wind project off the coast of Miaoli County in Taiwan.

The wind farm has a total installed capacity of 376 megawatts. It is about to begin full-scale generation to the grid. The project which started construction in October 2019 is expected to start commercial operations later this year. JERA owns around 49% of Formosa 2, whilst Macquarie’s Green Investment Group and SYnera Renewable Energy hold 26% and 25%, respectively.

France-based TotalEnergies has started the commercial operations of its fourth solar power plant in Tsu, Mie Prefecture in Japan with a capacity of 51 megawatts (MW) after two years of construction. The Haze power plant will provide electricity to Chubu Electric Power Miraiz Co., Inc., through an over 17-year period power purchase agreement. It can provide power to around 20,000 households. The plant is situated on a nearly 77-hectare surface and uses almost 100,000 highefficiency solar panels.

Photo from CleanEnergyCouncil.org.au

Kane Thornton

Coal remains the cheapest newbuild generation option for APAC

The cheapest new-build power generation option for Asia Pacific will still be coal until 2024, despite the high fuel price environment, as costs of renewables in the last year, according to a report by Wood Mackenzie.

In an analysis, Wood Mackenzie said the rise in equipment and construction costs, and interest rates pushed the levelised costs of electricity (LCOE) for utility solar by 16% since 2020, with the average cost rising to $91 per megawatt-hour (MWh) in 2022 from$78 per MWh in 2020. Onshore wind also rose to $104 per MWh from $93 MWh during the same period.

The capital expenditure (capex) for solar and onshore wind rose to 12% and

6%, respectively, since 2020, whilst fossil fuel increased by 5% to 8%. The interest rate for power projects recorded a 30% from 5.8% in 2021 to 7.5% in 2022 across the energy sectors.

“Higher renewables costs mean that Asia Pacific’s average solar LCOE is at a 7% premium to coal power in 2022. This is despite higher fuel costs driving up the LCOE for new coal projects by 16% and gas by 11% in the last two years,” the report read.

New low-carbon technologies remain expensive with power costs for hybrid renewables and battery storage 41% to 72% higher than LCOE for gas in 2022.

Green hydrogen and ammonia blended

China has been insulated from cost inflation trends, gaining competitiveness against other markets

power costs are more than twice the costs of coal and gas today, adding that they will have a 60% premium by 2060. Even if the costs of green ammonia and hydrogen are expected to decline by 49% and 53%, respectively, by 2050, it will still be at least double the fuel cost of gas or coal.

However, Wood Mackenzie said that the cost of a “firmed” mix of renewables, gas turbine backup, and storage is seen to reduce to $90 per megawatt-hour (MWh) in 2030, from $130MWh in 2022, making it competitive against gas and nuclear.

Lowest-cost in China

China has the lowest-cost renewable power in the Asia Pacific in 2022, with a 4% decline in the average utility-scale solar LCOE to $44 per MWh.

China replaced India as the market with the lowest-cost renewable in the region, as India’s average LCOE for utility-scale solar by rose by over a third to $56 per MWh.

Along with India and Australia, these were the only markets in the region where renewable costs are competitive against new coal power projects.

“China has been insulated from cost inflation trends, gaining competitiveness against other markets due to massive scale, depth of local supply chain, and increasing technology dominance,” Alex Whitworth, Research Director at Wood Mackenzie, said.

“Offshore wind in China is now competitive with gas and coal power in coastal regions, and a further drop in costs of nearly a quarter by 2025 will allow the technology to undercut coal power nationally,” Whitworth added.

The cost of offshore wind in China dropped 22% to $72 per MWh in 2022, less than half the APAC average of $171 per MWh, whilst its solar and onshore wind costs remained low.

SOUTHEAST ASIA NEEDS AT LEAST US$200B IN ENERGY SECTOR INVESTMENT BY 2030

Southeast

Asia will need at least US$200b worth of investment in the energy sector by 2030 to speed up their clean energy transition, the International Energy Agency (IEA) reported.

In line with this, the IEA noted that more than three-quarters of the total amount should be earmarked for clean energy.

“However, investment momentum for renewables has been inconsistent, with insufficient policy signals to support the development of robust project pipelines,” IEA said.

“With only three years left to reach regional interim renewables targets, which envision renewables to account for 35% of power capacity by 2025, accelerating investments in renewable power and enabling infrastructure, such as electricity networks and battery storage, is critical.”

The IEA added that emerging and developing economies (EMDE) will need to turn to private capital to finance renewable energy and deviate from public finance which these economies have been reliant on,

traditionally. At present, public financing accounts for nearly 60% of clean energy investments.

Private capital will need to account for 60% of investments, which is still lower than the level seen across advanced economies at almost 90%.

“This is partly due to the elevated role of EMDE stateowned utilities as investors in electricity grids,” the IEA noted. “To facilitate this shift, regulatory and financing frameworks must improve to reduce the costs, risks, and barriers around developing clean energy projects in EMDEs and the ASEAN region, in particular.”

In its March 2023 report, ASEAN Renewables: Opportunities and Challenges, the IEA and Imperial College London reported that the annual average energy investments in the region stood at US$70b between 2016 and 2020. Of this, clean energy only accounted for below US$30b annually.

More particularly, the average annual capital expenditures of US$10b went to solar PV and wind energy over the past five years.

Source: Southeast Asia Energy Outlook (2022), IEA

POWER UTILITY

New low-carbon technologies remain expensive

Alex Whitworth

SEA energy investment under APS and SDS

SEA’S ELECTRICITY DEMAND TO EXPAND BY 6% ANNUALLY UNTIL 2025

Southeast Asia posted a 5.5% year-on-year growth in electricity demand as the region’s economies recover amidst the reopening of borders for international tourism.

In a report, the International Energy Agency (IEA) said coal accounted for 43% of the region’s power generation, followed by gas at 29%, and renewables at 27%.

The IEA added that the demand in the region will expand by 4% to 6% annually until 2025, with fossil fuel catering to most of the additional demand, whilst renewables are expected to meet about a third of the growth.

Meanwhile, coal generation is also expected to increase by 4% on average annually by 2025 with Indonesia and Vietnam leading in capacity additions. Its expansion will also be supported by the lifetime extension of some coal-fired power plants, such as in Thailand, due to the high energy global prices and supply shortages.

“The share of renewables in the generation mix will rise slightly to below 28% in 2025,” the report read, adding that the region is targeting to increase its solar and wind capacity by 50 gigawatts (GW) by 2030, and over 250GW by 2050, with some countries setting their carbon neutral or net-zero targets.

The slight increase in renewables capacity is expected to lead to a decrease in the emission intensity of the region’s generation mix by over 1% in 2025 compared to 2022.

Emissions intensity will reach 585 grams of carbon dioxide per kilowatt-hour but will remain amongst the highest in the world, according to IEA.

APAC electricity demand

For the whole Asia Pacific, the estimated electricity demand rose by 3.3% in 2022, boosted by India which saw an 8.4% increase but was partially offset by the lower growth in China of 2.6% amidst the economic slowdown due to the zero-COVID policy.

The IEA said that these countries alone accounted for around 70% of the total electricity used in the region of 13,500 terawatt-hours, comprising almost half of the global consumption.

The report noted that over half of the demand growth in 2022 was met by renewables with almost 60% of the renewable output coming from China. Despite this, coal still dominated the generation mix in the region at 57%

“The convergence of weather events and record-breaking gas prices led to higher coal use in electricity generation for the Asia Pacific region in 2022 (+2.5% on 2021 levels), but going forward its share in the mix will decline,” the report read.

However, the share of coal is expected to decline to 52% in 2025 as the share of lowcarbon sources such as nuclear and renewables increases to 38%, on the back of the almost 12% annual growth in renewable generation

Gas-fired generation’s share, meanwhile, is seen to dip to 9% in 2025 from 10% in 2022.

CN fast-tracks coal plants despite climate pledges

POWER UTILITY

The local governments in China were found to have approved a total of 106GWs of new capacity in 2022, equivalent to two new coal-fired power plants per week, a report found.

The report, conducted by the Global Energy Monitor (GEM) and the Centre for Research on Energy and Clean Air (CREA), compared this to 100 large coal-fired power plants, the highest since 2015.

The permitted new capacity is also four times more than the 23GWs power plants recorded in 2021.

“If China is going to meet its climate commitments, as we expect, these new coal power plants are going to end up as short-lived and under-utilised malinvestments,” Lauri Myllyvirta, Lead Analyst, CREA, said.

“To meet China’s goal of peaking CO2 emissions, the most urgent milestone is to scale up investments in clean power generation to cover all of power demand growth, which means declining demand for power generation from coal.”

In addition, coal power projects were also fast-tracked with 50% more construction starts seen during the year. This is twice as much as the new capacity announced in 2021 and six times as large as the coal-fired power

plants in the rest of the world. Further, around 60GW of projects green-lighted in 2022 have not started construction yet, but will likely start soon.

“China continues to be the glaring exception to the ongoing global decline in coal plant development. The speed at which projects progressed through permitting to construction in 2022 was extraordinary, with many projects sprouting up, gaining permits, obtaining financing, and breaking ground apparently in a matter of months,” Flora Champenois, Research Analyst, GEM, said.

“This kind of a process leaves little room for proper planning or consideration of alternatives.”

Electricity shortages

The report attributed the increase in new coal power capacity to the electricity shortages last summer due to a historic drought and heatwave in China. This has led to a rapid increase in peak loads were also recorded between 2021 and 2022 due to the hike in the use of air conditioners, prompting the market to develop new coal-fired powerplants. This also comes even as the Chinese energy regulator had said in early 2022 that no new coal plants would be permitted solely for bulk power generation.

GEM and CREA raised that China will need to improve energy efficiency requirements for air conditioning units and new buildings to avoid the need for new plants. China will also need to introduce a new program for largescale energy efficiency improvements for existing buildings.

Across the country, the largest amount of capacity was seen in Guangdong, Jiangsu, Anhui, Zhejiang, and Hubei.

The report found that provinces in China permit the construction of new coal-fired power plants in support of grid stability as well as the integration of clean energy. GEM and CREA, however, argued against this as the particular provinces that justified their coal plant projects were found to be laggards in growing their renewable energy generation.

China can control the construction of new coal-fired power plants by rejecting or revoking permits issued for projects that are not necessary for grid stability of renewable energy integration.

Moreover, the report also recommended that China should speed up its investment in renewable generation as well as electricity storage, flexibility, and transmission within grid regions. This includes creating a level playing field for different energy storage, demand response, and generation technologies, as well as boosting the scalability of clean flexibility technologies.

These new coal power plants are going to end up as malinvestments (Photo by ILO Asia-Pacific on Flickr)

China continues to be the glaring exception to the ongoing global decline in coal plant development

Lauri Myllyvirta

Flora Champenois

Experts analyse the pros and cons of small modular reactors as a climate solution

Schneider

Small modular reactors (SMRs) were designed to be fast, easy, and cheap to build, but they remain largely conceptual, with over 70 designs counted by the International Atomic Energy Agency. To date, they don’t exist anywhere in the Western world, with only two 30-megawatt (MW) floating prototypes in Russia and two 100MW high-temperature reactors in China. Construction of a 25MW reactor of domestic design in Argentina started in 2014, but its current grid connection is estimated for 2027. A 100MW design certified in 2012 in South Korea never found a buyer.

The only design that received general certification in the western world is NuScale in the US, but that certification was subject to solving several technical issues. Additionally, NuScale has increased the module size twice since certification, making it questionable whether it will be operational before 2030. By the time SMRs could be available, significant progress should have been made to address the climate emergency. Even if series production were available, it would be too late to capture current market opportunities and much too late for the climate.

In terms of waste generation, SMRs would generate more spent nuclear and high-level radioactive waste per gigawatt of capacity than a standard GW pressurised water reactor. They would also bring about proliferation risks with the proliferation of weapons-usable nuclear knowledge, materials, and facilities. Economically, SMRs would not be cost-effective due to their smaller size, which would lack economies of scale. NuScale, the most advanced design in the West, increased its projected construction cost by 75% from US$5.3b to US$9.3b, with a generation cost close to US$120/MWh. This makes it more costly than the most expensive large-scale nuclear plants currently under construction in Europe and the US.

Affordable and efficient options for reducing greenhouse gas emissions exist and can be quickly implemented. Solar and wind projects are affordable and have been implemented in Europe and India, and hybrid concepts that optimise technical solutions represent an untapped potential.

Dr Victor Nian Co-founder and CEO, Centre for Strategic Energy and Resources

SMRs can definitely be a game-changer. When we look at large reactors in the aftermath of Fukushima, public sentiment is that they are probably not safe enough and are difficult to manage in the event of an accident. Oldergeneration technologies are also not deemed safe enough. Newer generation technologies, together with small modular reactors, are now believed to be a game-changer because they enhance safety and are much safer compared to before. They are also smaller, so there are economies of scale. There is a chance that countries can now choose SMRs as end-products rather than building one-of-a-kind large reactor projects. This is like buying a product and putting it on your product. From the product commissioning timeline and delivery timeline, from the perspective of product cost management, SMRs will be a lot easier compared to the large ones. On that count, SMRs will definitely be a game-changer, especially in the Southeast Asian context.

In terms of security, it is always there, but of course, SMRs can now manage those risks much better compared to large reactors. We also have the concept of a floating nuclear power plant, which is also an SMR, but the reactors are deployed onto a floating barge. There is some flexibility in sitting. You can now move a nuclear power plant out at sea.

In terms of cost, SMRs are still higher, as of today, but this will change as and when the SMR market begins to scale up, and the industry standardises with repeat product manufacturing. Rather than having large ones one at a time, we’re producing SMRs in batches. If you look at the semiconductor industry, SMRs will also be expected to have cost reductions over time with scaling up. Between renewables and SMRs, politically speaking, renewables have stronger support than nuclear energy in general, including SMRs. But SMRs are not always suitable for every geographical location, which is analogous to renewables.

SEA context

In the case of Southeast Asia, not everywhere has green power from hydro. Similarly with SMRs. Of course, SMRs don’t depend on climatic conditions, but in principle, SMRs would always prefer to have a certain degree of access to water in the event that something happens. Water is the last line of defence for most nuclear power plant technologies. Today, we do not really need that kind of last line of defence anymore because these reactors will not have the same Fukushima problem, as we saw a decade ago. They are much more flexible in terms of where they can be sited and how they can be cited. You have the option of land-based SMRs, which makes it much easier compared to large nuclear power plants. You also have floating SMRs. In the case of Southeast Asia, you have archipelagos such as Indonesia and the Philippines and large shorelines like Vietnam and Malaysia. These countries can actually have floating nuclear power plants. In fact, Singapore is also considering nuclear energy, although it’s not really deciding in any direction. But in general, if you look at Southeast Asia, this is a good place to have SMRs. From that point of view, and other angles we’re looking at, comparing SMRs and renewables is integration—smaller or more scattered electricity grids, which some people call a distributed access degree. If you have countries like China, India, or even Japan and Korea—they have a very large grid size and the demand is so much bigger as compared to the rest of Asia Pacific.

