Asian Power (July - September 2023)

Boonyanit Wongrukmit Governor Electricity Generating Authority of Thailand

CHARTING EGAT’S ‘TRIPLE S’ STRATEGY

RETIRING EGAT GOVERNOR ON LEGACY AND THAILAND’S ENERGY TRANSITION

SOLAR PH SYSTEM UPGRADES IN THE WORKS TO ENERGISE CALATAGAN SOLAR FARM

UNTAPPED OFFSHORE WIND CAN POWER JAPAN CLEAN ENERGY SHIFT

SEA DRIVES COAL PHASEOUT IN POWER PLANTS BUT SOCIOECONOMIC IMPACT LOOMS

PESSIMISM SURROUNDS SMRS’ VIABILITY IN CARBON REDUCTION PUSH

Patrick Henry Panlilio COO, Spectrum p. 18

PUBLISHER & EDITOR-IN-CHIEF Tim Charlton

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FROM THE EDITOR

As Asian markets grapple with retiring highemission power plants, they confront financial risks, socio-economic impact, and the need to strike a delicate balance between environmental goals and energy security. Read more on pages 14 and 24 about how industry experts deliberate on these complex challenges and explore concrete steps taken by Asian nations.

In Thailand, amidst the socio-economic implications of the green energy leap, the retiring Governor of the Electricity Generating Authority of Thailand, Boonyanit Wongrukmit unveils EGAT’s commitment to carbon neutrality, aligned with the government’s ambitious targets. Read the detailed conversation on page 18.

In Japan, the country faces a struggle to boost its energy transition despite its progress due to its land constraints. Discover on page 20 the analysts’ insights on tapping the offshore wind potential to power their renewable energy ambition.

In the Philippines, delve into the plans of Solar Philippines on page 12 as a prominent player in the solar energy sector. Solar Philippines’ record-breaking utility-scale solar farm exemplify the region’s evolving renewable energy landscape.

Read on and enjoy!

Tim Charlton

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INDIA POISED TO EMERGE AS SOLAR PV POWERHOUSE

India’s rise to becoming the world’s secondlargest solar photovoltaics producer, poised to rival China, will be driven by the addition of 110 gigawatts (GW) of module manufacturing capacity in the next three years, securing the nation’s self-sufficiency.

In a report, the Institute for Energy Economics and Financial Analysis (IEEFA) and JMK Research & Analytics found that India’s total module manufacturing nameplate capacity rose over twofold to 38 GW in March 2023 from 18GW in the same period last year.

“The future of the Indian PV manufacturing sector is bright. The favourable policy environment created by the Indian government is helping the PV manufacturing industry to grow rapidly, which is evident in the frequent announcements of expansions or new investments in the sector,” said co-author Vibhuti Garg, director, South Asia, IEEFA.

“After India attains self-sufficiency in two to three years, the next course of action should be to challenge and compete for dominance in both quality and scale in the global PV module market. Despite the aggressive market drivers, there are minor hurdles that are impeding the growth of the PV manufacturing industry. Therefore, policy stability is necessary to sustain investor confidence in the market,” she added.

JMK Research Founder and co-author, Jyoti Gulia said the production-linked incentive (PLI) scheme is one of the main drivers in boosting the PV manufacturing ecosystem in the country.

The report added that a 51.6 GW increase in module capacity is expected as a result of both tranches of the PLI scheme, as well as at least 27.4 GW growth of integrated “polysilicon-tomodule” capacity in the next three to four years.

Increasing solar PV modules demand

Alongside this, the Indian government also implemented measures to drive demand for the locally-manufactured solar PV modules.

The country launched the Approved List of Module Manufacturers (ALMM) in 2019 in a bid to increase local demand and serve as an “absolute trade barrier” that protects local manufacturers’ interests, said co-author, Prabhakar Sharma, consultant, JMK Research.

Over 70 manufacturers are included in the list with a capacity of 22,389 MW, he said, citing data from the Ministry of New and Renewable Energy as of February.

Other measures include the the Pradhan Mantri Kisan Urja Suraksha evam Utthaan Mahabhiyan and Central Public Sector Undertaking Schemes.

Asian FIs rapidly phase out coal investment

POWER UTILITY

Asia has shown a “swift progress” in coal divestment as the number of financial institutions (FIs) with such policies grew to 41 within the last three years from only 10 in 2019, a report found.

In its 200 and Counting: Global Financial Institutions are Exiting Coal, the Institute for Energy Economics and Financial Analysis (IEEFA) found that 41 out of the 53 FIs in the region have implemented coal divestment policies.

The report, however, flagged that most coal divestment policies either lack a formal coal exit plan or have “less stringent” policies in place.

Japan, for instance, has amongst the world’s largest financial industries, but only 14 FIs have formal coal exit plans.

IEEFA noted that some Japan FIs only cover project financing for their coal phase-out plans, leaving room for corporate financing. This paves the way for continued investments in coal companies. Similarly, FIs in South Korea and Australia lack commitments to completely phase out coal.

Coal divestment is also gaining traction in emerging markets with 22 FIs introducing restrictions for coal financing. In Asia, China and Malaysia each have three FIs that have established emerging markets, whilst India and the Philippines each have one.

Overall, the IEEFA found that globally, the number of FIs divesting from coal have doubled in the last three years. Whilst it took six years for the first 100 FIs to adopt policies to steer away from coal, the number of FIs has grown in over three years.

“We see two prominent trends which are redefining capital markets. First, we see more financial institutions committing to investment policies that are moving away from fossil fuel projects,” IEEFA’s debt markets leader for Asia Pacific Christina Ng said.

“And second, we are seeing many of these institutions revising their policies and strengthening them as the market increases its knowledge of climate risk as a source of systemic risk to the global financial system. Institutions are getting tougher on what they will finance, and they have identified coal as a risky investment. They see climate risk as a financial risk,” Ng added.

Ng also observed that more medium-sized FIs are leading in implementing coal divestment policies, compared to larger asset managers.

“This is a reflection that the market is learning fast amidst regulators getting tough on greenwashing. Collectively, the whole finance ecosystem is working together to find where the issues are,” she said.

Whilst coal divestment in Asia is rapidly increasing, European FIs outperformed other regions with policies that are stricter. The highest number of FIs with coal exit policies are in the US, France, the UK, Japan, South Korea, Germany, Australia, and the Netherlands. In total, there are 114 FIs in Europe, 53 in Asia[1]Pacific, 27 in North America, 6 in Africa, and 2 in South America.

IEEFA noted that more than half of the 87 banks on its list are members of the United Nations NetZero Banking Alliance, many of which have upgraded policies.

In particular, 47 of these banks have strengthened coal exit policies, whilst 16 announced plans to phase out coal. Ng noted that half of these new entrants are operating in Asia.

Meanwhile, 50 of insurance and reinsurance companies across the globe have likewise implemented coal exit policies. IEEFA noted this is more than double the 2019 figures.

Ng noted that commitments to coal divestment will likely continue growing with more FIs introducing strengthening existing policies, particularly in emerging markets. This will be driven by the strong momentum of coal divestments by global FIs as well as the risk of stranded assets.

Most coal divestment policies either lack a formal coal exit plan or have “less stringent” policies in place (Photo by byrev from Pixabay)

POWER UTILITY

Market is learning fast amidst regulators getting tough on greenwashing

Christina

Ng

The future of the Indian PV manufacturing sector is bright (Photo by Shailsh Telang from Wikicommons)

China’s solar power to drive strong renewables growth

China is expected to sustain its renewable energy growth over the next decade, primarily propelled by an expansion in solar power, supported by government policies and sectoral advancements, according to a report from BMI Country Risk & Industry Analysis.

In a report, BMI said China’s renewable sector is supported by government policies intended to increase renewable energy generation to meet additional electricity demand.

“We expect this growth to continue over the coming 10 years, mainly coming from the solar power sector,” BMI reported.

China continued to experience growth in its non-hydropower renewables sector

with a 19% and 19.2% increase in 2021 and 2022, respectively.

Citing the latest data released by the National Energy Administration in March 2023, China added slightly more than 20.4 GW of solar photovoltaic capacity, and about 5.8 GW of wind power in January and February 2023 combined.

The market also added a total of 13.3 GW of solar capacity during the rest of the first quarter of 2023.

BMI has noted, “We believe that China will experience its strongest solar capacity growth yet in 2023, ending the year with slightly more than 500.2 GW in solar PV capacity.”

INDIA’S GREEN LEAP CAN SAVE UP TO US$19.5B ANNUALLY

India can save up to US$19.5b (INR1.59t) annually if it pushes through with its plans to add a total of 76 gigawatts (GW) of solar and wind power capacity by 2025, the Global Energy Monitor (GEM) reported.

Citing data from its Global Solar Power Tracker and Global Wind Power Tracker, GEM found that India ranked seventh amongst countries with the most prospective renewable power. India currently accounted for 5% of all the followed China, Australia, Brazil, the United States, Vietnam, and Greece.

GEM noted that the planned additional capacity in solar and wind power could help India avoid the use of almost 78 million tonnes of coal per year. This is equivalent to about 32 GW in coal power plant capacity, which is more than the new coal capacity India has added since 2018.

India currently plans to add some 420 GW of wind and solar power by 2030, which is

estimated to increase the market’s annual savings to more than US$58b. This will likely lead to a total savings of around US$368b by 2030.

“Save money, slash emissions – India’s switch from coal to clean power is a win-win. A promising step towards meeting the country’s net zero emissions target by 2070, India will be richer and cleaner by quitting coal,” said Shradhey Prasad, project manager for the Global Wind Power Tracker.