Mycle

Founding Board Member, Spokesperson, International Energy Advisory Council

Photo by NuScale

GENERATION REPORT: SOLAR AND WIND

SEA strives to offset ‘very young’ coal fleet with green energy

to each market. “It needs to be countryspecific, because it will be different if you’re addressing Indonesia, which is mostly coming from the national utility, from other countries where the role of private is stronger,” Yurnaidi cited as an example.

Moreover, Yurnaidi raised that the coal pivot will negatively impact the economy as it could translate to job losses and disrupt operations of industries in the supply chain, such as coal mines and transportation systems. In this light, he said markets should begin thinking of solutions to repurpose plants and mines. For instance, firing coalfired power plants with alternative fuel, such as biomass, or turning coal mines into storage, much like in Germany.

Infrastructure and investments

O’Malia added renewables in Southeast Asia are also held up by lapses in grid connectivity as existing infrastructure are unable to handle the increased load.

Southeast Asia is poised to make significant strides in renewable energy, with 154 gigawatts (GW) of additional capacity planned for the next five years. According to the Global Energy Monitor (GEM), this development has the potential to offset about 55GW of coal power annually. However, despite the promising outlook, the region still faces the challenge of reducing its reliance on a young fleet of coal-fired power plants, necessitating a considerable expansion of renewables capacity.

Citing its global tracker data, GEM reported there is 98 GW of wind capacity and 55 GW of utility-scale solar capacity expected in the next five years. If attained, this will help meet 70% of the electricity need of the region by 2030, which is projected to grow by 40% more than 2020 figures. GEM noted the remaining 30% gap may be filled with storage capabilities deployed with rooftop and community solar installations, whilst also moving away from new coal and gas power capacity.

“Nonetheless, to close down existing coal power plants in the region whilst maintaining the same level of electrification, significantly more renewables are needed,”

Kasandra O’Malia Project Manager, Global Solar & Geothermal Power Trackers, told Asian Power O’Malia said Southeast Asia would need 100GW more of rooftop solar or an additional 55GW of offshore wind on top of its planned projects in operation to match the current generation capabilities of the region’s coalfired power plants.

The 154 GW planned renewable buildout is estimated to generate up to US$37b of annual savings versus burning coal, she noted. This could also help avoid

nearly 148 million tonnes of coal used annually or about 55 GW in coal power plant capacity. This is also equivalent to half of the coal capacity currently in operation in Southeast Asia.

“If Southeast Asia were to bring online all of these planned wind and utility-scale projects it would cost roughly US$232b, but with a US$37b annual savings in direct fuel costs, these projects would be paid for in just over 6 years,” O’Malia said.

‘Very young’ coal fleet Reducing the use of coal power will be challenging for the region, Dr. Zulfikar Yurnaidi, Team Leader of the 7th ASEAN Energy Outlook development, said considering Southeast Asia is home to a “very young” coal fleet.

“The average age of our coal fleet is maybe 12 years, which means it still has a lot of productive lifetime,” Yurnaidi, who is also the Manager of the Modelling and Policy Planning Department, said.

Assuming the minimum life is 30 years, coal-fired power plants will still have around 18 years which owners likely ought to maximise to generate revenue for profit or debt payment. This raises the need for financing to help retire coal plants sooner, Yurnaidi said.

This is what initiatives such as the Asian Development Bank’s Energy Transition Mechanism (ETM), which provides loans, grants, or investments for the early retirement or repurposing of coal-fired power plants, and the Just Energy Transition Partnership (JETP), which likewise mobilises funding to shift away from fossil fuels, are trying to address. Yurnaidi, however, noted that such initiatives need to be tailor-fitted

“This causes future projects to seem less attractive to lenders who worry that they won’t see a return on their investments. Updating and adding to the electrical grid in these regions will both allow renewable energy projects to reliably provide power, whilst also making the region more resilient to climate change and increasing electricity access,” she said.

Data from its Global Solar Power Tracker and Global Wind Power Tracker found that utility-scale solar and wind capacity will likely grow by more than six times in the next five years.

Beyond this, O’Malia said an even higher hurdle lies in putting a stop to coal investments, which remain high in the region. In 2020 alone, nearly US$18b in subsidies for fossil fuel were made by governments across Southeast Asia “despite the uncompelling economics of both coal and gas,” she said. The region also has 37% of the remaining proposed coal power capacity outside of China.

“Even though the past year has underscored the risks—especially in Asia—of relying on natural gas imports, Southeast Asia ranks second in the world for prospective gas power plant buildout,” O’Malia said. “Governments, banks, and other stakeholders still have to be pushed at all times to beat the inertia and politics behind fossil fuels.”

The JETP in Indonesia and Vietnam should only be the beginning of international partners that fund energy transition in Southeast Asia, O’Malia said. International governments and financial institutions should prioritise equitable funding rather than focusing only on the wealthiest nations, she added. After all, the region only received 4% of the global renewable energy investments in 2020 even as it made up 9% of the global population.

To read the full story, go to https://asianpower.com/

The region’s renewables push requires more capacity to challenge coal reliance effectively.

SEA would need 100GW more of rooftop solar capacity to match the current generation capabilities of the region’s coal-fired power plants (Photo from Asian Development Bank on Flickr)

Gov’ts, banks, and stakeholders have to be pushed at all times to beat the inertia and politics behind fossil fuels

SOUTHEAST ASIA

Dr. Zulfikar Yurnaidi

Kasandra O’Malia

TRANSFORMING TOMORROW

Pathway to Net Zero

CKPower

aims to be “one of the largest electricity producer in the region with one of the lowest carbon footprint”

Implementing a range of strategic initiatives to optimize e ciency, minimize production losses, and attain Net Zero GHG emissions by the year 2050.

Our unwavering commitment to these sustainability goals has garnered widespread recognition from Asian Power Awards, who have honored us with prestigious awards for three consecutive years.

The Silver award, Gas Engine Combined Cycle From Steam Turbine Load adjustment Project Power Utility award of the Year – Thailand From Fuel Gas System Optimization Project

Innovative Power Technology award of the Year – Thailand From Cooling tower optimization project

Reducing GHG emissions

2,089 tCO2e per year

Reducing GHG emissions

40.7 tCO2e per year

The Silver award, Environmental Upgrade of the Year and The Natural Gas-Fired Power award of the Year – Thailand From Gas Compressor project

Reducing GHG emissions

183 tCO2e per year

Cambodia is looking forward to more and more renewable energy needs

Gan Boon Hean CEO Leader Energy

Leader Energy gains ground in Cambodia with new

high-voltage transmission line project

This Malaysia-based firm aims to accelerate Cambodia’s transition to cleaner energy sources.

Cambodia has made significant strides in bringing electricity to over 98% of its villages, with only 245 villages still lacking access to power. However, as it has historically relied on non-renewable sources like oil, the country’s next challenge is to electrify these villages and transition to renewable energy sources. In its bid to help address this challenge, Leader Energy has acquired a transmission line, which serves as the backbone of Cambodia’s energy structure.

Malaysia-based Leader Energy first received a high-voltage transmission project in Cambodia—a 25-year Build-Own-Transfer Power Transmission Agreement with the Electricite du Cambodge (EDC)—in 2010. In 2022, it acquired the 230-kilovolt Kampong Cham-Kratie Transmission System to power Kampong Cham and Kratie, and transmit electricity from the Lower Se San 2 Hydropower plant in Stung Treng to Kratie.

Combining these two projects will be the main backbone of Cambodia’s transmission system, aimed to accelerate the country’s transition to cleaner, more sustainable energy sources.

In this Q&A, Leader Energy CEO Gan Boon Hean shares with Asian Power more insight into Cambodia’s transition to renewable energy and Leader Energy’s exploration of wind and rooftop solar amongst other untapped energy sources in Cambodia.

As one of the key industry players in Cambodia, how would you say Cambodia is faring in the clean energy transition?

In 2010, only about 30% of consumers had access to electricity, with the vast majority of power generated by non-renewable resources, such as oil, and only slightly more than 3% of the generation coming from hydro. But since then, the country has made remarkable progress.

In 2022, Cambodia has about over 30% or more than 1,300 megawatts (MW) of the generation coming from hydro. It also has more than 400MW of solar power installed. In combination, these renewable sources now make up more than 40% of the total power generation.

If you look at the country’s master plan launched last year, it intends to have more than 1,000MW of solar farms installed by 2030. By 2040, more than 3,000MW of solar farms will be installed. If achieved, this would result in renewable energy making up over 50% of the country’s generation mix.

The company recently acquired the 230kV Kampong ChamKratie Transmission System. What are your plans for the project?

How will this help Cambodia’s power sector?

We were awarded the first Build-Operate-Transfer or BoT privatised transmission system in 2010 and we have been operating this transmission system from Phnom Penh to Kampong Cham since 2013. The project from Kampong Cham to Kratie is an extension of our existing project, and combining the two projects will create the main backbone of Cambodia’s transmission system. This system will power hydropower from the north of the Se San hydropower plant and imported power from Laos to Phnom Penh. It will be one of the key transmission systems for Cambodia.

Leader Energy also operates thermal power plants in Cambodia, however, there are moves to pursue more renewable energy. What’s the future of these thermal plants you have in Cambodia?

For our thermal power plant, we have a long-term commitment to the government because we signed a long-term Power Purchase Agreement (PPA) and certain legal commitments that we need to comply with. Also, we have contractual obligations

with our lenders. Having said that, we are certain that we will not extend the PPA when it expires. Our company has recommitted to achieving carbon neutrality by 2026 and carbon net-zero by 2050, which is when our coal plant will be retired. We currently have two coal plants. One will be retired by at the latest 2043. The second will follow by 2050. We have no plans to develop any new thermal power plants and are committed to achieving 100% renewable energy.

At the same time, we are exploring alternatives to burning coal, such as burning biomass, pellets, wood pellets, or rice fuel pellets. We are also looking into the earlier termination of the agreement, but this is a signed commitment with the government, so we need to engage all the related parties and stakeholders to discuss it. Nonetheless, we intend to explore possibilities if they are feasible.

Can you name some of the challenges that companies usually face when entering foreign markets and in your case, how do you respond to these challenges?

Currently, Leader Energy has assets in several countries in Southeast Asia and Taiwan. We have solar farms in Vietnam, Singapore, Indonesia, Thailand, Malaysia, and Taiwan.

To enter a new foreign market, we need to familiarise ourselves with local regulations, particularly on foreign equity participation and local tax law. Language is also a significant factor, as in countries like Cambodia and Vietnam, it can be a barrier to communication. Therefore, we work closely with the locals in these countries and employ a high percentage of local staff.

Our Vietnam operation currently is operated 100% by local staff. In countries, like Singapore, where English is a common language, this is not an issue. We have been there for a long time. We work very closely with all the staff and especially look for the support of the local team. I think so far we have managed to secure and then expand and solve most of the challenges that we are facing.

What other projects do you have planned for the Cambodian energy market?

As I said in the beginning, Cambodia is looking forward to more and more renewable energy needs. Since we have already successfully implemented several renewable energy sources outside Cambodia, we are very confident that we can play a very important role in the growth of the renewable energy sector in Cambodia.

Based on our experiences in other countries, there are other resources, for example, wind resources, and also rooftop solar for C&I customers in Cambodia. These are a little bit of an untapped business in Cambodia, where we think we can contribute. With our relationship with the current government, and also the utility, we think we can play a very important role in the sector.

Leader Energy has a presence in Southeast Asia and Taiwan, as you’ve mentioned earlier, what other projects do you have lined up for these countries in 2023?

As most countries are moving towards net zero, or even carbon neutrality by 2050, reliance on thermal power plants is decreasing and more and more renewable energy sources, such as solar farms and wind farms, are being developed. This is where we believe we can play a part. There are still many untapped markets, such as Indonesia, Thailand, and Taiwan, which are all in need of more renewable energy.

With more green energy in the market, this is an area in which we can contribute. Additionally, new technologies such as battery storage and EV car charging are the businesses that we are very keen to explore in this market. We hope to begin exploring these areas very soon.

ASEAN risks energy security amidst fossil fuel imports

The region’s reliance on gas and coal may lead to price volatility and lack of affordability.

SOUTHEAST ASIA

In countries that make up the Association of Southeast Asian Nations (ASEAN), fossil fuels have long been the dominant source of energy. Domestic gas and coal have fueled growth, powered industries, and kept the lights on in homes and businesses across the region. But now, a troubling trend has emerged. As production infrastructure ramps up amidst continuous fossil fuel consumption, ASEAN is on track to become a net importer of natural gas by 2025 and coal by 2039.

“This poses a significant energy security challenge for the region, as heavy reliance on fossil-fuel imports may affect the affordability of energy, exacerbated by price volatility,” according to the ASEAN Centre for Energy’s 7th ASEAN Energy Outlook (AEO7).

The report revealed that ASEAN countries exported more natural gas and coal than they imported in 2020 at nearly 30 million tonnes of oil equivalent (mtoe) and 153 mtoe, respectively. However, it also noted that the region has already been a net oil importer since before 2005, importing approximately 200 mtoe more oil than it exports.

ASEAN’s primary energy mix was led by oil (33%), coal (28%), and natural gas (22%) in 2020, with renewables, only accounting for 14.2% of the energy share. In terms of installed power capacity, the total share of fossil fuels is at 67%.

Dr. Zulfikar Yurnaidi, senior officer of the Renewable Energy and Energy Efficiency Department at the ASEAN Centre for Energy, and AEO7 project manager, discussed more on the report’s findings with Asian Power

Tell us about the AEO7. How do you see the energy demand and supply in the region evolving in the next five years?

We are currently in a period post-pandemic so both the demand and supply of energy will be increasing and continue to be growing following the path of economic growth. The region’s primary energy supply in 2020, for instance, we have 654 mtoe. But in 2025, which is the target year of our regional energy blueprint, the energy can grow up to 818 mtoe in the supply. We’re going to see penetration of renewable energy, but our estimate is that the role of fossil fuels, including oil and transport, and coal in the power systems will still be very strong following, of course, the growth of the economy.

Which countries would account for the highest increase in energy demand by 2025?

In terms of the structure of the economy and the structure of energy, it will be quite similar to what we have now. Indonesia, for instance, is the largest country in the region. It comprises almost half, maybe 40% of the gross domestic product (GDP) in the region. With that, the share of energy consumption is also the biggest in the region. Following the growth rate of GDP in Indonesia, which is the highest in the region, its energy use will grow significantly. Indonesia will continue to be the biggest player in the region’s energy landscape, and ASEAN will also grow in a similar manner. Following that, countries such as Malaysia, Vietnam and the Philippines are expected to grow quite well in this period, thus we also expect that their primary energy demand will also grow accordingly.

What is the outlook for the installed power capacity and generation? Which power sectors will dominate the energy mix? There are many efforts currently being done by the countries in

ASEAN to push towards the energy transitions, meaning we are moving towards an energy system that is low-carbon, sustainable, and cleaner energy, including in the power system. Currently, coal constitutes the largest share of electricity generation. The renewables in terms of installed capacity in 2020 is at 33.3%. In the future, this share of renewables will continue to be increasing. But still, at least until 2025, the share of coal will be still very high. Even after that, up to 2050, if we continue with the baseline scenario, which we have in our ASEAN Energy Outlook, coal will still take a large share. But, in other scenarios that reflect national and regional targets, we would see a strong penetration of various renewables, including solar and wind. Overall, hydro will continue to be the largest share of electricity generation.

The report also shows that the region is expected to be a net importer of natural gas by mid-2020s, and even coal by the late 2030s. What were the factors that contributed to this outlook? Our study has four main four scenarios. First is the baseline. Second is the national targets, which we call the ATS. The ASEAN target, we call the APS. Last is the least-cost optimisations or LCO. For our baseline scenario, we assume a very limited addition in reserves for oil, gas and coal, and we also assume the same level of energy demand growth and projection for the future. We indeed found that around 2025, we could become the net importer of natural gas. We have been the net importer of oil since way before 2005. We can become a net importer of coal by nearing 2040. But, when we implement national policies and regional policies that push towards renewable energy penetrations and improvement of energy efficiency, we can find that the total primary energy demand will decrease. For example, our primary energy supply is growing by

We’re going to see penetration of renewable energy, but the role of fossil fuels in the power systems will still be very strong

Currently, coal constitutes the largest share of electricity generation in ASEAN (Photo: Dr. Zulfikar Yurnaidi, Senior Officer, ASEAN Centre for Energy)

four times in our baseline. But in the region target scenario, we can push it down by 2.7 times only between 2021 to 2050. This brings us into more energy security, less demand for natural gas and coal. With that, we can push this situation of us becoming net importers of gas and coal away. So again, the growth of demand, and the lack of exploration of new resources, especially in gas, will contribute to this situation that might affect our energy security in the future.

How much investment does the region need to meet its renewable energy targets?

Our study showed that for the power sector only, only for the generations and the power plants, it does not include the upgrading of the power grid for example and other systems, we might need up to US$1t in the next decades or so. It’s huge money. But again, as I mentioned, with the penetration of renewable energy efficiency, in the other scenario, we can actually push this number down. But this is assuming that our scenario still shows coal and gas are still in the system so the penetration of renewable energy is somewhat limited. But again, this is assuming that our scenario still shows coal and gas in the system so the penetration of renewable energy is somewhat limited. But in other scenarios that we might explore, when we have a higher share of renewables, this investment requirement number could grow even more, and this is also something that has been shown by other studies that are comparable with ours.

The report also looked into the least-cost optimisation scenario to reach the regional renewable energy target. How can this be achieved and how feasible is this?

One of the new additions that we have in the 7th ASEAN Energy Outlook compared to the previous version is this least-cost optimisation on which we tried to optimise the power sector, especially to achieve this regional energy target in renewable energy. We found that, in this optimal scenario, the role of fossil fuels such as coal is actually slightly higher compared to the other scenario. This is partly because the cost of renewable energy that we have in our model is slightly higher compared to the others. This is also an issue that we might want to address since globally, I think the price of renewable is seemed to be decreasing, but in the region, it’s not yet there. So I think we need to strengthen our supply chain capability capacity so that we can increase the competitiveness of this renewable energy compared to the others.

Additionally, in our LCO, we explore technologies such as nuclear and also interconnections. We found nuclear can play a good role in the future power system. We also found that the solution of interconnection between ASEAN member states which we call the ASEAN Power Grid or the APG is actually cost-optimum in comparison with the system without an interconnection. At the same time, it can also support the penetration of renewable energy in the power grid, not only for one country but for the whole ASEAN. Last year, we just started this Laos-Thailand-Malaysia-Singapore power trade. This actually brings a lot of interest to the ASEAN Power Grid to the region. We are currently collaborating with the US to develop a feasibility study for an interconnection line between Indonesia and Malaysia. There are talks from Indonesia as the chair of ASEAN this year that they want to initiate another line, which is Brunei, Indonesia, Malaysia, and the Philippines. With Indonesia as ASEAN Chair, we will have the ASEAN Ministers on Energy Meeting (AMEM) in August. Indonesia is targeting to have an announcement by that time to kick off this new interconnection.

The power sector might need up to US$1t [investment] in the next decades or so. It’s huge money

ASEAN is on track to become a net importer of natural gas by 2025 and coal by 2039 (Photo from ASEANEnergy.org)

At least until 2025, the share of coal will be still very high

GENERATION REPORT: HYDROPOWER

China-concentrated energy capacity drives AsiaPacific as hydropower ‘powerhouse’

The Asia-Pacific (APAC) region is the front-runner in deploying hydropower which could play a crucial role in replacing the void to be left by coal amidst the energy transition. Although the region is the “powerhouse” for hydropower, the majority of installations are mostly located in China. The total installed capacity of hydropower globally in 2021 is 1,360 gigawatts (GW), of which 391 GW are in China, according to the International Hydropower Association’s 2022 Hydropower Status Report. By region, 523 GW are in East Asia and Pacific, followed by Europe (255 GW), North and Central South America (205 GW), South America (177 GW), South and Central Asia (162 GW), and Africa (38 GW).

In 2021 alone, hydropower including pumped storage saw 26 GW of capacity additions, of which around 21.9 GW is from East Asia and the Pacific. Out of the new installations in the region, 20.8 GW are accounted for by China.

“With rapidly growing economies, continued population growth in many countries, and an awareness of the impacts of climate change that will increase the pressure to remove coal, the region is likely to remain a new hydropower hotspot for the foreseeable future,” the IHA report read.

According to the report, the untapped potential in the region, along with South and Central Asia, is the highest in the

world. Developed sustainably it can help to relieve stresses on electricity grids as more solar is deployed, potentially with less significant land-use impacts.

‘Aggressive’ China

The long-term development plan for hydropower in China is still “quite aggressive,” considering that most of the best hydropower resources in the country have already been built, said David Fishman, senior manager at The Lantau Group, told Asian Power. He cited Sichuan Province—a prominent “hydropower powerhouse” in the country—which boasts numerous dams located upstream of the Yangtze River. Ambitious plans are still underway to increase the capacity by approximately 20 gigawatts (GW) and to add another 12 GW even further upstream, extending all the way to the Tibetan Plateau.

According to the IHA, China’s hydropower capacity reached 395.6 GW by end-2021 and it added nearly 2 GW of new capacity in the first two months of 2022.

The 16 GW Baihetan hydropower station, the second largest in the world, also came online in July 2021, generating 62,000 gigawatt-hours of electricity annually. Pumped storage hydropower development is also not out of the picture as the country’s National Energy Administration released the mid-term

and long-term plan for the sector from 2021 to 2035 in September 2021. Under the plan, pumped storage hydropower is expected to reach at least 62 GW in 2025, and 120 GW in 2030 or around 75% of the current capacity.

China also leads in the pumped storage hydropower capacity, comprising 36 GW of the 161.6 GW total, followed by Japan with 27.5 GW, and the US with 22 GW.

The country’s target of carbon peaking by 2030 and carbon neutrality by 2060, is driving the installation of hydropower in the country, said Fishman.

“They really don’t have that much time to swing the entire country around from where it is right now, which is heavily reliant on thermal coal, specifically, to something that is low-carbon,” he told. “You don’t have many options that are also low carbon, you have pretty much only hydropower and nuclear.”

Fishman said China is building nuclear capacity on its coasts, whilst hydropower is being built in the inland regions. Hydropower has to be matched with variable generation sources like wind and solar. “That is the only way that you can bring in lots of wind and solar into your grid. At the same time, to have stability, you need to have a dispatchable firm source to work with, and hydropower can do that in China,” he added.

China’s aggressive hydropower development is driven by its carbon peaking target by 2030.

The long-term development plan for hydropower in China is still quite aggressive

APAC is likely to remain a new hydropower hotspot for the foreseeable future (Photo: Three Gorges Dam on the Yangtze River, China, by Rehman)

ASIA PACIFIC

Facing headwinds

Despite the hydropower’s potential in the region excluding the Middle East, hydropower is still expected to face “significant headwinds” due to environmental and social opposition, according to a Fitch Solutions report by David Thoo, Power and Renewables analyst. Constructing dams on rivers could negatively affect the ecology and livelihood of the people in the area, Thoo said, citing the opposition by environmentalists and local communities against additional damming of the Mekong river basin. There are 31 gigawatts of hydropower projects in pre-construction and construction states along the Mekong river across 57 projects, 41 of which are in Laos, and the rest are located in Cambodia, Myanmar, and Vietnam.

The Mekong river basin is the largest inland fishery, accounting for 25% of the global freshwater fishing, which around 60 million people from markets in the region depend for livelihood.

“We remain apprehensive about the strong growth of hydropower generation capacity in the Southeast Asia region, as opposition remains strong, especially after flaws were found in environmental impact assessments (EIAs),” the report read.

Thoo added in the report that financing of hydropower projects is also limited because of the high capital needed and long construction times before it can generate and sell electricity. Banks are also reserved in financing such projects as this could affect their reputation due to strong international opposition.

Fishman said that building hydropower is “extremely capital-intensive” because you will take into account not only the cost to build the generation infrastructure but also the need to allocate funds for local people that could be displaced.

Slowed growth

The capacity and generation expansion of hydropower is expected to be limited from 2021 to 2031 because of the competition with other renewable sectors such as solar

GENERATION REPORT: HYDROPOWER

and wind which are smaller in scale and decentralised, thus having minimal impact on the ecology and livelihood.

“Solar and wind power projects usually have lower costs and construction times associated, making these projects more attractive for many Asian markets,” Fitch said. Thoo said that hydropower generation in the Mekong region experienced severe shortages amidst dry spells, which would result in markets considering additional conventional thermal power generation to make up for the deficit.

As this move is not aligned with their carbon emission reduction targets, they are including non-hydropower renewables such as biomass and waste power, according to Fitch Solutions.

Due to this, non-hydropower renewables generation in non-hydropower renewables are expected to grow at an annual average rate of 8.4% from 2022 to 2031, faster that the 3% annual growth of hydropower. Generation from nonhydropower renewables may overtake hydropower in 2024.

Even against strong opposition, the Asia power project pipeline is dominated by hydropower projects, according to Fitch’s Key Projects Database. Out of the 574 hydropower projects, 314 are in India with a total capacity of 107 GW.

However, in the past 10 years, 22 projects have either been cancelled or suspended with a generation capacity of 17 GW. Fitch expects hydropower capacity in India to grow 17 GW from 2022 to 2031.

Attracting investments

Hydropower projects would need strong government support to ensure “adequate management of social and environmental impacts” and water management, said Carlos Torres Dias, head of Power Research at Rystad Energy. Governments will play a crucial role in attracting necessary investments in hydropower through incentives and creating a “suitable business environment,” according to the report by the International Renewable Energy Agency (IRENA).

For investors, controlling the capital expenditure on the development side, and the type of rate they are getting from the sale of power is important, according to Fishman.

Governments should offer developers access to lower interest rates or loans or set them up with lenders that are willing to give more preferential conditions to promote hydropower development.

“On the sales side, the developer needs to know that they’re going to sell their power at a good rate and that they can see a path to profitable profitability after a certain number of years,” Fishman said.

“If they don’t have that, it doesn’t make much sense for even the largest, wealthiest investors to be investing if they don’t see a pathway to profit,” he added.

Some of the incentives the governments could implement include relief from taxes and duties, concessional grants or loans, accelerated asset depreciation, subsidies based on environmental performance, subsidies for services by the power generation, capital cost contributions, and support for structures for the deployment and testing of new technology, according to the IRENA, citing the report from the University of Cambridge.

Governments can also help in streamlining concessions and licensing processes, which could reduce uncertainty and make the projects attractive to investors.

IRENA also noted that international and multi-stakeholder cooperation can play a part in the development of the hydropower sector as the industry, governments, and regulators have to collaborate in developing solutions to address challenges.

An area where cooperation amongst stakeholders is critical is river basin management, it said.

“International cooperation, through the sharing of experiences and best practices, can accelerate the creation of favourable policies and regulations relevant to hydropower,” it said.

David Fishman

David Thoo

Carlos Torres Dias

International cooperation can accelerate the creation of favourable policies and regulations relevant to hydropower

Gov’ts will play a crucial role in attracting necessary investments in hydropower (Photo from IRENA.org)

Opposition remains strong on the growth of hydropower generation capacity in Southeast Asia (Photo from the IHA 2022 Hydropower Status Report)

COUNTRY REPORT: PAKISTAN

Pakistan’s energy and economic woes intensify as blackouts reveal deep-rooted issues

On 23 January 2023, Pakistan was hit by a massive blackout, leaving nearly 220 million people without power and resulting in $70m in losses for its textile industry. This is not the first time the country has faced a power outage of this magnitude in recent years. Without addressing the root cause of the problem, what is preventing Pakistan from experiencing another blackout?

“The blackout that happened in January 2023 was, effectively, a result of economic turmoil, debt-ridden power companies, poor infrastructure in the distribution network, and heavy dependence on imported fossil fuels to run the grid,” Sooraj Narayan, senior research analyst at Wood Mackenzie, told Asian Power

The January blackout took place three months after a power outage affected the southern provinces of Pakistan in October 2022 and two years since a nationwide power failure in January 2021.

Narayan explained that the government had to ration power through scheduled power shutdowns during low-demand hours amidst energy security threats. He said that whilst this was intended to conserve fuel during the crisis, this posed problems for grid operators that found it difficult to switch the plants back on in time for the morning peak demand. “This resulted in the country seeing widespread

grid blackout,” he said. The power cuts were intended to help conserve power. It formed part of Pakistan’s energy conservation strategies which also included reduced commercial activities and shorter business hours.