“Costs for solar and wind power continue to plummet, and compared to volatile fossil fuel prices, renewables present a far better option for building new energy infrastructure,” Prasad added.

GEM added that the additional 76 GW of new solar and wind capacity will likely cost India about US$51b. The country could, however, offset this within just two and a half years with its nearly US$20b savings annually.

The expansion of solar capacity will be driven by the operation of large-scale solar projects that were stalled by the pandemic and the acceleration of China’s solar equipment manufacturing sector.

Solar net additions in China in the next 10 years is expected to reach 1,136.1 GW. Some of the government programmes that will boost the growth of renewable energy in China include the launch of large-scale renewable power programmes such as the solar and wind construction projects in the Gobi and Tengger Deserts.

The suggested reintroduction of the project registration for the China Certified Emmission Reduction scheme for emissions trading will also contribute to driving renewables growth as this will add incentives for project developers to generate and sell credit from the projects.

Coal’s share

Despite China’s reliance on coal to meet its power generation needs, the share of coal in its energy mix will likely decrease in the coming years as it is offset by renewables, according to BMI.

Currently, the market sources more than 60% of its electricity needs from coal-fired power generation.

On top of this, some 20 GW of coalfired power plants have been approved in the first quarter of 2023. This is higher than the 18 GW recorded in 2021.

“We believe that this does not necessarily mean that the net coal-fired power capacity will grow by 20 GW over the coming 10 years,” the report read.

“Instead, we believe that it will be used to replace old and inefficient power plants that are running at low capacities,” it added. BMI expects coal-fired generation to peak in the latter half of the decade before gradually declining. Nonhydropower renewables, on the other hand, are expected to meet the growing demand in power consumption.

POWER UTILITY

The expansion of solar capacity will be driven by the operation of large-scale solar projects

We believe that China will experience its strongest solar capacity growth yet in 2023

Source: Global Energy Monitor, Global Solar Power Tracker, Global Energy Monitor, Global Wind Power Tracker

India ranks seventh globally with the most prospective renewable power

FIRST

CLEAN ENERGY TECH INVESTMENT COULD REACH US$1.7T IN 2023

East Asia could surpass global pumped storage capacity goals

POWER UTILITY

East Asia, led by China, alone could already achieve the 420-gigawatt (GW) target of the International Renewable Energy Agency (IRENA) for pumped storage capacity globally by 2050.

Aremarkable trend has emerged in the global energy investment landscape. Investment in clean energy technology is set to rise to US$1.7t this year, overtaking investments in fossil fuels. This shift reflects a growing emphasis on sustainability and renewable energy sources.

According to the International Energy Agency’s (IEA) report, this makes up a portion of the estimated US$2.8t investment in energy this year. The US$1.7t will likely fund renewables, electric vehicles, nuclear power, grids, storage, low-emissions fuels, efficiency improvements, and heat pumps amongst others. The remaining amount, which is slightly over US$1t, will likely fund coal, gas, and oil.

“Clean energy is moving fast – faster than many people realise. This is clear in the investment trends, where clean technologies are pulling away from fossil fuels,” IEA Executive Director Fatih Birol said.

“For every dollar invested in fossil fuels, about 1.7 dollars are now going into clean energy. Five years ago, this ratio was one-to-one. One shining example is investment in solar, sets to overtake the amount of investment going into oil production for the first time,” Birol noted.

The IEA added that investment in clean energy is expected to increase by 24% annually between 2021 and 2023. This is higher compared to the 15% annual growth for fossil fuel investment.

IEA, however, noted that 90% of the projected growth in investment is driven by advanced economies and China, which the agency flagged as a “serious risk of new dividing lines in global energy if clean energy transitions don’t pick up elsewhere.”

Low-emissions electricity technologies are expected to receive the lion’s share of investment as it is projected to account for 90% of investments in power generation. This is led mostly by solar power-related technology.

In 2022, investment in clean energy technology exceeded $1.4t, accounting for about 70% of the year-on-year growth in the total energy investment. This is also an increase from around $1t in 2015.

The IEA said renewables, power grids, and energy storage comprised over 80% of the nearly $1t total investment in the power sector led by solar. This is an increase from 75% of the around $800b investments in 2018.

On the other hand, the share of fossil fuel power declined to 10% from around 20% over the same period, with the total investment in oil, gas, and coal reaching above $800b in 2022 from over $1t in 2015.

Though IEA has noted, the world still highly relies on fossil fuels for energy supply despite the recent developments in clean energy tech, with its overall share in the mix remaining at about 80%.

In the Global Hydropower Tracker, Global Energy Monitor (GEM) found that East Asia has a total of 425 GW of pumped storage capacity, both operating and prospective or those that have been announced, in preconstruction, or in construction stages. The region’s capacity represents 73% of the world’s total.

An IRENA Modelling suggested that the world would need 420 GW of pumped storage hydropower could meet climate goals by 2050 under the Paris Agreement.

According to GEM, pumped storage only accounts for 14% or 161 GW of all operating hydropower projects with at least 75-megawatts (MW) of nameplate capacity, whilst the remaining are conventional storage or run-of-river.

On the other hand, pumped storage comprises 49% or 439 GW of the prospective capacity.

“Pumped storage capacity is set to grow much faster than conventional dams worldwide, and China is the clearest example of this trend,” said

Alterenergy sets 1st solar PV in Palau

EGAT boosts power system in Thailand

Joe Bernardi, project manager for the Global Hydropower Tracker.

“Pumped storage and hydropower are an integral part of the global energy transition, and the rest of the world should take note of the build-out in Eastern Asia,” he added.

Leading hydropower markets

China leads the operating pumped storage hydropower market with 51 GW, 30% of the global total. Next is Japan with 24 GW (14%), the United States with 22 GW (13%), Italy with 8 GW (5%), then Germany with 6 GW (4%).

China is also the market with the most prospective pumper storage hydropower with 407 GW in the pipeline, 82% of the total globally, then India with 16 GW (3%), Australia with 14 GW (3%), the US with 14 GW (3%), and the UK with 6 GW (1%).

Adani to set wind power in India

Alterenergy Holdings Corp. and its subsidiary Solar Pacific Energy Corporation commissioned the first solar photovoltaic (PV)-battery energy storage system (BESS) project in Palau.

The solar PV-BESS project has a capacity of 15.3 megawatts (MW)-peak solar PV, and 12.9 MW-hour BESS, one of the biggest foreign direct investments in the country with a total cost of US$29m.

Alterenergy Chairman Vicente S. Perez said the project will contribute to Palau’s 45% renewable energy target in its power generation by 2025.

The Electricity Generating Authority of Thailand (EGAT) has started the commercial operation of a 3-megawatt (MW) solar power plant and 4-MW battery energy storage system project.

The project forms part of the Smart Grid Pilot Project in Mae Hong Son Province, which is being developed as a green tourism city.

It aims to enhance the power system security in Mae Hong Son Province due to many power outage problems occurring in the province, said Chaiwut Lakmuang, EGAT Assistant Governor.

The Adani Green Energy Limited (AGEL), through its subsidiary Adani Wind Energy Kutchh Five Limited, commissioned a 130-megawatt (MW) wind power at Kutchh in Gujarat.

AGEL said the power plant is under a 25-year power purchase agreement with Solar Energy Corporation of India at around US$0.035 (INR2.83) per kilowatt-hour.

The commissioning totaled the operational wind generation capacity to 1,101 MW and its operational renewable generation capacity to 8,216 MW.

Pumped storage capacity is set to grow much faster than conventional dams worldwide

Pumped storage will support the growth of variable renewable energy sources such as solar and wind--GEM

Clean energy is moving fast (Photo by Kenueone from WikiCommons)

Independent Power Producer of the Year - Indonesia

Innovative Power Technology of the Year - Indonesia

Coal Power Project of the Year - Bronze

PT.GH EMM INDONESIA recognised with three wins at the Asian Power Awards 2022

Through innovative technology and a commitment to sustainability, their Simpang Belimbing coal-fired power plant provides reliable energy, while driving economic development, social responsibility, and environmental protection.

Established on 11 March 2008, PT GH EMM Indonesia is a consortium between China Shenhua Energy and PT Energi Musi Makmur, with a commitment to providing sufficient power for the national electricity company (PLN), the government, and the Indonesian people.

As one of Indonesia’s Independent Power Producers, PT GH EMM Indonesia owns the Simpang Belimbing coal-fired power plant, which has a capacity of 2 x 150 MW. This power plant, located in the remote area of Muara Enim Regency, South Sumatera Province, is Indonesia’s first mine-mouth power plant.

The company continuously strives to adopt the latest technology to support its business processes. Continuous improvement programs, innovation, and breakthrough projects drive the company’s progress.

Leading the Way in Efficient Power Generation

With an efficient operation and management system, the company successfully utilises extremely low-quality lignite coal with a calorific value of 1800-2200 kcal/kg and a total moisture content of 59-63% as the primary fuel for the power plant. Additionally, the company has implemented plans for green business development by recycling and reusing coal wastewater as additional fuel for the power plant.

Regarding availability and reliability, the power plant has consistently operated at full capacity for 94% of the time (equivalent availability factor, or EAF), with a forced outage rate (EFOR) of less than 1% since its start of operation.