Energy Finance Analyst Haneea Isaad of the Institute for Energy Economics and Financial Analysis, said this has led to a 30% loss in retail sales; whilst Power Analyst Attaurrahman Ojindaram Saibasan of GlobalData, said this has also affected schools, offices, and the country’s manufacturing sector.

A wounded economy

“This is affecting an already wounded economy. Pakistan’s foreign reserves shrank by 50% last year and the Pakistani rupee has reached an all-time low of 260 against the dollar,” Saibasan said. “Unprecedented inflation rate of 25% last year has made fuel and essential food items unaffordable to large sections of the population.”

With lower costs and industry expertise, the country nabbed textile contracts away from China, Bangladesh, and India in 2021, but recent events could cost Pakistan its textile contracts. This could further hurt the economy as the industry accounted for 8.5% of its gross domestic product.

Moreover, Pakistan’s growing foreign debt also puts its relations with other countries on

the line. Citing data from the International Monetary Fund (IMF), Saibasan said nearly 30% of Pakistan’s debt is owed to China.

“China is now reluctant towards further lending to the spiraling Pakistani economy. It is also a cause of concern for Pakistan which is out of options to overcome the crisis,” it said. Data from Wood Mackenzie showed Pakistan currently has an installed capacity of 42 gigawatts (GW), largely sourced from gas and liquefied natural gas (LNG) (30%).

This is followed by hydro (26%), fuel oil (17%), coal (13%), nuclear (9%), wind and solar (6%), and bagasse (1%).

A 42GW installed capacity would have been enough to meet the 28GW peak demand in Pakistan, but Narayan noted this was particularly difficult to achieve as the energy crisis limited Pakistan’s fuel imports.

“A huge increase in international fuel prices with the advent of the Russia-Ukraine conflict affected the Pakistan economy badly, with the foreign exchange reserves dropping to US$3b by January 2023 end—which is a whopping 80% drop from the US$15b it had one year ago,” Narayan said.

Pakistan is heavily reliant on imported fuels, which it utilises to meet generation needs with gas accounting for 29%, oil for 10%, and coal for 17% of its generation mix. Considering this import reliance, the higher fuel prices and the foreign exchange crisis have led to fewer running

Recent events could cost Pakistan its textile contracts, accounting for 8.5% of its gross domestic product.

This is affecting an already wounded economy

The power cuts formed part of Pakistan’s energy conservation strategies, which also included reduced commercial activities and shorter business hours (Photo from IEEFA.org)

LNG plants that slowly eroded the effective operational capacity.

In addition, the energy supply was further slashed as Pakistan’s hydro plants generated 5% less energy than in 2021, based on Wood Mackenzie data. The 26% share of hydro is also much less than the 32% it generated in 2020.

“Rise in energy prices due to the Russian-Ukraine war further wounded an already underperforming and debtridden economy,” Saibasab said, noting this has also left Pakistan with overdue payments on energy imports.

Decades-old grid network

Saibasan said Pakistan’s energy sector is already struggling with its decadesold national grid network, which was established before its independence in 1947.

The power grid has also failed to secure significant funding over the years due to a highly unstable political scenario, he noted.

“Fluctuating power supply and load shedding has been a regular problem. Frequent power cuts are common in Pakistan with households and businesses relying on diesel generators to overcome the issue,” Saibasan said.

“The country faced a massive blackout in 2021 due to extensive grid failure yet the government did little to overcome the issue.”

Adding insult to injury, Pakistan’s power infrastructure took a hard hit due to the devastating flood between June to October 2022, leading to damages worth more than US$14.9b and a total economic loss of about $15.2b, as estimated by the World Bank.

Fitch Solutions had projected in a report that Pakistan’s power grid will be amongst the poorest performers in the region. In particular, Fitch forecast that transmission and distribution (T&D) losses will average 14% of its total power generation in the next ten years.

The state-owned National Transmission & Despatch Company (NTDC) currently manages Pakistan’s national grid, except Karachid. The NTDC had already tapped banks, such as the Asian Development Bank, World Bank, and the Japan International Cooperation Agency, to help maintain and expand the grid. All in

COUNTRY REPORT: PAKISTAN

addition to the burden of blackout-related fines imposed by the National Electric Power Regulatory Authority.

In this light, Fitch reported the improvement of Pakistan’s grid network will likely be slow despite plans for upgrades and expansions to existing infrastructure as the government lacks funds.

A cycle of debt

Narayan explained distribution companies have not paid their dues to power generating companies, resulting in power generators’ failing to fully pay their fuel suppliers. This has led to a cycle of revenue recovery difficulties.

“Pakistan’s energy sector has been crippled with circular debt,” he said.

On top of this, the differential tariff system that subsidises electricity tariff for a section of bill-payers, such as the agricultural consumers, and the weak distribution system have likewise left distribution companies in debt.

“This also implied that many industries were being forced to shut down as they had to face high electricity tariffs as part of the differential tariff scheme,” Narayan said.

Narayan said the government should rethink its differential subsidy strategy to ease the burden on distribution companies. Not only will this reduce the circular debt, but it will also ensure that distribution companies are in a position to pay the due debt to power generators, ultimately allowing them to have a higher cost recovery.

Pakistan bailout

Investments should also be directed towards transmission and distribution infrastructure to cut losses and towards renewable energy and storage as a longer-term solution.

Wood Mackenzie estimated that building solar in the market is just 5% more expensive than coal on a levelised cost of energy basis. This is also 40% cheaper compared to gas. Solar power growth was however hampered by the lack of government initiative and high initial capital cost. The country could also tap international support to help fund hydro as its installed capacity currently

stands at 10GW, well below the estimated 17GW and 23GW required capacity by 2030 and 2040, respectively.

In the short-to-medium term, he said the market may consider looking for higherquality domestic coal as an alternative to lowquality Thar coal. This is to reduce import dependence and improve energy security whilst also keeping power prices stable.

Isaad likewise expected the market will need to use fuel oil or coal in the near term to address the crisis but raised the need for Pakistan to diversify its energy mix with renewables. “This has to be done first at a policy level and then at a practical level through programs that facilitate the uptake of renewable energy through accessible finance,” she said.

“Grid upgrades are also necessary to remove transmission bottlenecks and ready the grid for the accommodation of renewable energy on a larger scale.”

She noted the country has impressive solar and wind resources and more dispatchable sources, such as hydropower and indigenous coal that could help reduce reliance on imports as well as fill the gap left by natural gas.

Isaad noted getting Pakistan out of this tight spot will also require greater participation from the international community. Aside from financing, there should also be technology transfer through capacity building or direct provision of technology, such as battery storage and grid upgrade.

The government had already reached the IMF for a bailout, but Saibasan said this could only lead to inflation and higher energy prices.

“Pakistan should look for support from international organisations as well as leverage its relationship with US and China to mitigate the current economic scenario, but this would provide only a temporary relief,” Saibasan said.

Sooraj Narayan

Haneea Isaad

Attaurrahman Ojindaram Saibasan

Pakistan’s energy sector has been crippled with circular debt

Frequent power cuts are common in Pakistan (Photo: Lahore, Pakistan by Adam Cohn on Flickr)

Distribution companies have not paid their dues to power generating companies, resulting in power generators’ failing to fully pay their fuel suppliers

COUNTRY REPORT: MALAYSIA

How grid enhancements can re-energise Malaysia’s solar energy boom

As Malaysia sets its sights on a more sustainable future, renewable energy is taking centre stage, with solar power expected to lead the expansion. The country’s Ministry of Natural Resources, Environment and Climate Change has ambitious targets to increase its renewable energy installed capacity, aiming for 31% by 2025 and 40% by 2035. It also wants to achieve 18.4 gigawatts (GW) of renewable power by 2040. Achieving these targets is tenable but Malaysia’s grid infrastructure will need significant enhancements to support the variable power source as the capacity grows.

According to the Malaysia Renewable Energy Roadmap, renewables account for 23% or 8.45 GW of its installed capacity mix in 2021, with gas and coal accounting for 39% and 34% of the total, respectively.

“Growing the amount of renewables to 18.4 GW by 2040, the grid itself needs to be strengthened for it to be able to take on the intermittency and variability of the solar energy,” The Lantau Group Principal Azrina Abdul Samat told Asian Power Samat noted that battery storage is one of the strategies the government is looking at to improve the grid. The ministry, in 2021, said that it plans to install battery energy storage systems with a 500 megawatts capacity from 2030 to support the potential of solar power, in multiples of 100MW.

Behind-the-meter, Malaysia has employed schemes such as Net Energy Metering (NEM) 3.0 and the SelfGeneration scheme to promote the

installation of solar panels on rooftops for consumers to offset their bills by selfgenerating solar energy and an option to export any excess back to the utility

However, despite the falling cost of solar PV installation in recent years, only the top 1% of domestic customers have done so. The domestic tariffs in Malaysia are also one of the lowest in Southeast Asia with the lowest tier beginning at US$0.049 (RM 0.218) for the first 200kWh and the highest tier at US$0.13 (RM 0.571) for above 901kWh.

“Because of that, there’s a lesser push for domestic customers to be installing solar as they continue to enjoy the low tariffs,” she said, adding that the tariffs are also cross-subsidised.

For commercial and industrial customers, Samat said that the tariffs are competitive but on the lower side than the neighbouring countries, giving them a bigger push to deploy solar and the take-up is on the rise although some of the hindrances they face are the local legislation preventing to install solar panels on the rooftops of leased or rented facilities.

Solar potential

According to the Roadmap, large hydropower dominated the share of renewables in the country at 5,692 megawatts (MW), followed by solar PV at 1,534 MW, biomass at 594 MW, small hydropower at 507 MW, and biogas at 123 MW.

Whilst hydropower forms the bulk of the renewables capacity and the fastest means

to reach the renewables aspiration, Samat noted that the sector is “constrained” due to the need for a suitable site and the high capital expenditure.

Malaysia’s low wind speeds due to its geographical location limits the potential to harness wind energy though pockets of higher wind speeds or coastal areas may still will. On the other hand, the country has a solar irradiance between 4.2 to 5.5 per kilowatt-hours per square meter per day with around 12 hours of sunshine in a day.

“Solar will be the fastest growing in Malaysia in terms of renewable choices,” she said. Fitch Solutions also expect that Malaysia’s target will be supported by the strong growth in the solar power sector.

Power Analyst David Thoo said in the report that the Malaysian government has implemented measures that would boost the country’s solar capacity.

Thoo noted that the government issued solar project tenders through the Large Scale Solar programme (LSS), LSS3 in 2020 and LSS4 in 2021, which received a total of 112 bids across 20 projects.

The energy and natural resources ministry also launched the NEM 3.0 scheme that encourages the installation of solar panels on the property of the locals, businesses, and government. Through this scheme, the participants were allowed to offset electricity bills by sending their excess solar power to the grid.

Malaysia also launched a Green Electricity Tariff (GET) programme in November 2021 which allows consumers to cut

Strengthening the grid will be crucial for the solar energy mix, which accounted for 18% of the country’s RE.

The grid needs to be strengthened to take on the intermittency and variability of solar energy

Solar power is expected to lead the RE expansion (Photo: Solar panel installation on Kuala Lumpur International Airport roof by Slices of Light on Flickr)

Azrina Abdul Samat

David Thoo

their carbon emissions by purchasing renewable energy. The consumers need to pay 3.70 sen per kilowatt-hour (kWh) or ¢0.08 of renewable energy and they will be provided with a Malaysian Renewable Energy Certificate. Under the GET programme, the government allotted 4,500 gigawatt-hours of renewable electricity that can be subscribed to.

“Our current forecast for nonhydropower renewables growth remains skewed towards solar power, as we have yet to notice any strong move by the government to advance biomass and waste growth and introduce wind power,” Thoo said in the report.

Malaysia also has a Feed-in Tariff system that mandates distribution licenses to purchase the generated electricity from renewable sources of Feed-in Approval Holders and set the rate.

Increasing renewable uptake

Malaysia has recently launched two programmes that will propel its energy transitions and green energy uptake.

Samat said the government announced in November 2022 a virtual power purchase agreement (VPPA) scheme through the Corporate Green Power Programme.

Under the programme, an eligible corporate consumer can enter into an agreement with a solar power producer to buy and sell renewable energy produced by the plant “under mutually agreed terms and conditions and price structure,” according to Malaysia’s Energy Commission.

The plant should be completed by 2025. The application for the programme ran from 7 November 2022 to 20 March 2023.

Samat also noted the launch of another GET this year offered by the largest electricity utility in Malaysia, Tenaga Nasional Berhad (TNB), with a cumulative quota of up to 6,600 gigawatthours for a subscription.

Residential and non-residential customers under the programme can subscribe to 100 kilowatt-hours (kWh) blocks, and 1,000 kWh blocks, respectively, for ¢0.08/kWh, according to TNB. They will receive Malaysia

COUNTRY REPORT: MALAYSIA

Renewable Energy Certificate and will be exempted from the imbalance cost passthrough from January to June 2023.

“I do believe Malaysia in its efforts to improve and grow the renewables,” Samat said. “The two new developments, CGPP and GET, are active measures and initiatives that should really improve and should really grow the renewables in Malaysia, in line with the target that we have.”

“Solar is going to be driving the growth for renewables with the economy picking up and a lot of more corporate players are looking to boost their ESG targets,” Samat said.

RE deployment challenges

With the current share of renewables in the generation capacity, Rystad Energy sees it is feasible for Malaysia to reach 31% renewables share target by 2025, “but this will require a serious commitment to expanding the solar PV and bioenergy fleet,” said Head of Power Research

Carlos Torres Diaz. “We expect close to 500 MW of new solar PV capacity to be installed in 2023 but the utilisation of coal and gas plants is likely to remain high as demand continues to increase,” Diaz said.

To reach the goal of 31% renewable energy share in 2025, the roadmap showed that large hydropower is expected to reach 5,826 MW, followed by solar by 4,706 MW. Smally hydro should reach 1,153 MW, biomass at 862 MW, and biogas at 333 MW.

The roadmap has also identified resource potential for the country with 269 GW for solar PV, lead by ground-mounted configurations with 201 GW, followed by rooftop solar with 42 GW and floating configurations at 17 GW. Malaysia also has 13.6 GW resource potential for large hydro, 3.6 GW for bioenergy, 2.5 GW for small hydro, and 229 MW for geothermal.

However, deploying them is not without challenges. Jun Yee Chew, head of Asian Renewables Research said that LSS is the only way to deploy utility-scale solar PV in the country, with foreign participation in the programme limited to 49%.