On 12 December 2022, at the annual Asian Power Awards ceremony, PT GH EMM Indonesia received

three major awards: Independent Power Producer of the Year (Indonesia), Innovative Power Technology of the Year (Indonesia), and the Bronze Award for Coal Power Project of the Year. This accomplishment solidifies the company’s position as a leader in the Indonesian region. It is the fifth consecutive year that the plant has been recognised at the Asian Power Awards, known as the “Oscar” of Asia’s Power Industry, bringing CHN ENERGY GROUP’s name to the forefront in the power generation, transmission, and distribution industry in the Asia Pacific region.

power for the economic and social development of Indonesia. Additionally, PT GH EMM Indonesia actively participates in “the Belt and Road” initiative, adheres to the principles of “mutual consultation, joint construction, sharing, and winwin,” fulfils social responsibilities, and contributes to mutual benefit, win-win scenarios, and harmonious development between enterprises and regions. During the pandemic, the company worked with various sectors of society to combat the crisis and actively contributed to the development of Indonesian society.

Commitment to Social Responsibility

Empowering Society Through Reliable and Sustainable Energy Solutions

The plant’s core focus is on empowering society and contributing to the economy. It prioritises safety, stability, economic reliability, green environmental protection, and sustainable development. By prioritising safety and implementing risk precontrol and hidden danger investigations, the plant ensures long-term safe and stable operation. It has provided high-quality and reliable green

Unit 1 achieved a world record of 1,438 consecutive safe operation days and received high praise from the Indonesian power industry. The plant has created 2,000 job opportunities for the local people, improved 8.5 kilometres of surrounding roads, repaired 4 mosques, provided assistance to schools and township government offices on 9 occasions, and excavated 25 wells. During the pandemic, the company actively donated anti-pandemic materials to local government organisations and five socially responsible villages within its territory, garnering high praise from government organisations at all levels.

PT GH EMM INDONESIA remains committed to its original mission of “nation, honour, and responsibility” overseas. It upholds the enterprise spirit of “hard work, dedication, innovation, and competition” of CHINA GUODIAN, practices the corporate culture of “inclusiveness, harmony, and win-win,” and strives to build the overseas golden brand of high-quality energy enterprises for CHN Energy Group.

PT. GH EMM INDONESIA sticks to its original mission of “nation, honour, and responsibility” overseas, inherits the enterprise spirit of “hard work, dedication, innovation and competition” of CHINA GUODIAN

Simpang Belimbing coal-fired power plant

Could ammonia co-firing be the solution to decarbonise coal-fired plants?

Attaurrahman Ojindaram Saibasan Senior Power Analyst GlobalData

Co-firing ammonia in coal power plants is not a viable strategy for decarbonisation. Currently, the technology is at a nascent stage and unproved at a large-scale. In 2021, Japan’s JERA implemented a demonstration project to establish technology for large-scale ammonia fuel co-firing at the Hekinan Thermal Power Station. The ammonia-coal co-firing plant uses 20% ammonia and is set to use 50% at a later stage. This may be seen as an attempt to increase life-cycle of coal fired plants stunting growth of renewables such as solar PV and wind which are more favourable towards achieving decarbonisation.

In December 2022, Mitsubishi Heavy Industries (MHI) signed an MoU with a Chilean independent power producer to conduct research for the possibility of turning the power plant located at Huasco, Atacama Region in Chile to an ammonia-coal co-firing plant. The 758 MW-power plant has five units.

Minimal benefits

With regards to decarbonisation, the benefits are minimal. The usage of 20% ammonia still emits five times more greenhouse gas than the benchmark set by the International Energy Agency (IEA) for Net Zero 2030 scenario. It also raises the question as to which ammonia is used whether if its grey, blue, or green. Although green ammonia is preferred, it would be better used in other applications and would prove costly to be used in a coal-firing power plant.

The key benefit if co-firing ammonia in coal powered plants is achieved at a large scale would be the increase in demand of the product itself.

The key challenge is the cost-effectiveness of the plant. The usage of ammonia would double the fuel costs even with grey ammonia, the cheapest form of ammonia. The usage of blue or green ammonia would make renewables a cheaper option; thus, nullifying the need for an ammonia co-fired plant.

Converting a coal plant to an ammonia co-firing coal plant would require massive investments in retrofitting which would not yield good returns if there were stricter regulations post-2030 to phase out coal-power plants.

Frank Thiel Managing Director Quezon Power (Philippines) Limited Co., General Manager San Buenaventura Power Ltd. Co.

There are many ways to approach decarbonisation, and ammonia co-firing is just one of them. You also have biomass co-firing. The other thing coal-fired plants can consider the same thing as combined cycle is to put a carbon capture facility on the back end, and then either take the carbon that is captured and put it into the ground or use it for other purposes.

Right now, we think ammonia co-firing has a lot of merits and we are evaluating all of that. All those things have pros and cons, there is cost associated. We are trying to find something that allows us to bring down the level of greenhouse gas emissions, at the same time allow the plant to continue operating.

The number one benefit of ammonia co-firing is the reduction of greenhouse gas emissions. We are in primarily for that. Our company has taken on a pledge to try and reduce greenhouse gas emissions all around and we have a target to reduce a certain percentage by 2030. We are trying to follow that directive and trying to bring bring down in greenhouse gas emissions.

Current challenges

There are many challenges to ammonia co-firing. The first challenge is supply. There is a limited amount of ammonia. Ammonia is primarily a fertiliser. When people say ammonia, they don’t think of ammonia as a fuel, they think of ammonia as a fertiliser. So, you find yourself in a situation where you compete with other entities that are using ammonia.

Another challenge is delivery of ammonia. How am I going to bring ammonia to the Philippines in the quantities that I need in order to burn it in the facility? Once it’s here, I have to make sure that it’s done properly and safely. Ammonia is toxic, and it can be corrosive as well, so we have to be very careful. Ammonia as a fuel is something new, so we’re learning as we go on. But we want to make sure that it is done properly and safely.

The last thing we want is to create a problem, so we want to make sure that everything is done in accordance with all the latest regulation.

Asian Power spoke with an industry analyst and leader to shed light on the direction of co-firing ammonia with coal in power plants

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

Solar Philippines’ system upgrades in the works to energise Calatagan Solar Farm

This

Solar Philippines was amongst the first to construct a utility-scale solar power plant in the country, beginning with the 63.3-megawatt (MW) solar farm in Calatagan, Batangas in 2016. Solar panels at the plant have a lifespan of 25 years, but the company has already kicked off feasibility studies for upgrades just seven years into its operation.

In an interview with Asian Power, Plant Manager Alex Dela Cruz took pride in the fact that the Calatagan Solar Farm, which was completed in a recordbreaking two months, stands as the fastest construction project of its kind in Asia.

“We are now planning to upgrade our solar farm so that the capacity or our output will be higher. By upgrading, we can also choose to replace the panels or inverters; but it will depend on the [feasibility] study,” Dela Cruz said.

Dela Cruz said the feasibility study is also looking at possible expansions in the Calatagan solar farm. The study will not yet cover the development of battery energy storage systems, but he noted that it is a “possibility.”

The Calatagan Solar Farm has an output of 49.68 megawatt alternating current (MWac) that can power up the whole of western Batangas, composed of six municipalities.

The solar panels at the farm are tilted 11 degrees to best capture the solar irradiance, which should hit the panels perpendicularly. The panels also face south by design as the sun changes position between September and December, explained Dela Cruz.

He added that the inclination of the panels is advantageous, particularly during the rainy season as the slope allows it to avoid water from smudging the panels.

Powering Calatagan

The farm is currently being operated and maintained by around 50 groundworkers, all from Calatagan. During the construction of the farm, Solar Philippines also employed more than 2,500 local workers in its pursuit to provide a livelihood to the communities where it builds plants.

Whilst solar power has the potential to reduce electricity prices for consumers, Dela Cruz said the Philippines is still a long way from cutting electric bills.

“The government is pushing for solar power to slash electricity prices because much of our power generation is still sourced from fossil fuels,” he said “We need

to keep pushing for more solar power, and that’s the vision of Solar Philippines – to construct more solar power plants.”

Solar power projects

Solar Philippines has also set up a 150-MW plant in Tarlac, through its subsidiary Solar Philippines Tarlac Corporation. Its first phase was completed in June 2020 with a capacity of 100MW.

It is also currently constructing its third solar farm in Nueva Ecija, expected to be the largest amongst the three solar farms. The 500-MW solar farm is being constructed in two phases with the first 225MW set to finish in 2022. The remaining 275-MW will follow in the succeeding years.

Like the Calatagan Solar Farm, they stand to illuminate the vision of Solar Philippines and demonstrate the potential of solar power to empower entire Filipino communities while paving the way for a greener and more sustainable future for the country.

Philippines’ energy landscape

share of renewable capacity in its energy mix to 35% by 2030 and to reach 50% by 2040 under the National Renewable Energy Programme 2020-2040.

Currently, it has a renewable energy capacity of 8,255 MW as of 2022, comprising 29% of the total installed capacity, according to data from the Department of Energy. It is led by hydropower with 3,745 MW, followed by geothermal at 1,932 MW, solar power at 1,548 MW, biomass at 603 MW, and wind power at 427 MW.

The energy department’s data showed that coal remains the dominant installed power capacity at 12,441 MW, accounting for 44% of the energy mix. Oil composed 14% of the total energy mix with an installed capacity of 3,931 MW, whilst the share of natural gas was at 13% with 3,732 MW.

In term of gross power generation, coal produces 59% of the total, whilst renewable energy only account for 22%, of which 10% is from geothermal, 9% from hydropower, 2% from solar, and 1% each were biomass and wind. Natural gas comprises 17% of the generation mix and oil is at 2%.