He added that as gas and coal receive government subsidies, this makes renewables less competitive, “artificially

driving the true cost of fossil fuel down and diverting much-needed investment in the renewables.” The roadmap said there is difficulty in deploying solar PVs in securing land for LSS as well as debt financing for solar rooftop systems. There is also a lack of regulatory framework for customer choice, capacity limits, and limitations on the NEM scheme to assets on the premises of the customers.

The country’s roadmap also cited a longer gestation period, high development costs, public acceptance, and government and policy support, amongst others as the key challenges in the development of large hydropower projects.

Moving forward

To achieve the goal for the solar sector by 2025, Malaysia’s roadmap stated that it will hinge on the existing programmes but will be paired with the potential new business models. Future NEM programmes will be reviewed whilst the offtake tariffs will gradually converge with energy costs, whilst NEM tariffs and grandfathering of contracts will remain which will create more incentives and boost the rate of NEM uptake.

Other business models will be explored aside from NEM and LSS, including corporate power purchase agreements (PPA), and third-party access frameworks. The roadmap also noted that they will look into other LSS auctions for solar that will take up lesser land such as floating solar.

Aside from expanding the corporate PPAs from the limited 600MW, the government should offer more incentives that will aid projects with higher upfront capital expenditure such as through low-interest loans, Chew said. One way Malaysia could do this is by seeking out the Just Energy Transition Partnership like in Indonesia and Vietnam.

Regulatory roadblocks should also be reduced to accelerate the deployment time of the project, improving the economics of developers. Transmission infrastructure should also be upgraded but it could be shared with the private sector due to high capital cost.

“Malaysia’s government should gradually remove fossil fuel subsidies to ensure renewables can compete on a level playing field. The fossil fuel subsidy money should also be used to invest in renewables,” Chew said.

Carlos Torres Diaz

Jun Yee Chew

Solar is going to be driving the growth for

renewables

Source: SEDA Malaysia

2025 government committed RE target and 2035 milestone

Source: SEDAMalaysia

Renewable energy surge increases the need for pumped hydropower storage

Asia is expected to outperform other regions for capacity growth.

As countries around the world strive to fully realise their energy transition by ramping up renewable energy capacity, another critical component is gaining traction: pumped hydropower storage. This technology is poised to become a game changer in addressing the intermittent nature of renewable energy sources, and the Asia Pacific region is set to take the lead on the global stage in terms of installed capacity.

Pumped hydropower storage is the “most scalable kind of energy storage solutions for markets” when compared to other solutions such as battery storage, hydrogen fuel cells, and gravity battery storage. The sector dominates the total energy storage capacity, accounting for 90% of the total capacity, according to the International Hydropower Association.

“Pumped hydropower will see sustained capacity growth over our forecast period as intermittent renewable generation rises,” according to Fitch Solutions.

The pumped hydropower capacity is projected to increase at an annual average rate of 3.5% from 165 gigawatts (GW) in end-2021 to reach 233GW in 2031.

Asia’s capacity

Asia’s capacity is expected to reach 82 GW in 2023 and 134 GW in 2031.

“We expect Asia to outperform other regions for pumped hydropower capacity growth, overtaking the North America and Western Europe’s (NAWE) installed

We expect Asia to outperform other regions for pumped hydropower capacity growth

pumped hydropower capacity in 2023, with developments chiefly concentrated in Mainland China,” Fitch said.

Fitch said China’s pumped hydropower capacity growth is anchored on the National Energy Administration’s target to reach 62GW by 2025 and reach 120GW installed capacity by 2030. To meet these targets the government aims to start constructing 200 pumped hydropower projects in 2025, with a total of 270GW capacity. Meanwhile, other markets in the region with pumped hydropower capacities such

as Australia, Japan, Thailand, and Indonesia, also have projects that are expected to start operations within the next 10 years.

Some of the recent projects and developments in the region include the completion of China’s Jilin Dunhua pumped hydropower storage in April 2022 upon the operation of its fourth unit with a 350-megawatt (MW) capacity. The first unit of the 3.6GW Fengning pumped storage facility also started operation in December 2021, providing 600MW support to the Winter

Global - Pumped Hydropwer Capacity by Region, GW

e/f=FitchSolutionsestimate/forecast.Source:EIA,Localsources,FitchSolutions

The projected capacity growth of pumped hydropower storage is chiefly concentrated in Mainland China

ASIA PACIFIC

Global Pumped Hydropower Capacity Growth Follows Renewables Expansion

Global - Pumped Hydropower Capacity, GW, & Growth Rate, %, & NonHydropower Capacity Growth Rate, % (2021-2031)

Installed Pumped Hydropower Stations Limited to 40 Markets Worldwide Global - Heat Map of Net Pumped Hydropower Capacity, MW (2021e)

Olympics, according to the International Hydropower Association (IHA).

The association also noted the financial closure of Australia’s 250MW Kidston Stage 2 project in May 2021 which could store and discharge energy for up to eight hours once completed. Indonesia also announced its first pumped storage plant, the 1,040MW Upper Cisokan facility which is supported by the World Bank.

South Korea is also building three new projects with a total capacity of 1.8GW which are expected to be completed by 2034. India, meanwhile, stated in its Draft National electricity Policy 2021 its 96.5GW pumped hydropower storage potential with only 4.78GW had been developed so far.

Uzbekistan is also planning to develop a 200MW facility and floating solar station in the Tashkent region, whilst Israel aims to double its capacity to 644MW from 300MW when the Kokhav Hayarden project starts operations in early 2023, the IHA report said.

What analysts say:

Senior

Leading market

According to Fitch Solutions, NAWE region is the leading pumped hydropower market, with a capacity of 78 GW or around 47% of the total globally.

The US is driving the sector’s growth in the region with 30% of the capacity in NAWE located in the country, and it accounts for 13 of the 24 projects in the pipeline. However, the country’s capacity is expected to grow only by about 1GW over the next 10 years, with all projects in the pipeline still in the planning stages, and there is limited clarity on the part of the government on how to achieve the sector’s potential.

Western Europe, which has a welldeveloped hydropower sector, is expected to see limited growth for the next 10 years which will be led by Greece and Switzerland, which will increase their capacities by around 750 megawatts (MW) and 360 MW from 2022 to 2031, respectively.

Pumped hydro is creating system flexibility for your generators and for your grid operator, any country that is hoping to move forward with a decarbonisation plan that relies heavily on variable resources or resources that have a lot of seasonality to them. Variable means, a day-to-day variability, like solar which generates during the day and not at night. Wind happens to usually generate better at night and not during the day. Hydropower tends to generate better during the rainy season and worse during the dry season. All of these can be smoothed out by storage, and that’s where your pumped hydro comes in.

Pumped hydro is the majority of storage in the world and the energy sector. All this talk about batteries, pumped hydro is still 90% of all the energy storage in the world. I don’t think that it is going to change necessarily until we run out of places to build pumped hydro.

It does have geological constraints. You need to have specific conditions. You need to have a high area for a reservoir and a low area for a reservoir so that you can actually build the pumped hydro facility that goes from a high reservoir to a low reservoir and then send it back up when power rates are cheap but extremely important for the energy transition. Any country that is looking at any of those variable generation sources should and could be thinking about pumped hydro, as long as they have the right conditions.

Pumped hydropower will be the key energy storage solution over the coming 10 years

Difficulties and opportunities

Markets need to have access to water reservoirs at high altitudes to develop pumped hydropower, making it challenging to be adopted particularly by markets with flat terrains and lack major rivers or reservoirs.

Out of the 117 markets covered by Fitch, pumped hydropower projects are only being installed in 40 markets.

“For markets that are unable to adopt pumped hydropower, renewables uptake will have to go in hand with other forms of energy storage solutions. Regardless, pumped hydropower storage will remain the key energy storage solution over the coming 10 years,” Fitch said.

Fitch added that the attractiveness of projects that combine floating solar with pumped hydropower will increase, noting that some of the floating solar projects were built on pumped hydropower station reservoirs.

Zulfikar Yurnaidi

Senior Officer of Renewable Energy and Energy Efficiency Department, ASEAN Centre for Energy: Pumped storage hydropower is very crucial for the energy transition because, currently, the storage options that we have is batteries, the lithium. The battery is mostly designed mostly for smaller applications such as for our phones up to car applications. It is characteristically not for the power system. Other solutions of storage, in addition to lithium batteries, are required and pumped-up hydro is one of the good solutions for it because we have lots of potential for this in the region. However, there are challenges in the planning and policy requirement sides in pushing for this pumped-up hydropower storage. Maybe we also have to think of something similar to other hydropower generation issues such as the potential environmental impact because when we have these water resources such as dams for hydropower or pumped-up hydro, it will affect the other system including the agriculture system, the water system, and also partly maybe the ecosystem as well. This needs to be properly investigated before we jump into having this pumped-up hydropower. First and foremost, we need to assess its potential. We had some higher-level studies that looked at the general mapping and the potential location. But we need a more detailed study to understand which parts have the higher potential and how much it costs. That one is not there yet.

e/f=FitchSolutionsestimate/forecast.Source:EIA,IRENA,localsources,FitchSolutions

e = Fitch Solutions estimate. Source: EIA, local sources, Fitch Solutions

David Fishman

Manager, The Lantau Group:

Lighting up the future with the winners of the Asian Power Awards 2022

With the continued rise in demand for renewable energy and the climate crisis pushing harder on the industry, more sustainable models have been the focus for companies in order to continue thriving amidst the challenges. In its 18th year, the Asian Power Awards recognises revolutionary innovations and outstanding initiatives amongst the players in the power industry of Asia.

Nominations for the prestigious awards programme were screened under the meticulous eyes of this year’s expert panel of judges made up of Petteri Harkki, Managing Director, AFRY South-East Asia and AFRY (Thailand);

Asian Power Awards 2022

Battery Storage Project of the Year

• Gold - The Demonstration Project of V2G Technology for Electric Vehicles by Taiwan Power Company

• Silver - Kabankalan Battery-based Energy Storage System Continues Energy Transition in the Philippines by Fluence

Biomass Power Project of the Year

• Gold - MOBG (Mobile Gasifier) as An Environmentally Friendly Generator Solution on Remote Islands by PT Pembangkit Jawa Bali

• Silver - Co-Firing Bio Mass as a Green Solution of New Renewable Energy by PT PJB SERVICES

Coal Power Project of the Year

• Gold - GoSeong Green Power by Emerson

• Silver - Engro Powergen Thar Limited (EPLT)

• Bronze - Simpang Belimbing Coal Fired Power Plant by PT. GH EMM Indonesia

District Cooling Initiative of the Year

• UAE - Emirates District Cooling

Environmental Upgrade of the Year

• India - Lalitpur Power Generation Company Limited

• Vietnam - PROINSO

ESG Programme of the Year

• India - THE TATA POWER COMPANY LIMITED

• Indonesia - PT Shenhua Guohua Pembangkitan Jawa Bali

• Malaysia - TNB INTEGRATED LEARNING SOLUTION – ILSAS

• Philippines - Mangrove Earth Balling and Planting in Quezon Province, Philippines by Quezon Power (Philippines), Limited Co. and San Buenaventura Power Ltd. Co.

• Taiwan - The Taiwan-Penghu Submarine Cable Project by Taiwan Power Company

Flexible Gas Power Project of the Year

• Gold - Improvement to Overcome Intake Air Filter Clogging in PLTGU Blok 3 UP Muara Karang Jakarta by PT Pembangkit Jawa Bali

Gas Engine Combined Cycle Power Project of the Year

• Gold - The Most Efficient Power Plant in Indonesia: Muara Karang GTCC Power Station Expansion by PT. PLN Nusantara Power and Mitsubishi Power

• Silver - Bangpa-in Cogeneration Steam Turbine Load Adjustment by CK Power Public Company Limited

• Bronze - The Taichung Combined Cycle Power Plant Project by Taiwan Power Company

Gas Power Project of the Year

• Bahrain - Al Dur 2 IWPP by ACWA Power

• Indonesia - The Most Efficient Power Plant in Indonesia: Muara Karang GTCC Power Station Expansion by PT. PLN Nusantara Power and Mitsubishi Power

• Thailand - Portfolio financing of 980 MW B.Grimm 7 SPPs projects - the first ever SPP replacement project in Thailand by B.Grimm Power Public Company Limited

Wen Bin Lim, Director, Infrastructure Advisory, Head of Renewables, KPMG Asia Pacific; Gervasius Samosir, Partner, YCP Solidiance; Mike Thomas, Managing Director, The Lantau Group; and John Yeap, Senior Advisor, Pinsent Masons.

The awards presentations were held virtually from the end of November to early December 2022.

Congratulations to the winners!

Hydro Power Project of the Year

• Gold - Hwacheon Hydro Power Plant of HanGang Hydro Power Site, Korea Hydro & Nuclear Power by Emerson

Independent Power Producer of the Year

• India - Azure Power

• Indonesia - PT. GH EMM Indonesia

• Nepal - Api Power Company Limited

• Thailand - Constant Energy

Innovative Power Technology of the Year

• China - Huadian Kemen Power Plant 600MW Unit Coordinated Control Optimization Project by Emerson

• India - Robotic Desilting by Adani Power Limited

• Indonesia - Simpang Belimbing Coal Fired Power Plant by PT. GH EMM Indonesia

• Philippines - D2D Stage 1: Data Advantage Strategy by AboitizPower - Coal Business Unit

• Thailand - CMU Smart City Project – Creating Smart Green Living for All by BCPG Public Company Limited

• UAE - Fujairah Asia Power Company

Power Plant Upgrade of the Year

• Bangladesh - Feni Lanka Power Limited

Power Project Finance House of the Year

• Gold - KASIKORNBANK PUBLIC COMPANY LIMITED

Power Utility of the Year

• India - The Tata Power Company Limited.

• Indonesia - PT Pembangkit Jawa Bali

• Korea - Korea South-East Power Co., Ltd.