The Philippines is targeting to increase the

enhancement comes just a decade after the start of its operations. PHILIPPINES

The government is pushing for solar power to slash electricity prices

The Calatagan Solar Farm has an output of 49.68 megaWatt alternating current (MWac) that can power up the whole of western Batangas

Operator Pearl Energy unveils strategic masterplan for Mauban-based coal plants

Since the start of the millennium, the 460-megawatt (MW) coalfired Quezon Power Plant in the municipality of Mauban has been reinforcing the Philippines’ Luzon electricity grid under a power supply agreement with private distribution utility firm Manila Electric Co. (Meralco).

As the years progressed and the economy grew, a greater demand for electricity gave rise to a second coalfired unit in the municipality: the San Buenaventura Power Plant.

Asian Power recently toured the facilities and delved into the plant’s contribution to the Philippines’ energy landscape.

The plant tour

Both the Quezon and San Buenaventura power plants are operated by Pearl Energy Philippines Operating Inc. (PEPOI). The first coal-fired unit, owned by Thailand’s EGCO Group subsidiary Quezon Power (Philippines), Limited Co., is the first baseload IPP in Southeast Asia to sell electricity to a non-government utility.

Walter Laptew, facilities manager at PEPOI, said the Quezon Plant uses a steam turbine from General Electric and its boiler is a Foster Wheeler. Building it back in 2000 required around $750m whilst rolling out the transmission line cost another $68m.

In 2019, the second unit in Mauban started operations to answer to the bigger demand for electricity, PEPOI Plant Manager Roel Feliciano said. Meralco’s power generation unit, Meralco PowerGen, holds a 51% stake in the 455-MW San Buenaventura Power Plant, whilst the EGCO subsidiary New Growth BV owns the remaining 49% stake.

Costing around $1b, the second unit is the first supercritical coal-fired power plant in the Philippines, using a “high efficiency, low emissions” coal technology through higher temperatures and pressures.

“After our project, two power plants followed us. They are now supercritical,” Feliciano said.

Overcoming challenges

Building the plants did proceed without challenges. The construction of the Quezon Power plant was met with opposition from a non-governmental group.

“However, we were fortunate that the local government unit was in favour of the plan. As time went on, we were accepted by the community,” Laptew told Asian Power The main challenge in building the San Buenaventura unit was the limited area for construction, he said.

Laptew said they had to relocate several QPL support facilities to free up space for the construction of the second unit.

Solid maintenance programme

According to Feliciano, said one of the challenges in maintaining the power plants is ensuring compliance with the environmental requirements set by the Department of Environment and Natural Resources (DENR).

Pearl Energy has parameters to measure its compliance with environmental standards. For example, they use an antiemission device called the electrostatic precipitator which reduces the opacity of the smoke emitted by the plants. Through this, the smoke released is not visible, he said.

“We keep on upgrading that. If the original equipment manufacturer has a new technology for that, we install it so that we make sure that we are compliant with the environmental requirements,” Feliciano noted.

It also maximise the scheduled annual outages within 25 to 30 days to check the condition of the plant. Feliciano added that every three to five years, they need a major outage spanning 45 days to carry out significant changes and overhauling of equipment like the turbine.

Meanwhile, Laptew highlighted the importance of their engineers in ensuring the plants remain in good condition.

“For reliability and maintaining the plant, it’s a skill set that requires a good maintenance program, and a good maintenance team. We have a very solid group of professionals who enables us to reliably and as cheaply as possible produce power that’s needed by the public,” he said.

“People are one of our major assets,” Feliciano added.

Feliciano stated that they provide continuous training to their engineers by sending them overseas or attending seminars led by organisations like the Philippine Society of Mechanical Engineers and the Philippine Coal Plant Users’ Group to keep up with the developments in the sector.

Government moratorium

It is a challenge to shift towards cleaner electricity sources, Feliciano said.

In October 2020, the Philippine government imposed a moratorium against the construction of new coal-fired power plants. The country also plans to increase the share of renewable energy (RE) in the generation mix to 30% by 2030 and 50% by 2040%.

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

Walter Laptew

Roel Feliciano

A

second coal plant was built in 2019 to boost energy supply in Luzon, the economic and political centre of the Philippines.

The Quezon Plant uses a steam turbine from General Electric and its boiler is a Foster Wheeler

If four or five coal-fired power plants are offline, there will be insufficient supply

GENERATION REPORT: COAL AND GAS

Financial woes loom as Asian markets struggle to abandon coal

Pakistan, for instance, announced it will increase domestic power capacity, including coal, as it plans to phase out imported LNG. China and India are amongst the economies actively promoting power generation, Pradhan noted. Rystad Energy data showed that in 2022, a total of 106 gigawatts (GW) of coal-fired power plants were approved by the Chinese government. Of this, around 50 GW were already under construction in 2022, whilst 56 GW are set to begin construction in 2023.

Likewise, India has introduced its National Electricity Policy which provides a target of 50 GW coal-fired power generation in the next decade. Rystad noted 25 GW of this was already in construction with plans to add the remaining 25 GW in the pipeline.

Meanwhile, Japan and South Korea have neither set plans to actively phase-out coal or construct new plants in the near-term; whereas Indonesia and Vietnam, which account for 65% of the coal-fired capacity in the region combined, have entered in the Just Energy Transition Partnership (JETP) to take a step out of coal.

Rystad Energy noted that as of 2022, Indonesia’s coal fleet reached 40 GW. With the JETP, the country committed to suspend nearly 14 GW of on-grid coalfired power and decommission existing plants before its planned lifecycle ends.

Balancing act

For its part, Vietnam pledged to add only up to 6 GW of coal capacity in the future.

Sreejeet Barik, junior analyst for power and coal at Rystad Energy, noted Vietnam remained committed to this target as its recently launched Power Development Plan 8 showed it only has approximately a 6.125-GW coal capacity under construction.

Asia’s pursuit of higher power consumption contradicts decarbonisation goals as it fosters dependence on fossil fuels. This becomes an even steeper climb as Asian markets run the risk of incurring financial losses with moves to retire high-emitting power plants ahead of their lifespan.

Asia is projected to see the highest growth in power consumption in the next decade, Ashis Kumar Pradhan, senior coal analyst at Rystad Energy, told Asian Power. He noted that to meet this demand, the region is expected to depend largely on coal for electricity generation.

“To achieve their carbon neutrality goals by 2050-2070, many Asian nations plan to rely on fossil fuels in the short term. However, the long-term focus is shifting towards increasing the use of renewable energy sources with the support of battery storage and pumped hydro systems,” Pradhan added.

Asian nations have taken concrete steps to get rid of dirty energy with renewable energy targets coupled with

The

coal phase-out and divestment plans; but coal’s dominance remains. This is mainly linked to its affordability and reliability as a baseload power to support renewable energy (RE) sources.

Pradhan noted the region continued relying on coal during the pandemic with coal prices notably declining, compared to volatile gas prices.

“The current energy system is heavily optimised for the use of fossil fuel. Decarbonising the energy system will require countries to accept losses in these stranded fossil infrastructures before their planned retirement,” Dr. Ken Tay, senior regional energy transition analyst at Rystad Energy, said.

Coal in Asia

It did not help that Russia’s invasion of Ukraine drove prices of liquefied natural gas (LNG) to new heights, leading Asian markets to view gas as an “expensive and unreliable fuel source,” Warda Ajaz, project manager for Asia Gas Tracker at Global Energy Monitor, said.

“It is worth noting that the agreement made by Indonesia primarily targeted on-grid power plants and did not encompass captive power plants used by industries such as nickel, aluminum, steel, and chemical plants,” Barik said, noting that Indonesia has more than 12 GW of captive coal-fired capacity in the pipeline, including in the nickel industry.

On top of this, Indonesia hosts a relatively young fleet of coal-fired power plants with around 80% of them aged less than 20 years old. This could translate into “significant financial implications” particularly for the Indonesian government which owns many of the plants through state-owned enterprise PLN.

Coal exit is similarly difficult for Vietnam as it faces a downturn in power supply, prompting it to rely more on coal. This also comes as disruptions in the supply of gas-for-power undermine the government’s plan to depend on gas.

Gas expansion

Gas was considered a transitional fuel as it was believed to emit fewer carbon than coal, leading to countries adopting gas for

Fossil fuel exit is still a steep climb as Asian markets need to rely on coal power at least in the short run for energy security.

Decarbonising the energy system will require countries to accept losses in these stranded fossil infrastructures before their planned retirement (Photo from WikiCommons)

longterm focus is shifting towards increasing the use of renewable energy sources with the support of battery storage and pumped hydrosystems

Ashis Kumar Pradhan

their energy transition. Ajaz noted that countries in East and Southeast Asia are poised to see “explosive growth” in gasfired power plants development as they seek cleaner alternatives.

In particular, more than 60% of gasfired capacity development globally is found in Asia. Over half of which are in East and Southeast Asia.

“The proposed gas expansion will be detrimental to climate goals, as any new fossil-based projects are ‘incompatible’ with a target to limit planetary warming to 1.5°C,” Ajaz said.

She added that if these units become operational, more than 750 million tonnes of carbon emissions are expected annually. This would nearly double current annual emissions of gas-fired power plants in Asia that is roughly 1.3 billion tonnes.

Catastrophic impacts

Ajaz has noted, “Asia is already witnessing the catastrophic impacts of climate change in the form of floods, severe heat waves and other extreme weather events,” citing data from the World Meteorological Organisation that found Asia facing more than 100 natural hazards in 2021.

Of this, 80% were flooding and storms, leading to the death of around 4,000 individuals, affecting nearly 50 million and costing economies a total of US$35.6b.

Moreover, Ajaz said importing LNG fuel could also pose risks for Asia’s energy security as in Bangladesh and Pakistan which struggled to afford high LNG prices. LNG prices soared ten-fold in mid-2020, leading Bangladesh to implement rolling blackouts that could potentially last up until 2026.

“Domestically produced, renewable power can alleviate these issues and set Asian nations on a path of energy independence,” she said. “Renewable energy technologies like onshore wind

GENERATION REPORT: COAL AND GAS

institutions have the capacity, the power, and the incentive to put the world on course to meet our global climate and public health goals by ending the flow of capital that has sustained the era of coal for too long,” Ajaz said.

“Until then, energy planning that promotes new coal plants or props up existing coal plants presents a risk and delays the much-needed transition to cleaner energy sources,” she added.

Grid infrastructures will also need to be upgraded to handle the increased load coming from existing renewable energy sources, a project that would require massive investments.

Ajaz flagged that the lack of development in grid systems has made investments in renewables seem to be less attractive.

and solar projects present a wiser investment choice, as they now cost, on average, 40% less than new coal or gas plants.”

Renewable energy investments

The East Asia and the Pacific region continue to dominate the investment in renewable energy globally, securing around 45% of the total in 2019 to 2020, which translates to US$307b annually, according to the International Renewable Energy Agency’s (IRENA) World Energy Transitions Outlook 2023.

In 2022, the region accounted for almost two-thirds of the total investments. China comprised over 80% of the investment in the region on the back of the government’s goal to peak emissions by 2030 and achieve carbon neutrality by 2060.

Globally, the total installed solar capacity reached 1,047 GW. Of the total 191 GW installed in 2022, accounting Asia for 59% of the installations, IRENA said.

The region also led in onshore wind with 393 GW out of the 836 GW total capacity. Along with Europe, Asia contributed 50% to the total offshore wind capacity, the report read.

Transition ‘not fast enough’

Ajaz observed that whilst significant strides have been taken to rid power mixes of coal, the transition away from existing and planned fossil fuel projects is still not moving “fast enough.” “Even though the past year has underscored the risks — especially in Asia — of relying on natural gas imports, the region ranks highest in the world for prospective gas power plant buildout,” she added.

Not only that, GEM found that even as financial institutions are implementing coal divestment policies, coal could still source funding from other financial pipes.

“For the era of coal to come to an end, all these pipes must be closed. Financial

Additionally, governments and financial institutions should further look into equitable funding for the transition, similar to the JETP in Indonesia and Vietnam. This is particularly important as renewables deployment remains economically nonviable in some Asian markets.

“Renewables are not yet economically viable in many Asian countries. So, switching to renewables in current conditions might mean an increase in tariffs. The cost of switching to renewables is also a significant issue,” Ajaz noted.

“Transitioning away from fossil fuels, especially in the short run, will also come with a financial loss in terms of stranded assets, as the existing infrastructure might end up being abandoned,” she added, citing the case of the Philippines which recently saw its first LNG terminal commissioned.

On top of this, “strong and clear” long term government policies will also be needed for the transition.

Dr. Tay recommended a carrot and stick approach through subsidies for renewables investment as well as carbon tax on emissions. Phase outs will also need to cover both direct and indirect subsidies on fossil fuels towards this end.

Sreejeet Barik

Warda Ajaz

The transition away from existing and planned fossil fuel projects is still not moving “fast enough” (Photo from rawpixel)

Globally, the total installed solar capacity reached 1,047 GW (Photo by Fernando Tomás from WikiCommons)

Ken Tay

For the era of coal to come to an end, all these pipes must be closed

EGAT’s ‘Triple S’ strategy drives Thai energy transition

Retiring EGAT Governor Boonyanit Wongrukmit shared the company’s clean energy initiatives.

THAILAND

In the midst of pursuing Thailand’s ambitious carbon neutrality target by 2050 and net-zero emission goals by 2065, state-owned electricity company, Electricity Generating Authority of Thailand (EGAT), faces a significant leadership transition. EGAT Governor Boonyanit Wongrukmit’s imminent retirement on August 23 leaves behind a three-year legacy of driving the company towards carbon neutrality.

“We aim at being a regional green energy infrastructure provider,” shared Wongrukmit in an exclusive interview with Asian Power. He also revealed valuable insights from his tenure at EGAT, whilst shedding light on the organization’s ongoing energy projects and the implementation of its “Triple S” strategy, which aims to reduce carbon emissions across its operations.

How has EGAT performed in 2022?

At the end of 2022, we had a total generating capacity of 16,920 megawatts (MW) from 53 power plants, which accounted for 34% of Thailand’s total capacity. EGAT also purchased power from independent power producers (IPPs) at 16,748 MW and from small power producers at 9,195 MW. Moreover, we imported 6,234 MW of power from neighbouring countries. Recently, we successfully commenced commercial operation of the Bang Pakong Combined Cycle Units 1 and 2 replacement projects with a capacity of 1,386 MW.

For the transmission system, EGAT owns a transmission line of 38,666 circuit kilometres long with 235 high-voltage transmission stations. For the environmental indicator, the carbon dioxide reduction target for the first quarter of 2023 is at 0.1292 million tonnes (megatonnes or Mt) of carbon dioxide and it is expected to reach the goal of 3.36 Mt of carbon dioxide by the end of this year.

What were the key milestones that the EGAT achieved under your leadership?

There are several key milestones that we have achieved during my time as EGAT governor. Firstly, we started the commercial operation of the world’s largest hydro-floating solar hybrid project at Sirindhorn Dam with a capacity of 45 MW. This is the pioneer project to speed up the development of other similar projects with a total potential capacity of 10,416 MW. They will be EGAT’s primary renewable energy source by 2080.

Secondly, EGAT established new companies under EGAT Group: INNOPOWER and InnoSpace Thailand. We aim to work with innovative start-ups to find business opportunities in the energy transition period.

Next, EGAT has co-invested with PTT in the LNG terminal at the Nong-Fab Sub-district. This is to generate an LNG supply of 7.5 Mt per year. Also, EGAT has expanded its new S-Curve business. This includes EV solutions, smart energy solutions, and LNG businesses. To support Thailand’s carbon neutrality and net-zero emission goals, EGAT has implemented the EGAT Carbon Neutrality policy. We also engaged with the Metropolitan Electricity Authority and Provincial Electricity Authority to invest in Thailand’s power infrastructure to promote green energy and enhance national power security.

Dealing with COVID-19, EGAT succeeded in applying workfrom-home and work-from-anywhere policies. For post-COVID-19,

The government is actively diversifying the country’s energy mix, with a strong focus on promoting renewable energy

the hybrid working policy has become our new working scheme. EGAT also established a transformation management office to digitalise our process and have a lean and efficient working system. All these achievements made us win many awards in various fields such as Best Employer Thailand 2022.

What were the

major challenges that EGAT faced and how were you able to overcome them?

During the few years that I have been EGAT governor, the energy industry has undergone important transformations. One big challenge we faced in Thailand’s energy transition is to move toward carbon neutrality by 2050 and net-zero emissions by 2065. The government is actively diversifying the country’s energy mix, with a strong focus on promoting renewable energy and achieving energy security and carbon neutrality. To handle this challenge, EGAT introduced a carbon neutrality strategy we call the “Triple S” approach.

The first S stands for source transformation, where we focus on generating energy from lower carbon emission sources. The second S is sink co-creation, which involves various projects to absorb carbon dioxide. And the last S is the support measure mechanism where we create the energy efficiency mechanism to prevent carbon dioxide emissions.

Another challenge we are facing is the fluctuating prices of oil and gas due to the Russia-Ukraine crisis. Since natural gas is the main fuel for generating electricity in Thailand, price fluctuations have a direct impact on the cost of electricity. We have taken several measures to handle this challenge. For example, we work with the Ministry of Energy, the Energy Regulatory Commission, and other relevant parties to closely monitor and analyse oil and gas prices.

In the short term, EGAT has delayed the decommissioning of power plants with low fuel costs, such as the Mae Moh Thermal Power Plant Unit 8. We chose to use low-cost fuels like diesel and furnace oil in combined-cycle power plants instead of natural gas.

Retiring EGAT Governor, Boonyanit Wongrukmit (Photo from the Electricity Generating Authority of Thailand)

For the long term, we are actively managing natural gas import portfolio to have flexibility in terms of price and quantity.

I have driven many strategies that helped EGAT overcome challenges in the energy industry. Our internal corporate competency, especially in human resource management and development, has been strengthened. Employees have been encouraged to give their best effort for EGAT whilst taking care of their physical and mental well-being. We also established EGAT Group companies to expand the business and improve operational flexibility. The companies can support each other’s strengths in line with EGAT’s positioning as a provider of green energy infrastructure and strengthen the EGAT Group’s brand.

To build trust and engagement from stakeholders, we believe in “win-win-win” solutions. Our focus is on flexibility and approaches that bring benefits to our involved parties. EGAT enhances the operational activities of an outstanding professional in the energy business. To expand our service to the ASEAN (Association of Southeast Asian Nations) market and become a player in future energy trading, we are focusing on high-performance projects.

What lessons have you learned in serving as the EGAT governor?

I always believe that our employees are the most important and valuable resource and they serve as a driving force for the organisation. My experience as the governor of EGAT has proven what I believe is true: When people are happy, the work they produce is of high quality. Under any arising crisis or challenges that EGAT may face, with the good mindset of the people, everything becomes manageable.