• Pakistan - K- Electric Limited

• Thailand - CK Power Public Company Limited

• UAE - Fujairah Asia Power Company

• Vietnam - TNPower Energy Joint Stock Company

R&D Project of the Year

• ENGIE Lab Singapore

Smart Grid Project of the Year

• India - THE TATA POWER COMPANY LIMITED

• Singapore - Singapore’s first Smart and Green Port through a co-developed Smart Grid Management System (SGMS) by PSA Corporation Limited & Envision Digital

Solar Power Initiative of the Year

• Philippines - Solar Schools Electrification Project by National Electrification Administration

• Thailand - CMU Smart City Project – Creating Smart Green Living for All by BCPG Public Company Limited

Solar Power Project of the Year

• Australia - EDL

• Bangladesh - Infrastructure Development Company Limited

• Cambodia - One of the Pioneer Non-Recourse Solar Power Project Financing in Cambodia by Ray Power Supply Co., Ltd

• India - Azure Power – Rajasthan 6 - 600 MWs Solar Power Project by Azure Power

• Indonesia - The Bawean Solar Power Plant in Increasing New Renewable Energy Growth by PT PJB SERVICES

• Nepal - Chandranighapur Solar Project, 4 MW by Api Power Company Limited

• Saudi Arabia - Sudair Solar PV IPP by ACWA Power

• Singapore - Sembcorp Tengeh Floating Solar Farm - One of the world’s largest inland floating solar photovoltaic (PV) systems by Sembcorp Solar Singapore Pte Ltd

• Vietnam - LOC NINH 1,2,3 POWER PLANT (550MWp) by POWERCHINA VIETNAM LIMITED COMPANY & POWERCHINA ZHONGNAN ENGINEERING CORPORATION LIMITED

• Uzbekistan - TOTAL EREN

Standby Power Plant of the Year

• Gold - The Demonstration Project of V2G Technology for Electric Vehicles by Taiwan Power Company

• Silver - Geothermal Power Plant Ulumbu by PT Cogindo DayaBersama

Transmission & Distribution Project of the Year

• Gold - CLP Power Hong Kong Limited

• Silver - The Taiwan-Penghu Submarine Cable Project by Taiwan Power Company

• Bronze - Tata Power Delhi Distribution Limited

Wind Power Project of the Year

• China - Shandong Songjia Liqi 100MW Flexible Tower Wind Power Project by Emerson

• India - ENERCON WINDENERGY PVT.LTD.

• Vietnam - Lotus Wind Power by Asian Development Bank

CEO of the Year

• Mohamed Jameel Al Ramahi of Masdar (Abu Dhabi Future Energy Company PJSC)

Taiwan Power Company

ENGIE Lab Singapore

Korea South-East Power Co., Ltd.

Emirates District Cooling

Azure Power

Quezon Power (Philippines), Limited Co. and San Buenaventura Power Ltd. Co.

B.Grimm Power Public Company Limited and Ray Power Supply Co., Ltd.

PT Shenhua Guohua Pembangkitan Jawa Bali

CK Power Public Company Limited

Gas Power Project of the Year - Thailand

B.Grimm clinches Gas Power Project of the Year - Thailand at Asian Power Awards 2022

The company spearheaded the first-ever SPP replacement project in Thailand.

Energy corporation B.Grimm Power Public Company Limited brought home the Gas Power Project of the Year - Thailand at the Asian Power Awards 2022 for the portfolio financing of its 980MW seven Small Power Producer (SPP) projects, including the first-ever SPP Replacement projects in Thailand.

The SPP projects consist of seven gas-fired cogeneration power projects with an installed capacity of approximately 140MW each to be developed and operated by six project companies. They will be located in four different industrial estates, namely: Amata City Chonburi Industrial Estate and Laem Chabang Industrial Estate in Chonburi Province, Asia Industrial Estate in Rayong Province, and S Angthong Industrial Estate in Angthong Province.

Each project uses up-to-date technology of gas turbine generators and steam turbine generators manufactured by one of the world-class power equipment manufacturers. The technology and the upgrade to this newest model of equipment have a proven track record of improved efficiency in electricity generation from power producers around the world.

Out of the seven projects, two would sell

electricity to the Electricity Generating Authority of Thailand (EGAT) under the 90MW power purchase agreement, or the Old SPP Scheme, whilst the other five projects would sell electricity to EGAT under the 30MW power purchase agreement, also known as the SPP Replacement Scheme.

SPP Replacement Scheme

The SPP Replacement Scheme is a new concept in Thailand, and there has been no other precedent case of project financing for this scheme before. In addition, with the lower portion of electricity sold to EGAT, compared to the Old SPP Scheme, the SPP Replacement Scheme’s different risk profile has posed a new challenge for project financing arrangements. Meanwhile, as all projects are expected to be operational within 2022 and 2023, B.Grimm, in collaboration with Kasikornbank Public Company Limited (KBank) as its financial advisor for the arrangement of project financing, set the challenging but attainable goal to achieve the financial close for the total loan required from the same group of syndicated lenders.

The total term loan facility of TH฿29.585m has been successfully arranged by KBank as a financial

advisor to B.Grimm on a project financing basis. With good risk and mitigation, well-planned and executed financing arrangement endeavour of B.Grimm and KBank, all projects have been managed to successfully raise sufficient debt financing in 2020 and 2021.

B.Grimm Power, with the vision of “Empowering the world compassionately”, is one of Thailand’s leading industrial power producers which has been focused on cleaner energy production through its co-generation and renewable energy power plants. The company’s goal is to enlarge the proportion of clean power in its overall energy portfolio, as part of the effort to reduce global warming and take care of the environment in a sustainable way.

B.Grimm Power’s current portfolio includes 56 projects in operation and aims to ramp up its total installed capacity to at least 7,200MW of secured power purchase agreements by 2025, and further to 10,000MW by 2030. More importantly, B.Grimm Power is moving strenuously towards realising net-zero carbon emissions by 2050.

Now in its 18th year, the prestigious awards programme recognised groundbreaking projects and trailblazing initiatives in Asia’s power sector.

B.Grimm Power’s goal is to enlarge the proportion of clean power in its overall energy portfolio, as part of the effort to reduce global warming and take care of the environment in a sustainable way

B.Grimm Power, Industrial Power Plants

A Green Energy Hub for a Sustainable Tomorrow

CLP Power is focused on decarbonising its power business, and its Ho To West Substation project won at the Asian Power Awards for its environmentally-friendly design.

Solar panels will be installed on the roof to capture sunlight and convert it into power to run the substation. A rainwater harvest system will reduce freshwater consumption by 80% while water-efficient fixtures will reduce sewage by more than 50%.

Energy-saving LED lighting and other energyefficient installations will meanwhile reduce carbon emissions by 10%, and electric vehicle chargers will be fitted in the substation to encourage green motoring and further reduce emissions.

As well as its green features, the design symbolises the close partnership between Hong Kong and the Mainland with twisting architectural fins on the exterior walls representing the coming together of the two Greater Bay Area cities of Shenzhen and Hong Kong.

A Model Development

Creating a sustainable energy future is more than an abstract concept: it is an objective that can sometimes be seen, felt, and experienced in the very fabric of the facilities and buildings needed to make it a reality.

CLP Power’s Ho To West 132kV Substation project in Hong Kong is an outstanding example—an inspired development that mirrors its purpose as an energy hub of the future and is as different from a traditional functional electricity substation as you could imagine.

With solar panels and vegetation covering its rooftop and vertical walls, a rainwater harvest system, and a host of other energy-saving features, it is a substation meticulously designed to help Hong Kong towards a sustainable tomorrow.

CLP Power won the gold award for Transmission & Distribution Project of the Year at the Asian Power Awards for the substation’s design, reflecting the company’s commitment to innovate and decarbonise and to be an influential agent in the fight against climate change.

An Engine

for Sustainable Growth

Ho To West Substation will provide a world-class

power supply to the Lok Ma Chau Loop area serving the Hong Kong-Shenzhen Innovation and Technology Park, an exciting new hub for hi-tech research and development and creative industries.

Fringed by the meandering Shenzhen River, the park is designed to strengthen the strategic role of Hong Kong and Shenzhen in the Pan-Pearl River Delta regional cooperation framework.

CLP Power adopted an innovative, green design for the substation to optimise its environmental performance and to echo the theme of sustainable development that permeates the Lok Ma Chau Loop area.

An Intelligent Green Design

The substation will be built on a compact site and has been designed to minimise its visual impact on the neighbourhood. It will be only two storeys high and will have vegetation on its rooftop and vertical walls to make it blend into the surrounding green environment.

The vegetation will not only make the substation a more attractive and comfortable workplace but will also play a role in supporting the surrounding microclimate.

Cutting-edge technologies have been deployed in the creation of the new substation, including Building Information Modelling, Virtual Reality, and Computational Fluid Dynamics modelling.

The use of these technologies has allowed CLP Power to create a 3D model of the substation in the early design stages to show all project stakeholders and demonstrate how it can be built and operated with a vastly reduced carbon footprint. During the construction stage, green practices will be implemented to reduce building waste by 70%.

Environmental considerations have been put at the forefront of CLP Power’s thinking throughout the project planning process, from material selection to energy efficiency and water conservation.

CLP Power Senior Director of Power Systems Mr Eric Cheung said CLP Power was honoured to receive the award for the substation as it recognised the efforts of the project team. “CLP Power is committed to decarbonise our business and provide reliable and greener energy to our customers,” he said. “We will continue to adopt sustainable features and innovative technology as we design our future substations.”

The Ho To West Substation reflects CLP Power’s commitment to sustainability and will be a milestone on Hong Kong’s journey to achieve carbon neutrality before 2050.

It is a project that bridges the gap between what is possible and what is achievable, drawing on technology and dedication to environmental targets to create a green energy hub and a substation for a sustainable future.

Transmission & Distribution Project of the Year - Gold

CLP Power Senior Director of Power Systems Mr Eric Cheung (middle) and Director of Transmission Mr Alex Wong (second from left) receive the award for the project

The Ho To West Substation

Korea South-East Power Co., Ltd recognised with Power Utility of the Year - Korea at the Asian Power Awards

It manages Yeongheung Thermal Power Plant Units 5 and 6 as the most advanced high-efficiency environmental facility.

Korea South-East Power Co. Ltd (KOEN) has a large share in the total installed power generation capacity in South Korea. To ensure a stable and reliable power supply in the metropolitan area, the Yeongheung Power Plant operates Units 1-6(5,080MW) and 70.3MW of renewable energy facilities (wind, solar and hydropower). It serves as the only base load power plant in the metropolitan area, responsible for alleviating the power supply imbalance (accounting for 23% of the power consumption in the metropolitan area) and ensuring the stability of the national power grid. In particular, Units 5 and 6 at Yeongheung Power Plant are equipped with advanced, high-efficiency power generation and environmental facilities, managing atmospheric pollutant emissions at the highest level in Asia.

KOEN is introducing cutting-edge technology to minimise environmental impact in power generation operations. Starting from the turbine bidding stage, efficiency was actively reflected in the evaluation criteria for technical specifications

to select the winning bidder. They applied 45-inch rotating blades, the first of its kind in Korea, and increased efficiency by 0.4% to 0.7% compared to the existing power plant.

By increasing efficiency compared to existing power plants, they are reducing the amount of fuel (coal) required to produce the same amount of power, contributing to minimising environmental impact by reducing greenhouse gas and air pollutant emissions. In addition, they are minimising air pollution by introducing the world’s most advanced high-efficiency environmental facilities, such as desulphurisation equipment (with an efficiency of over 98.3%), denitrification equipment (with an efficiency of over 92.7%), and electrostatic precipitators (with an efficiency of over 99.7%).

Innovative approach to sustainable growth

To practice low-carbon green growth, KOEN is also making efforts in renewable energy businesses. They refine combustion residues (waste) generated from coal-fired power plants into concrete

mixtures for recycling. Residues with insufficient recycling rates are mixed with semi-hardened soil and heated to produce artificial lightweight aggregates. In addition, KOEN continues to strive to supply clean and safe energy based on a vision of being a “Clean & Smart Energy Leader” through various facilities and technologies, such as applying high-efficiency power generation equipment to minimise environmental impact.

KOEN is introducing cutting-edge technology to minimise environmental impact in power generation operations

Yeongheung Power Plant Units 5 and 6

Yeongheung Wind Power

The transition-leading REIDS-SPORE demonstrator recognised as the Asian R&D Project of the Year

Singapore has accumulated return on experiences and critical learnings, making it a centre of expertise, a provider of low-carbon solutions and a forum for businesses, academic institutions, and professionals to gain the necessary knowledge to accelerate the transition.

ENGIE Lab Singapore was awarded the R&D Project of the Year for its REIDS-SPORE (Renewable Energy Integration Demonstration Singapore – Sustainable Power for Off-grid Regions) microgrid. The REIDS-SPORE microgrid is a unique research and development (R&D) energy demonstrator on Semakau Landfill off the Southern shores of Singapore mainland and the largest multifluid microgrid pilot in Southeast Asia.

REIDS-SPORE was originally conceived to develop, derisk and demonstrate sustainable and affordable solutions for remote and underserved communities. Assuredly, numerous regions, specifically in Asia-Pacific, are still facing unreliable grids coupled with exorbitant connection

kW Wind Turbine, a 50 kW Hydrogen Power-toPower System with 2 MWh of hydrogen storage, a Hydrogen Refuelling Station, a Hydrogen Fuel Cell Electric Vehicle, a 300 kVA Load Emulator, a 200 kW/600 kWh Battery Energy Storage System and 200 kVA of Diesel Generators. All these technologies together are tied in a multi-layered control, monitoring and optimisation system based on ENGIE’s proprietary Energy Management software. ENGIE Lab Singapore is now combining these innovative technologies to develop modular microgrids and hybrid solutions that address the pressing concerns of sustainability, energy access, and affordability. These solutions not only offer enhanced control and coordination instruments

“Not only a relevant research project for the energy transition, but the REIDS-SPORE demonstrator also hosts an empowering vision of the energy industry’s future. And it appears this vision is even more important with the ongoing war in Ukraine. The readily deployable solutions we develop in Singapore can be rapidly leveraged by corporates, public authorities and communities looking to reduce dependencies on fossil fuel supplies exposed to supply chain disruptions and energy price volatility. But also, the technologies we develop can increase energy security and reliability while minimising greenhouse gas emissions and improving air quality. Adopting those technologies will thus reduce recurrent expenses and improve population well-being” explained Loic Villocel, Managing Director of ENGIE Lab Singapore.

Operating and maintaining the REIDS-SPORE demonstrator undoubtedly proves ENGIE’s commitment to accelerating clean energy innovation cycles, pushing commercial testbeds and developing relevant, affordable, and adapted solutions for regions in need. In this context, the recently rewarded REIDS-SPORE microgrid acts as a leading and exemplary R&D facility to accelerate the energy transition globally.

costs today. To overcome these challenges, the traditional solution consists of localised electricity generation using highly polluting diesel generators. Without shifting quickly from fossil fuels to renewables, Asia-Pacific and its remote and underserved communities will be increasingly vulnerable and exposed to climate risk with progressively serious, centuries-long and, in some cases, irreversible consequences. Helping them maintain economic opportunities and keep a place on the global stage is the credo pursued by ENGIE Lab Singapore. Through the pursuit of innovative R&D breakthroughs and with the support of the ENGIE research network, ENGIE Lab Singapore can continuously improve the solutions embedded in the REIDS-SPORE demonstrator at the most qualitative level of execution.