I have realised that no one is a competitor. They are friends and alliances and I am thankful for our collaboration. Most importantly, we cannot be a one-man show. We are a team no matter what positions we hold. We all hold equal value and play a role in driving success.

How is EGAT faring so far in driving Thailand’s energy transition?

We have taken part in driving Thailand towards the energy transition with four strategies. Firstly, we have strengthened the national power system through our grid modernisation and transmission predictive maintenance. This is done to support the smooth integration of growing RE.

Secondly, we use the Triple S strategy to achieve our green energy and carbon neutrality goals. Under this strategy, we have developed several projects, such as the 45MW hydro-floating solar hybrid project in Sirindhorn Dam.

We also have an EV business solution, in which we increase the availability of EV charging stations nationwide to meet the growing demand of EV users and support the government’s policy which

speeds up EV production. We are also developing hydrogen technology projects with our partners to explore new sources of power generation that have lower carbon dioxide emissions. Thirdly, we have improved our organisational competency by focusing on HR, work process and digitalisation to increase engagement with the community and stakeholders.

Lastly, EGAT is finding new energy solutions to meet customer needs and improve their satisfaction. For example, since there is a growing demand for green energy from both domestic and foreign investors, we are developing green energy trading businesses and green digital solutions. These initiatives aim to attract investors by offering conditions that help reduce carbon dioxide emissions in operational activities.

EGAT owns three thermal power plants. What will happen to them as the company aims to reduce its greenhouse gas emissions, and support Thailand’s net zero emissions target?

Two of our thermal power plants, Bang Pakong and Krabi Power Plants are in standby mode for emergencies only. The other is the Mae Moh thermal power plant that is currently operating to support the power security of Northeastern Thailand.

We have a plan to install carbon capture and storage to capture carbon dioxide emissions from the generation process, which will be stored deeply under the Mae Moh mining area. We expect that this project will capture carbon dioxide emissions of around 1,565 million tonnes from 2022 to 2049.

Moving forward, what direction do you see EGAT taking in the next five years?

We aim at being a regional green energy infrastructure provider. This is from our prediction that by 2027, green energy will play a bigger role in everyday power usage and industries will need to incorporate more green energy into their production process. Also, foreign investors will have more demands for green energy, because they are forced to contribute to the global goal of carbon neutrality. They may have financial conditions tied to reducing carbon emissions, such as low-carbon loans or green loans.

EGAT predicts that the demand for green energy will increase from the foreign investment in ASEAN, particularly in Thailand, and Cambodia-Laos-Myanmar-Vietnam which have enough renewable energy resources. We believe that with our skills in transmission assets and management, as well as our knowledge in energy management and engineering, EGAT can become a leading provider of green energy in ASEAN.

Foreign investors will have more demands for green energy to contribute to the global goal of carbon neutrality

High voltage transmission line of EGAT is like an artery of Thai electricity system (Photo from EGAT)

Hydro-floating solar hybrid project at Sirindhorn Dam with a capacity of 45 MW (Photo from EGAT)

Meralco breaks into PH solar industry with Spectrum

Spectrum has an installed capacity of more than 50 megawatts throughout the Philippines.

PHILIPPINES

Meralco entered the Philippines’ solar energy market in 2016 with the establishment of its wholly owned subsidiary, Spectrum — a time when the market was already competitive. Despite this, Spectrum thrived through the years and even past the pandemic as it leveraged Meralco’s century-old reputation.

“We entered the market at a time when it was already filled with established solar companies. Admittedly, it was hard for us to match their base at that time,” Spectrum COO Patrick Henry Panlilio, told Asian Power

In addition, the company initially struggled with offers that cost more, compared to other players. He noted that the company managed to reduce costs and compete through Meralco’ s longstanding relations with its partners and manufacturers.

In 2022, Spectrum reported an accumulated installed capacity of more than 50 megawatts (MW) of rooftop solar power. It also increased its customer acquisition by 20%.

In this Q&A, Panlilio shared more insights into how Spectrum broke into the solar rooftop industry, the challenges it entailed, and the opportunities waiting to be captured in the Philippines’ solar energy industry.

What were the reasons behind the decision to establish Spectrum and venture into renewable energy?

Meralco has been the premier energy distribution utility in the Philippines for 120 years and it is accountable for around 55% of the energy distributed in the Philippines. As part of its progressive initiatives, sustainability is at the forefront and centre of its operations.

It is for this reason that Spectrum was established. Spectrum embodies Meralco’s sustainability agenda of providing clean, affordable, and accessible renewable energy to its customers. As the biggest distribution utility in the Philippines, Meralco needed to ensure that grid stability is paramount and cognizant that solar and other renewable energy sources potentially can disrupt the system.

As such, the establishment of Spectrum ensures that Meralco has a hand in ensuring standards are leveled up and compliance with the Philippine Electrical Code is carried out. Even today we see that there are areas for improvement for the organisation and centralisation when it comes to the policies for renewable energy.

Meralco and the Department of Energy (DoE) are working closely to harmonise the guidelines and requirements of the Energy Regulatory Commission (ERC), local government units (LGUs), and other distribution utilities nationwide with Spectrum, providing the expertise on the matter, based on actual market experience.

What are the challenges you encountered in the RE market?

During the inception of Spectrum, we came across many challenges that made our entry into the renewable energy space difficult.

The first issue we had to face was that we entered the market at a time when it was already filled with established solar companies. Admittedly, it was hard for us to match their base at that time. As with other new companies, we also did not have any portfolio to show our targeted customers or potential customers, which are particularly the businesses who were meticulously considering their requirements.

Another thing worth noting is at the start, our products were relatively more expensive, compared to the last few years. Without standing partnerships and relationships with vendors and suppliers,

Consumers are looking for somebody who can provide value for money, which also means being present after sales

we couldn’t provide competitive prices to our customers. And eventually, we were able to leverage the relationship of our parent company’s supply chain to establish these partnerships, and with these manufacturers. With these, we can improve our prices eventually and lead to more customers. Some of our first customers chose us because of our affiliation with Meralco.

These large customers enabled us to establish ourselves as one of the premier solar rooftop providers in the Philippines. As time went by, we only got bigger and we made sure to adapt to policies and regulations that the government mandated. We pride ourselves in making sure that our solar solutions reach international safety standards.

Right now, we’re working closely with the ERC, the DoE, and the LGUs of specific installations in compliance with these policies, whilst also having Meralco at the side, providing an expert opinion based on experience concerning the creation and liberalisation of these guidelines and policies for solar.

What were the lessons you learned from this experience?

Consumers are very meticulous. They are looking for somebody who can provide value for money, which not only means competitive price. It also means being present after sales.

Meralco established Spectrum for this, because solar and other renewables are for the long term. And it is considered an investment, especially during the seven years back down. It was really expensive. So, you need to maintain these facilities for them to efficiently work and safely work. That’s how we were organised and that’s what we did, especially when offering this sense of reliability to our customers. You need to have reliable partners in the industry, partners on the

Spectrum embodies Meralco’s sustainability agenda, Patrick Henry Panlilio, COO, Spectrum

equipment side, and also you need installers who can provide you quality service. Fortunately, in Meralco or Spectrum, since we have robust engineering processes, we apply that before we promote all of this equipment and include our designs. That’s very important because you’re investing in a facility that also can last you for 25 or even 30 years. That needs to be maintained as well. And definitely, this is something that Meralco or Spectrum wanted to continue as the business model when Spectrum was established.

How does Spectrum operate? What are your major partnerships?

We were able to establish solar for business, which is our prime service, and this is essentially the end-to-end of an EPC (energy performance contract) solar generating facility for our commercial and industrial customers, from SMEs (small and medium-sized enterprises) to large multinationals. We also have solar for homes, and our service for residential customers. The key thing here is that they’re able to, of course, avail of similar standards. And, of course, the safety and integrity of the installations are upheld.

The other one would be microgrids and utility-scale, so currently, [it’s] one of our biggest focuses in 2023. This service deals with large installations with hundreds of megawatts in capacity. This serves as either the solar energy generating plant for some communities or as a power generating facility that sends power into the power grid itself.

We also have operations and maintenance and this service is, particularly and definitely, what we are proud of. In Spectrum, we do not limit our maintenance packages to our installations only. We encourage those with existing solar systems on their homes, or office buildings to have them checked by us.

So as experts in the industry and backed by Meralco’s energy expertise, we believe that we can ensure that every installation is compliant with the Philippine Electrical Code.

More than 99% of our portfolio is from the C&I (commercial and industrial) business with a few residential customers. We only started offering our residential solutions when the pandemic kicked in because a lot of people are looking for ways to save on electricity, especially when working from home, and online schooling was very prevalent.

We have diverse customers. For instance, we have mall operators for the retail side, then food manufacturing for the industrial sector. We also cater customers from the electronics manufacturing. Then, we also cater some LGUs that were able to serve their requirements.

What’s next for Spectrum? Can you share with us any upcoming projects or partnerships?

We have major partnerships that we would like to proceed with, but are mostly focused on, again, the commercial and industrial sectors. We’re targeting to build about 23MW minimum capacity for 2023. This is aside from engaging utility-scale developers and electrical operatives for potential EPC contracts for their solar farms and microgrids all over the Philippines.

We are also continuing to develop partnerships to install solargenerating facilities

We are also focusing on building bridges with more trade and business organisations, but not limited to the members of the Philippine Chamber of Commerce and Industry as we want to bring the benefits of solar directly to them.