The REID-SPORE Microgrid Technology

Today, the REIDS-SPORE demonstrator consists of a smart multifluid microgrid that generates, stores, and uses green hydrogen and renewable electricity under harsh conditions. It currently hosts the following technologies: 200 kWp of Solar PV Panels, a 100

but also provide viable and innovative options for players facing these challenges.

Due to this unique complexity, the REIDS-SPORE’s mandate has recently expanded to include the development of integrated energy solutions for urban settings, both to meet today’s challenges and favour a sustainable vision for the future energy grid.

After almost five years of engineering, procurement, construction and commissioning, the REIDS-SPORE platform is fully operational 24/7. It is ready to support regions in need, demonstrate ENGIE’s technical know-how, and testbed new and promising solutions for both urban and remote applications. From conception, planning, and design to procurement, construction, and commissioning, many lessons were learnt and shared with players visiting the demonstrator.

ENGIE’s Commitment to Clean Energy Innovation

By continuously improving the demonstrator, ENGIE Lab Singapore is actively illustrating how it can help players deliver cost-competitively their sustainability projects. Over the years, ENGIE Lab

ENGIE Lab Singapore continues to gain global trust and recognition for its R&D expertise and operational excellence.

Not only a relevant research project for the energy transition, but the REIDS-SPORE demonstrator also hosts an empowering vision of the energy industry’s future

ENGIE Lab Singapore

Loic Villocel, Managing Director of ENGIE Lab Singapore

AboitizPower data strategy programme named Asian Power Awards’ Innovative Power Technology of the Year

With the emergence of artificial intelligence (AI) being used as a main tool in harnessing large amounts of data, competition between tech giants on the global stage continues to heat up, with companies pouring billions of dollars into developing AIpowered technologies that could either chat with you, create art, write essays, or even generate an AI version of your face.

But it’s not only in Silicon Valley where exciting things happen in the world of tech. Recently, the “Oscars” of the power industry recognised a Philippine energy company that exemplified gamechanging innovation, by strategically using and processing data to improve power plant efficiency and reduce operational threats.

For this, the 19th Asian Power Awards honoured AboitizPower-Coal Business Unit’s D2D Stage 1: Data Advantage Strategy as the “Innovative Power Technology of the Year” for 2022.

“Being a recipient of this award is a stark validation that AboitizPower is on the right track with its trajectory into the future,” said Celso Caballero, President and Chief Operating Officer of Therma Luzon, Inc. Coal Business Unit.

“AboitizPower’s Thermal Business Group has tangible assets to support the country’s energy transition. And as custodians of these assets, we need to protect, optimise, and advance them to provide reliable, reasonable and responsiblyproduced power,” Caballero added.

Transforming data into value

With vast amounts of assets available at power plants, the opportunities to access data and the possibilities for analytics study are endless. But simply using raw operational data won’t suffice in optimising analytic studies. Thus, the Data Advantage Strategy was conceptualised and developed to turn data into value.

The programme is part of AboitizPower’s forwardthinking ‘D2D (Data to Decision) Project,’ which strategically applies data science and AI, by using algorithms and machine learning models, to detect and preempt issues at the power plants.

The Operations Technology team anchored upon the proven foundations of the Data Advantage Strategy to successfully carry out its goal of achieving operational excellence through in-depth, crossfunctional analysis, and applying insights by providing available data-on-demand.

Data is organised by arranging it in a catalogue, per process, and follows the global power plant organising system. This ensures standardised naming and coding across the organisation.

Then, data is shared across multiple locations of the AboitizPower Thermal Business Group. Through

operators and decision-makers. It also helps improve efficiency at the power plants, so as to ultimately deliver a reliable stream of electricity to the grid.

In the beginning, the team was faced with millions upon millions of “dirty data”—items that didn’t have tags and identifiers.

Cybersecurity was also a major concern. The team had to make sure that the data transfer to its open communication platform was secure and free from cyber threats. This was resolved by subscribing and transferring data with the observance of the highest compliance to operational technology and cybersecurity practices.

With regard to the bulk of unprocessed data, the team took an unconventional route. AboitizPower tapped the capabilities of a 61-strong, all-women AI and data annotation team, who identified and classified the data set, comprising 2,870 asset tags, in just three days.

This digitalisation initiative by AboitizPower is a testament to its thrust in Transforming Energy for a Better World and is indeed worthy of recognition.

“The bedrock of AboitizPower Thermal Business Group is to build the future of energy by leading that energy transition and ensuring energy security and equity. Together, we continue to move in becoming the first techglomerate in the Philippines,” Caballero said.

a single source, data is made available almost anywhere in the organisation.

Finally, data is monitored by having a single dashboard for any team member to look at, making it easy to spot issues and hand down decisions right away.

The programme tries to make sense of millions of data points in a power plant and provides insights that allow for quick strategic thinking amongst plant

The AboitizPower Thermal Business Group manages and operates the thermal power generation assets of Aboitiz Power Corporation. Our coal and oil assets provide much-needed reliable power to the Philippine grid. Our promise is the same across all our facilities — to advance business and communities through our mission of providing reliable, reasonable, and responsibly-produced power. Together with you as our partners, we can continue to transform energy for a better world.

The energy company was recognised for using data to improve efficiency.

The bedrock of AboitizPower Thermal Business Group is to build the future of energy by leading that energy transition and ensuring energy security and equity. Together, we continue to move in becoming the first techglomerate in the Philippines

AboitizPower-Coal Business Unit

EMICOOL wins District Cooling Initiative of the YearUAE award at Asian Power Awards 2022

Emirates District Cooling Company (EMICOOL), a joint venture between Dubai Investments, a leading investment company listed on the Dubai Financial Market (DFM) and Actis, a leading global investor in sustainable infrastructure, was awarded the “District Cooling Initiative of the Year- UAE” at the Asian Power Awards 2022 for implementing and adopting innovative district cooling solutions as compared to conventional solutions.

In its 18th year, the Asian Power Awards recognises revolutionary innovations and outstanding initiatives amongst the players in the power industry of Asia and nominations for the prestigious awards were screened by an expert panel of judges.

Commenting on winning the award, Dr Adib Moubadder, Chief Executive Officer for Emicool, said, “Emicool has managed to set up new norms

and reshaped the district model to support a green development that educates the stakeholders within the supply chain on the benefits of using district cooling in an optimised way. Our Emicool-powered AI-enabled Expo 2020 district cooling plant is designed to maintain the highest international standards, incorporating special architectural elements without compromising the technical requirements and we are extremely happy to be recognised for our efforts and innovations with this plant at the Asian Power Awards 2022.”

Efficient and sustainable cooling solutions

Emicool is providing chilled water for many prestigious facilities at Expo 2020 including the Expo village, RTA Expo Metro Station, Dubai Exhibition Centre, and Dubai South Mall. The plant is controlled and monitored using highly advanced software with a prime focus on efficiency

management and can be utilised from a UMS (unmanned space), enabling efficiently run plants without operator interferences.

The Expo plant has also been uniquely designed to operate using direct Treated Sewage Effluent (TSE) feed, which provides better discharge quality and ensures a more sustainable approach to watercooling mechanisms.

Emicool’s strategic focus on digital transformation, enabling remotely controlled processes, facilitating instant connection and disconnection through the automated centralised software, minimising turnaround time of registration and cancellation processes, increasing customer satisfaction, and enhancing the experience are all initiatives contributing to Emicool’s vision to be recognised as a world-class provider of reliable and efficient district cooling services in the region.

The Emirates-based joint venture was recognised for innovative district cooling solutions.

Emicool wins at Asian Power Awards

District cooling solutions

Emicool, a joint venture between Dubai Investments and Actis

Emicool has managed to set up new norms and reshaped the district model to support a green development that educates the stakeholders within the supply chain on the benefits of using district cooling in an optimised way

Solar Power Project of the Year - Vietnam

PowerChina builds Southeast Asia’s largest solar power plant in Vietnam

than 1,000 installation/operation personnel, provided over 5,000 job opportunities, and built more than 30km of quality roads for the local communities.

POWERCHINA’s renewable expansion

POWERCHINA takes project development as the driving force to drive design and construction, equipment manufacturing, and power plant operation and maintenance businesses and build a high-quality localized business ecosystem. POWERCHINA proves itself with strength and wins the market with its reputation. Up to now, POWERCHINA has com pleted 50 renewable energy projects in Vietnam, including onshore wind power, offshore wind power and photovoltaic, with a total installed capacity of 5,540 MW, making it the largest EPC contractor of the power sector in Vietnam for 4 consecutive years.

The Loc Ninh solar power project is one of the largest photovoltaic power plants constructed in Southeast Asia so far, with a total installed capacity of 550MWp. It is located in Loc Ninh District, Binh Phuoc Province of Vietnam, consisting of Loc Ninh 1 (200MWp), Loc Ninh 2 (200MWp), Loc Ninh 3 (150MWp) and a 220kV step-up substation (utilised by the above 3 plants) which are implemented simultaneously. The project has been jointly undertaken by Powerchina International Group Ltd. (POWERCHINA INTERNATIONAL) and Powerchina

Zhongnan Engineering Co. Ltd. (POWERCHINA ZHONGNAN), both of which are subsidiaries of POWERCHINA – which is a Fortune Global 500.

Resilience amidst crisis

Throughout the construction period of the Project, the COVID-19 pandemic was ravaging the world. POWERCHINA INTERNATIONAL and POWERCHINA

ZHONGNAN, honouring the contract, had adopted a grid-based and closed-off management methodology, established an automatic temperature measurement system and provisioned sufficient medical supplies to minimise the health risk of all workers on site. After a series of effective antipandemic measures, the Project finally achieved zero COVID infection during the construction period. In order to compensate for the delays in equipment supply caused by the logistics “Black Swan Event” during the COVID-19 pandemic and disruptions in the rainy season, all teams from employers and contractors working on the Project had stuck together closely sparing no efforts for mutual goal day and night. Finally, over 180,000 piles, 20,000 sets of support structures and 1.2 million PV panels were properly installed.

POWERCHINA INTERNATIONAL and POWERCHINA ZHONGNAN aim to serve the Belt and Road initiative, adhering to the spirit of “extensive consultation, joint contribution, and shared benefits,” and have donated living, entertainment, and office supplies to local schools and temples. Meanwhile, the construction of the project has trained more

As a specialized company with a history of more than 70 years and profound technology accumulation, POWERCHINA ZHONGNAN has actively participated in and successfully implemented a large number of major milestone hydropower and municipal projects in China, and won numerous industry recognitions.

Since the beginning of the 21st century, POWERCHINA ZHONGNAN has been committed to technology development, resource planning, survey and design, EPC and investment in the renewable energy field at both domestic and international markets, giving full play to its own technical and management advantages, successfully implemented many classic projects and continuously achieving business breakthroughs, which makes it an international new energy construction enterprise with influence.

Looking into the future, POWERCHINA ZHONGNAN will continue to insist on technology and management as its core competence, actively participate in and serve the economic development and energy transformation strategies, create more value for our clients and partners, and make due contributions to the economic development of the world. For more information, please visit: https://www.msdi.cn/en/

The Loc Ninh solar power project overcame supply chain disruptions and adverse weather conditions.

220kV Substation

Aerial view of Loc Ninh solar power project (partial)

POWERCHINA ZHONGNAN will continue to insist on technology and management as its core competence and make due contributions to the economic development of the world

Zhou Qi, Overseas Business Department, PowerChina

Jawa 7: Indonesia’s Most Environmental Friendly CFPP Ready to Support Energy Transition

100% and helped 3.677 Terate villagers during the COVID-19 pandemic.

To ensure safe, reliable, efficient and environmentally friendly electricity production generated by Jawa 7, SGPJB has implemented Quality Management System ISO 9001:2015 and ISO/IEC 17025 for laboratory testing and calibration. As the backbone of the Java-MaduraBali electricity system, SGPJB continuously synergises with other relevant stakeholders in implementing best practices governance in the generation sector to optimise the contribution of Jawa 7 to constantly supply high-quality electricity for the Java-Madura-Bali transmission system and is ready to support the Indonesian government’s policy in the electricity sector.

PT Shenhua Guohua Pembangkitan Jawa

Bali (SGPJB) is a Special Purpose Company established on 13 January 2016, to build Jawa 7 Coal-Fired Power Plant (Jawa 7). It is a consortium between China Shenhua Energy (70%) and Pembangkitan Jawa Bali Investasi (30%). As part of the Indonesian government’s 35,000MW acceleration programme, Jawa 7 was built under Independent Power Producer (IPP) Scheme with an investment value reaching US$1.88b or approximately IDR26.8t. The financial close of this project was achieved on 29 September 2016, becoming the first IPP in Indonesia to have its financial close process done in just six months.

Jawa 7 is the first Ultra-Supercritical (USC) Power Plant to operate in Indonesia with a capacity of 2 x 1.050MW/Unit, located in Terate Village, Kramatwatu District, Serang Regency, Banten Province, Indonesia. It has a high plant efficiency at ±45.04% with the largest installed capacity per Unit using the latest technology, and currently, the most economical power plant operating in Indonesia. Unit 1 succeeded to operate commercially on 13 December 2019 (five months earlier than the target) and followed by Unit 2 on September 23, 2020. The PCOD of 2 Units Jawa 7 CFPP officially reached on 08 July 2021.

To ensure sustainable investing, SGPJB integrates Environment, Social and Governance (ESG) principles in Jawa 7 development. SGPJB has a high commitment to environmental protection. At the beginning of the construction, SGPJB set Mangrove Protection Plan to preserve the natural mangrove forests around Jawa 7, participate in reforestation activities, and beach and sea cleaning activities with the local government and stakeholders.

Community Development Programme

The USC technology, makes Jawa 7 operate with high efficiency and low emissions, becoming the most environmentally friendly Coal-Fired Power Plant in Indonesia.

To this day, all parameters for monitoring the environmental impact of Jawa 7 are still in compliance with the government’s quality standards, proven by PROPER category blue achievement from the Ministry of Environment and Forestry.

In addition to the commitment to environmental protection, one of SGPJB’s missions is to encourage the social and economic development of the community. Referring to the social mapping of the area around Jawa 7, SGPJB designed Corporate Social Responsibility (CSR) programmes for the community. Right after the PCOD of 2 Units in Jawa 7 in 2021, SGPJB initiated the “Desa Harapan”/Village of Hope programme, a community empowerment programme for Terate Village, one of the Ring-1 Village of Jawa 7.

The programme was designed based on Sustainable Development Goals (SDGs) so that the community can develop their potential to improve their welfare in the economic, health and education sectors independently and sustainably. The programme consists of direct assistance activities towards villagers in the fields of Micro Finance, Production & Marketing of Local Products, Waste Management, Donation funds & Coaching for Honorary Teachers. On 14 July 2022, all of the activities have been successfully implemented

Key Strategy for Emissions Reduction

In order to achieve Net Zero Emissions and reduce Greenhouse Gas (GHG) Emissions the government of Indonesia, through the Ministry of Energy and Mineral Resources, officially launched Carbon Trading in the power generation sub-sector on 22 February 2023. Based on the Carbon Trading roadmap for the power generation sub-sector, the implementation of Carbon Trading has the potential to reduce greenhouse gas emissions by more than 36 million tonnes of CO2e in 2030.

At the event, SGPJB received Technical Approval of Upper Emission Limits (PTBAE-PU) directly from the Ministry of Energy and Mineral Resources to support and participate in the Indonesia government road map plan for carbon trading Phase 1 as a strategy to achieve the target in accordance with the enhanced Nationally Determined Contribution (NDC) document. SGPJB is ready to participate in Indonesia’s Energy Transition towards lower-carbon green economic activities.

SGPJB Integrates ESG Principles and Sustainable Community Empowerment in Jawa 7.

SGPJB has a high commitment to environmental protection and also has mission to encourage sustainable social and economic development of the community through synergy & collaboration with related stakeholders

Jawa 7 Coal-Fired Power Plant

SGPJB Team

Asian Oil & Gas Awards 2022 hails outstanding companies, initiatives

Demands for a more sustainable and affordable energy grid are now driving many oil and gas companies to not just perform well, but to seek innovations in doing so. Continuous recovery, ease in pricing pressures, and regional refining margins are expected to contribute to the potential stability of the Asia Pacific’s oil and gas industry.

Amidst the challenges brought by unstable economic movement, companies have adapted and utilised solutions to ensure marketability. These industry leaders have made significant contributions to the industry and have been recognised by the Asian Oil & Gas Awards 2022 for their work.

The prestigious awards programme recognises the most outstanding com-

Asian Oil & Gas Awards

Bharat Petroleum Corporation Ltd

• Environmental Innovation of the Year - India

Cladtek Holdings Pte Ltd

• ESG Initiative of the Year - Singapore

DEE Piping Systems (Thailand) Co., Ltd.

• Plant/Facilities Upgrade of the Year - Thailand

Engineers India Limited

• Innovative Technology Initiative of the Year - India

HPCL–Mittal Energy Limited (HMEL)

• COVID Management Initiative of the Year - India

Indian Oil Corporation Limited

• Digital Transformation Initiative of the Year - India

• Data Initiative of the Year - India

Kiwi Resource Protection Co., Ltd

• Health and Safety Initiative of the Year - Thailand

Petroliam Nasional Berhad (PETRONAS)

• Digital Transformation Initiative of the Year - Malaysia

• Innovative Technology Initiative of the Year - Malaysia

• Data Initiative of the Year - Malaysia

Quorum Software

• New Product of the Year - India

Royal Commission of Jubail and Yanbu

• ESG Initiative of the Year - Saudi Arabia

Saudi Petroleum Service Polytechnic

• People Development Initiative of the Year - Saudi Arabia

panies in Asia Pacific’s oil and gas sector that have risen above various challenges and remained steadfast despite a challenging environment.

Winners were carefully evaluated by an elite panel of judges, consisting of Sanjeev Gupta, Asia Pacific Oil and Gas Leader, ASEAN Energy Market Segment Leader at Ernst & Young; Tim Rockell, Managing Director at Energy Strat Asia Pte. Ltd., and; Gervasius Samosir, Partner at YCP Solidiance.

They were awarded virtually on 07 November 2022.

Congratulations to all the winners!

Indian Oil Corporation Limited

Cladtek Holdings Pte Ltd

PETRONAS

HANEEA ISAAD

Would Pakistan’s long-term power purchase agreements become roadblocks to its solar energy revolution?

Arecent public hearing held by the National Electric Power Regulatory Authority (NEPRA) on a proposed 600 MW solar power plant in Muzaffargarh has brought to light a host of concerns on the right incentives needed to promote an expedient uptake of solar power in Pakistan.

This is the first large-scale 600 megawatt (MW) solar project offered under the new Fast Track Solar Initiative that aims to substitute solar PV in the place of expensive fossils fueled power generation. Like many countries in Asia, which have been priced out of liquefied natural gas (LNG) markets after Europe’s ‘buy-at-any cost strategy’ to avoid reliance on Russian gas, Pakistan too has been on the lookout for alternatives that offer economically priced and reliable energy supply. A request for proposal was hence released in September 2022, inviting bids on a Government to Government (G2G) or a private basis.

The framework intends to provide an attractive package to renewable energy developers to up investments in solar PV in three phases: large-scale projects in multiples of 600 MW up to a total of 6,000 MW, 200 MW of small-scale installations on 11 KV feeders, and 2000 MW worth rooftop PV to solarize government buildings.

The package prepared by the Alternative Energy Development Board (AEDB) offers land on lease, a 70% foreign exchange-linked tariff indexation on a quarterly basis, a guaranteed off-take by the state-owned Central Power Purchase Authority, and a 25-year power purchase agreement (PPA).

While AEDB’s proposal appears to be aggressively addressing the acute cost of supply problem, structurally it risks being unsustainable.

Rather than incentivizing developers to innovate on price and contract terms, this package is highly reminiscent of the deal offered to thermal Independent Power Producers (IPPs) in the 1990s, when Pakistan was new to overseas private investments in energy and was signing deals for plant financings at ten times the proposed investment cost.

More pointedly, those terms have landed the country in the contractually bound economic mess it is in right now.

Concerned stakeholders have already taken up some of these issues, ensuing in a technical debate during the NEPRA public hearing, but some sticking points remain.

AEDB’s proposed 25-year project term is particularly troubling and could potentially lead to an unsustainable lock-in of dollar-indexed tariffs. Should the cost of generation from solar power go down in future, the 2023-era solar projects would look prohibitively expensive.

Examining project term and tariff structure

At first sight, long-term contracts seem favorable to the government because they result in lower tariffs, as the costs are spread out over a longer horizon. Solar based power generation has been benchmarked at around 4 cents/ KiloWatt hour (c/KWh) at present in Pakistan, assuming a 25-year project lifetime and a 14-year debt period, as in the recent case of Zorlu Solar Pakistan. However, the Institute for Energy Economics and Analysis’ (IEEFA) evaluation reveals that reducing the project term from 25 to 14 years would raise the total tariff to 4.6 c/KWh, or a 14% increase. Reducing the debt servicing schedule to ten years and ending the project within the same timeframe only further raises it to 5.5 c/KWh.

In contrast, some thermal power plants running on fuel oil or high-speed diesel now have fuel costs of 16-22 c/KWh, while fuel costs for imported coal and re-gasified liquefied natural gas (RLNG) are 9.5-13 c/KWh and 12 c/KWh respectively.

Solar-based power generation would still be the cheapest form of power generation by a wide margin. Granted that at 4 c/KWh Pakistan has one of

Haneea Isaad Energy Finance Analyst, IEEFA

the cheapest regional tariffs awarded to solar power, especially considering the limited capacity installed at present, it can be argued that even with a shorter PPA term, the resultant tariff would still be comparable regionally.

Consider Vietnam, for instance, an established solar power market with an installed capacity of over 17 GW where the government has recently capped prices for ground mounted solar at 5.02 c/kWh.

With vastly depleted forex reserves and the Pakistani rupee in freefall, dollar-indexed tariffs could mean an ever-increasing tariff in Rupee terms over the proposed project span of 25 years — an undue economic burden in such strenuous circumstances.

Policymakers should be wary as PPAs that are long-term or linked to foreign currency could limit the fiscal and planning flexibility of the government and utility.

Opportunities for reform

As Pakistan moves towards a more liberalized power sector by introducing a Competitive Trading Bilateral Contract Market (CTBCM) in the years to come, both competition and innovation should be encouraged instead.

The promotion of solar PV projects, with one-time upfront capital investment and negligible variable cost, creates an opportunity for a domestically financed, rupee-denominated system of energy supply. As such, the government should prioritize rupee-dominated term lending to match currency liability with rupee utility revenues.

Meanwhile, multilateral development banks (MDBs), such as the World Bank or Asian Development Bank, could introduce a mechanism to break the cycle of reliance on foreign currency denominated debt. Together with the GoP, the MDBs can lower the cost of capital for domestic green lending banks to co-finance renewable energy projects alongside domestic banks. The MDBs can also create a partial risk guarantee facility that might absorb any first loss.

One thing is for certain: a dire need for some out-of-the-box thinking in Pakistan’s energy sector to resolve its power crisis. Offering the same incentives in the name of fuel substitution to solar power developers as legacy thermal IPPs received is neither a replicable nor sustainable solution for low-cost power generation.

Only new policies based on rigorous data modeling and research would allow Pakistan to tap into the innovation and economy of the new energy market, provide right incentives for developers, and minimize economic risk to the country.

Photo from IEEFA.org

SHAFIQUL ALAM

Clean energy ramp-up will help Bangladesh reduce fuel imports

Shafiqul Alam Energy Finance Analyst IEEFA

Bangladesh’s energy and power sectors continue to experience the pinch of its reliance on expensive and highly volatile imported liquefied natural gas (LNG), coal and oil. This is increasing the country’s fiscal burdens, eventually prompting the government to pass the cost to the consumers.

For instance, amid the high fossil fuel costs, the government raised the price of electricity twice by 5% in a span of 20 days in January 2023. Between these electricity price hikes, the government increased gas prices from 14% to 179% for different sectors.

While the government cites fiscal reasons for such price hikes, the country’s average power generation cost will increase considerably without any major overhaul of the imported fossil-fuel-dependent energy system. Moreover, high fuel and electricity prices will affect industries, and the power sector may still struggle to ensure an uninterrupted electricity supply. However, the latest adjustments in electricity prices make clean energy investment an even more compelling case for Bangladesh to attenuate its fiscal burdens.

High prices of fossil fuels to increase power generation costs

The new gas price for power generation, effective from 01 February 2023, costs Bangladesh Power Development Board (BPDB) an additional Bangladeshi Taka (Tk) 9 (US$0.083) per cubic meter (CM). Analysing BPDB’s gas-based power plants’ average generation costs, based on the fiscal year (FY) 202122’s revised annual report, shows that the incremental gas-based electricity generation cost is Tk2 (US$0.018) per kilowatt-hour (kWh).

In the same breadth, coal remains costly at US$245/tonne in the international market, 88% higher than US$130/tonne considered in FY2021-22 by BPDB. Hence, the average cost of coal-based power generation will shoot up by the end of FY2022-23.

On the other hand, BPDB’s average electricity purchase cost from the Independent Power Producers (IPPs) in FY2021-22 was Tk. 11.55/kWh (US$0.11). In all likelihood, Bangladesh’s average power generation cost will cross double digits in Tk during FY2022-23 compared to Tk8.84/kWh (US$0.082) in FY2021-22. Therefore, the BPDB, despite recent electricity price hikes, will have a huge revenue shortfall. Notably, the subsidy burden of the power sector during FY2021-22 was Tk.297b (US$2.74b), which may further rise in FY2022-23. The government will ultimately feel the exigency to pass the additional cost to consumers before too long.

Power sector will find it difficult to ensure uninterrupted electricity supply

Following the unprecedented gas price hike, the government resumed LNG import from the spot market for the first time since July 2022. It recently ordered one LNG cargo, costing Tk850 crore (US$78.4m), and intends to purchase up to 12 LNG cargoes in 2023. Even if the next 11 cargoes are 25% cheaper, the total cost of 12 LNG cargoes will be more than Tk7,850 crore (US$724m).

Apart from gas, there are other areas of concern. For instance, the government needs funds to keep coal-based power plants operational to circumvent load-shedding. Reportedly, outstanding bills of the Payra coal power plant against coal purchase reached US$168m. Banks declined opening Letters of Credit (LC) for further coal import. The waning foreign currency reserves earlier caused a delay in loan repayment for the Payra plant.

With the annual requirement of 4 million tonnes of coal to run the Payra power plant at full capacity, the government requires substantial foreign currency to keep the plant operational throughout the year. Although the current coal price stands at US$245/ton, considering a reduced coal price of US$200/ton, the cost of fuel to operate the Payra plant from February to December 2023 will be a whopping US$733m. Moreover, due to coal

shortages, the first of the two units of the Rampal power plant suspended generation after just 29 days of commercial operation.

Keeping both power plants operational would heavily burden foreign currency reserves because of coal imports. If electricity production in Payra and Rampal power plants at full capacity cannot be ensured, Bangladesh will again opt for electricity rationing during the summer of 2023.

Industries will be affected

Industries have been the hardest hit due to gas shortages as they use this fuel in process and captive generation. As such, owners of textile industries previously expressed interest in paying around 40% higher gas price, provided that the government imports additional LNG to fill the demand-supply gap. However, an 88% increase in gas prices has made captive power generation considerably expensive. The cost of gas per kWh of electricity from a captive unit now stands at Tk6.58 (US$0.061) against roughly Tk3.5 (US$0.032) in January 2023.

Similarly, two rounds of increase in electricity tariffs mean the cost of grid electricity for large industries, if purchased at a flat rate, is now Tk. 9.32/kWh (US$0.086/kWh) compared to what was Tk. 8.45/kWh (US$0.078/kWh) in December 2022. On top of this, the demand note will make grid electricity even higher. With rising production costs, the apparel sector, which contributes to more than 80% of the national export earnings, will lose its profit margin unless it can transfer the additional cost to international buyers or receive cash incentives from the government.

Clean energy can insulate the economy from price shocks

The cost of grid electricity has reached a level that now provides a strong market signal to industries to promptly increase rooftop solar systems to reduce operational costs. Similarly, the rapidly rising average cost of electricity generation in the country makes a compelling economic case for Bangladesh to enhance deflationary renewable energy at the grid scale to rein in the soaring power generation costs and contain the challenges of imported fossil fuels.

Alongside this, energy efficiency measures on the demand side would reduce significant energy consumption and thus cut down on imported LNG, coal and oil. High energy prices also demonstrate the strong financial viability of energy efficiency interventions.

The gov’t will feel the exigency to pass additional cost to consumers before too long