We are also continuing to develop partnerships with LGUs to install solar-generating facilities. We have a lot of them in our portfolio already, which we’ll be pushing for this year to help them achieve the government mandate of installing solar facilities in their businesses and offices.

We also intend to look at other renewable sources, but we have our hands full with solar right now. Solar is just on the rise and a lot of awareness needs to be made, not only from the government, but also from the distribution utilities, businesses, and service providers. Since solar is the prevailing technology and the cheapest and the most accessible and affordable technology, we plan to pursue more of our efforts here in this space.

How would you characterise the Philippine RE landscape, particularly in solar energy?

The renewables landscape is very, very promising. Solar is on the rise. Renewable energy comprises only about 22% of the Philippines’ energy production, with wind and solar amounting to less than 2%, based on DoE’s latest recent estimates. That doesn’t mean the Philippines is lacking opportunities for renewable energy.

The Philippines is an untapped treasure trove for renewable energy projects, particularly for solar as the country is situated at an optimum angle from the equator. It’s just a matter of developing these facilities to make the [most of the] circumstance.

Part of the Renewable Energy Act of 2008 is the Renewable Portfolio Standards or RPS. It’s a market-based policy that requires our distribution utility, like electric cooperatives, and retail electricity suppliers to source an agreed portion of their energy supply from eligible renewable energy sources. Before, it was only 1%, and last year, they enhanced it to require up to 2.5%. The number may look small, but this is a big encouragement to invest in renewable energy sources, especially for the developers of large-scale solar and utility-scale farms.

Considering the country’s effort to embrace RE, we are on the right path, and with the laws such as Republic [Act] 11285, the Energy Efficiency and Conservation Law, at the forefront of requiring businesses to have part of their energy consumption taken from renewable energy sources, this leads companies to look for their solar providers as this is the most accessible source of RE. Policy shifts will play an important role.

Just very recently, the government allowed 100% foreign ownership when it comes to related renewable energy projects. This would attract more foreign investments and open up great opportunities not just for Spectrum, but for all renewable energy companies in the Philippines.

The Philippines is an untapped treasure trove for renewable energy projects, particularly for solar

Anglo Watsons Glass Inc

Untapped offshore wind can power Japan clean energy shift

Unleashing wind potential could boost Japan’s share of clean power to 90% by 2035, according to the think tank, Ember.

“There have been challenges with the recent slowdown in the growth of renewables deployment,” Kawamata told Asian Power. “Despite past efforts, we see the renewables share is expected to remain at 27% of total generation in 2030, falling short of the government’s target of 36 to 38%.”

Lower wind capacity

Japan has a “modest” operating wind capacity as of May 2023 at 3,429 MW, according to GEM’s Global Wind Power Tracker. With that, it ranks 29th globally.

Despite this, Ember pointed out that Japan’s share of wind generation is way lower compared to the other G7 member states.

“In 2022, wind accounted for more than 10% of electricity generation in the United States, and more than 20% in both Germany and the United Kingdom. The second lowest wind performer was Canada at 6%. But, Japan with just 1% of its electricity from wind, is a clear outlier in the G7,” the Ember report read.

In an interview with Asian Power, Ember’s Global Insights Lead Dave Jones noted how solar power rose from almost zero to 10% in the last decade.

“Japan already has built quite a base of solar power. We’re really happy to see that and take a lead role. When you look globally, it really is wind and solar. Although there’s good progress on solar, that progress on wind is not as good,” Jones said.

The think tank added that Japan’s 6th Strategic Energy Plan, which outlined its target to generate 59% of its electricity from clean power by 2030, aims to generate 5% of its electricity from wind in 2030, around 5.7 GW of which will be offshore.

Despite the progress in renewable energy transition led by solar power, Japan can only do so much with solar due to various factors such as land constraints as mountainous terrain covers over 75% of the land mass.

To boost the country’s energy transition, Japan can tap the potential of offshore wind with a long coastline fit for the technology and as it comprises only less than 1% of the country’s total electricity generation mix, according to climate and energy think tank Ember.

Renewable energy accounts for around 20% of Japan’s electricity generation. Whilst there are goals to raise its share, the country is lagging behind the other Group of 7 (G7) member states which include Canada, France, Germany, Italy, the United Kingdom, and the US.

“Japan’s renewable energy ambition falls behind that of G7 member states, as countries like Canada, Germany, the United Kingdom, and Italy have already surpassed Japan’s 2030 target of 36-38% electricity from renewables. Nonetheless, Japan’s deployment of renewable energy

There have been challenges with the recent slowdown in the growth of renewables

has exhibited varying levels of success,” said Shradhey Prasad, project manager for Global Wind Power Tracker at Global Energy Monitor (GEM).

Japan’s solar power

Yamato Kawamata, senior power market analyst for Asia Pacific Power & Renewables Research at Wood Mackenzie, said Japan RE’s capacity is not necessarily lower than the other G7 countries.

He noted that Japan ranked third globally in terms of installed solar capacity in 2022, behind China and the US. The country also has the highest solar capacity per land amongst the G7 countries which stood at 163 kilowatts per square kilometre, 9% higher than Germany’s and 181% above the UK’s. GEM data also showed that Japan is seventh globally in operating large utility-scale capacity and is also faring well in smaller-scale distributed solar installations, ranking second amongst G7 members following the US. The country’s prospective large utility-scale solar, however, is relatively low at 2,648 megawatts (MW), according to GEM.

The plan only comprises 4% of the G7’s 150-GW offshore wind commitment by 2030, based on the members’ existing targets, led by the UK which aims to reach 50 GW, followed by the US and Germany targeting to reach 30GW during the period.

“Wind is Japan’s missing puzzle piece. Unleashing wind potential could boost Japan’s share of clean power to 90% by 2035,” Ember said, citing a report by the Lawrence Berkeley National Laboratory.

In 2020, the Japan Wind Power Association announced a 10-GW target by 2030 and around 30 GW to 45 GW by 2040.

Ember also noted the commitment of the G7 leaders last year to “a goal of achieving predominantly decarbonised electricity sectors by 2035,” means 100% decarbonisation for the UK, US, Canada, and Germany.

France, on the other hand, is already using 90% clean power on the back of its nuclear capacity, whilst Italy aims to phase out coal by 2025, but still has to issue a plan to veer away from gas and replace it with clean power.

“For Japan, the Berkeley Lab study shows that it has the potential to raise its clean

Japan can tap the potential of offshore wind with a long coastline fit for the technology (Photo from WikiCommons)

Shradhey Prasad

power ambitions by unleashing offshore wind–alongside some onshore wind and enhanced solar– which will put Japan on track to reach 90% decarbonised power by 2035,” the report read.

Under the Berkely Lab study, solar could generate 27% of the country’s electricity whilst wind can generate 26%, with offshore wind forecasted to meet 18% of Japan’s electricity, Ember noted.

Meanwhile, a report by the Renewable Energy Institute projected that Japan can reach 80% decarbonised electricity by 2035, with solar power expected to account for 40% of the total electricity generation and wind comprising around 20%.

Deployment barriers

According to Jones, political ambition is crucial in accelerating Japan’s renewable transition. He explained that companies want reassurance that there is a pipeline of contracts that will enable them to build and invest in wind projects.

“When you’re looking at a big kind of capital expenditure, you need that level of certainty. What really needs to happen is for the Japanese government to be able to articulate what they want to be able to achieve on offshore and onshore wind over the coming decade,” Jones said.

Kawamata cited three main challenges Japan faces in ramping up its renewable energy capacity. First is the country’s mountainous terrain, which proved it difficult to find a suitable site for affordable RE projects, particularly for solar.

Various steps were considered to maximise space use by utilising farmland, carports, and rooftop solar, but these are unlikely to significantly boost the renewables capacity in the future. The insufficient grid capacity would also worsen the risk of curtailing new RE projects.

“This curtailment risk has made renewable developers and financial

institutions hesitant to invest in new projects. The government announced the grid expansion master plan this March, and it is pretty important to materialise the plan on time,” Kawamata said.

Some of the projects are also facing local opposition which has resulted in the cancellation or delay of several renewables projects. This strong resistance against large-scale projects in local communities rose due to concerns over the impact on the landscape and tourism, amongst others.

Japan aims to install 140 GW of wind power in line with its carbon neutrality goal by 2050. It ranks 10th globally for prospective wind capacity with 52 GW in various stages of development, of which around 43 GW are offshore wind projects, Prasad said.

However, he said the lack of “transparent and predictable” timelines and zoning designations pose a challenge in identifying suitable sites.

“Japan requires localisation of certain aspects of the wind power supply chain, which adds complexity to the development process. Streamlined regulatory frameworks and competitive power purchasing prices are crucial in attracting international investment to Japan and ensuring the successful implementation of projects,” he said.

Prasad also noted that investment in offshore wind is still being scaled up, prolonging the pre-construction period. In addition, the extensive infrastructure development and the need for port facilities to receive power from such projects make the development more complex.

Unlocking offshore wind opportunities

Prasad has noted though, the country’s effort to address the issue. “To Japan’s credit, in response to the limited suitability of sea-bed conditions for fixed-bottom wind turbines and the challenges posed

by typhoons and earthquakes, Japan is exploring floating offshore wind projects,” he explained. The way things are, significant increase could not be expected in the solar and onshore wind sectors. But Kawamata believes the growth of renewables in Japan would have to lie in the expansion of offshore wind power.

To achieve this, he said the government’s central system should minimise the risk for developers and investors. It should create a “favourable environment” for such projects.

Strengthening the domestic supply chain through incentives can also accelerate the project pipeline and bring down costs, Kawamata stated.

He also stressed that the early release of Japan’s exclusive economic zone (EEZ) should help the sector as this will facilitate increased participation, competition, and overall development in the offshore wind sector, including floating wind.

Japan should strengthen the domestic supply chain through robust incentives which will accelerate the project pipelines and reduce cost, he added.

For Prasad, establishing a sustainable offshore wind industry that enjoys lowinterest rates, a large electricity market, and a strong financing and legislative framework would make Japan attractive to international investors.

“Japan faces unique obstacles in its renewable energy landscape, but offshore wind power holds great promise. By streamlining regulations, ensuring pricing clarity, expanding transmission capacity, and developing port infrastructure, Japan can tap into its offshore wind potential, fostering a sustainable and independent energy future,” Prasad explained.

Yamato Kawamata

Dave Jones

The 28 wind power units are standing 3.1km long along Japan Sea coast line in North Hokkaido (Photo by Kanenori from pixabay)

The EZZ of Tokyo extends from the inner Tokyo Bay to the Izu and Ogasawara Islands (Photo from the Tokyo Metropolitan Government official website)

ANALYSIS: NUCLEAR REACTOR

Pessimism surrounds SMRs’ viability in carbon reduction push

Small Modular Reactors (SMRs) could miss out on contributing to the critical carbon emission reduction timeframe, despite their potential to provide consistent clean power, analysts caution, as only Russia and China have deployed the technology.

“In principle, SMRs could make a difference by supplying large quantities of reliable, low-carbon energy that is not intermittent. However, the problem is that they are unlikely to be deployed at a sufficiently large scale in the next 15 years, which is the period when significant reductions in carbon emissions must be made,” Philip Andrews-Speed, senior principal fellow of the Energy Studies Institute, National University of Singapore, told Asian Power.

Likewise, the International Energy Advisory Council (IEAC) pointed out that as SMRs are “largely conceptual,” this new power source might not be developed in time, adding that to date, only Russia and China have so far deployed these compact nuclear reactors.

“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,” Mycle Schneider, IEAC founding board member and spokesperson, said.

Schneider said there are only two 30 MW floating prototypes in Russia, two 100 MW high-temperature reactors in China, and none in the West. A 25 MW reactor domestically designed in Argentina was started in 2014, but its grid connection is set to be completed in 2027; whilst a 100-MW 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,” Schneider added.

Game-changing SMRs

Last January, NuScale Power secured the US Nuclear Regulatory Commission’s (NRC) certification for its proposed SMR design. This was followed by the NRC’s announcement in March that it has started the second round of review for the Standard Design Approval application of NuScale for its six co-located pressurised-water reactor modules. Each has a capacity of 77 MWe, with a total output of around 460 MWe.

NuScale President and CEO John Hopkins

noted that this brings the company closer to the commercialisation of SMR technology.

SMRs are considered a “game-changer” as these provide the same reliable and emission-free electricity with enhanced safety features, mitigating security threats often associated with large nuclear reactors.

“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. Older-generation technologies are also not deemed safe enough,” said Dr. Victor Nian, co-founder and CEO of the Centre for Strategic Energy and Resources, an independent think tank headquartered in Singapore.

Nian was referring to the 2011 incident, when a 15-metre tsunami hit three Fukushima Daiichi reactors in Japan that led to high levels of radioactive releases.

“Newer generation technologies, together with small modular reactors, are now believed to be a game-changer because they are much safer compared to conventional nuclear power technologies,” Nian said.

He said whilst security issues will always be present, SMRs have the technology to manage risks better than large reactors. SMRs are also flexible as these reactors can be sited offshore.

As these nuclear reactors are still in development, their wide deployment is unlikely, analysts say.

SOUTHEAST ASIA

SMRs are considered a “game-changer” as these provide the same reliable and emissionfree electricity

As nuclear reactors are mainly in development, SMRs might miss the window when significant carbon emissions reduction is needed - analysts (Photo by Michael Gattorna from Pexels)

Philip AndrewsSpeed

Mycle Schneider

These nuclear reactors also have a smaller footprint, unlike larger reactors that require exclusion zones in case of emergencies. Multiple SMRs may also be deployed in a single site, which eases difficulty in licensing.

As these are still in development, SMRs still cost higher, but Nian said this will likely change as the SMR market scales up and standardises. Further, the upfront commitment for SMRs is only about 30%40% of a large reactor.

Andrews-Speed, however, raised that whilst standardisation could significantly lower the capital costs of building SMRs, compared to larger reactors, “this has yet to be demonstrated in practice.” This means that the companies that will build SMRs will need to make a large number of orders to prove their economic benefit, he said.

Schneider, then argued that SMRs will likely lack economies of scale, as the smaller size of these reactors does not guarantee cost-effectiveness.

“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,” Schneider commented.

He added that in terms of waste generation, SMRs are expected to generate more spent nuclear and highlevel 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,” Schneider noted. Although, identified three ways to handle spent fuel management, at least in the Southeast Asian context.

ANALYSIS: NUCLEAR REACTOR

One of which is ensuring that agreements with vendors or suppliers of nuclear reactors provide for a spent fuel take-back policy or arrangement. This could protect against weaponising spent fuel.

Another way is having the region agree on establishing a common legal or regulatory framework that sets a guideline for managing radioactive waste. This could also cover setting up a single site that will serve as potential central storage.

Lastly, Nian said countries could sign different treaties and agreement that provides for how they can manage radioactive wastes within their respective jurisdictions. However, Nian flagged a potential conflict in this last option as other territories will likely have security concerns.

Ultimately, Andrews-Speed noted that considering there are over 70 designs and a variety of underlying fuel and cooling systems, “it is still too early to assess whether SMRs will be safer than the safest large-scale reactors.”

Weighing clean energy options

In the short term, Andrews-Speed and Schneider agree that renewables are better than SMRs as these are already being manufactured and deployed on a large scale. It has also achieved costcompetitiveness as it has become more affordable for markets across Asia and Europe to build solar and wind farms as well as hybrid renewable energy projects.

“In terms of policy, the most cost-effective option for reducing greenhouse gas emissions as quickly as possible should be considered, as every dollar can only be spent once. SMRs are not currently an option and may not be available for the next two decades,” Schneider said. “The focus should be on implementing climate-effective options that are available and cost-effective.”

Weighing both options, Nian said renewables generally have the stronger political support but pointed out that SMRs and renewable energy have their fair share of disadvantages. For instance, SMRs cannot be sited in every geographical location, much like renewable energy.

Citing the case of Southeast Asia, Nian noted that not all markets in the region generate green power from hydro, whereas nuclear reactors need to be sited in an area with a certain degree of access to water.

Nian contended, however, that as SMR technology is more advanced, these nuclear reactors no longer need water as a last line of defence. SMRs have also made nuclear power more flexible as it enables siting both on land and water.

“In Southeast Asia, you have archipelagos such as Indonesia and the Philippines, and large shorelines like Vietnam and Malaysia. These countries can have floating nuclear power plants,” Nian said.

SMRs would also be easier to integrate into the power grid, compared to renewables, particularly in regions such as Southeast Asia where electricity grids are smaller and more scattered. This is due to the reliability of nuclear power as it functions as a baseload power that produces electricity continually, as opposed to the intermittent and variable power generated from renewable energy sources.

“With SMRs, the demand can be stepped up continuously. Therefore, SMRs will be a lot easier to integrate into the grid than large-scale renewables, making it more feasible to have 1GW of SMRs compared to 1GW of renewables in the Asia Pacific context,” Nian said.

“In conclusion, SMRs will be a lot easier to manage in terms of integration and will provide the greatest quality electricity as compared to renewables.”

The focus should be on implementing climate-effective options that are available and cost-effective

Rendered NuScale Power’s small modular nuclear reactor plant (Photo courtesy of NuScale from WikiCommons)

In the short term, renewables are better than SMRs as these are already being manufactured and deployed on a large scale (Photo by Pixabay from Pexels)

Victor Nian

ANALYSIS: COAL ENERGY

Southeast Asia drives coal phase-out in power plants but socioeconomic impact looms

In a groundbreaking move, the Association of Southeast Asian Nations (ASEAN) Taxonomy Board (ATB) has issued an expanded regional taxonomy in March this year, specifically for the energy sector, outlining criteria for sustainable financing to phase out coal in power plants.

Considered a global first, the ASEAN’s move is deemed a critical first step towards meeting the region’s climate goals. But at what cost does this come, exactly?

Financing coal phase-outs

Coming out with the expanded ASEAN Taxonomy for Sustainable Finance, the ATB developed a set of criteria that took into account coal-fired power plants’ emissions intensity, absolute emissions reductions, and the reduction in the period of operations.

The ATB also identified the power plants in three categories: Tier 1 (Green or T1), Tier 2 (Amber, T2), and Tier 3 (Amber, T3). These are based on the target timeline for the coal phase-out, construction date, and technologies adopted, amongst others.

“Given the benefits of reducing emissions from coal power generation in a managed phase-out and the need for the ASEAN Taxonomy to respond to the diverse ASEAN member states’ circumstances to facilitate an orderly and just transition, the ATB has developed technical screening criteria for coal phase-out,” Noorrafidah Sulaiman, ATB chairperson, said of the science-based, inclusive method of classifying activities according to their contribution to the environment in the region.

She noted that as the inclusion of coal phase-out is novel, it can provide a powerful tool for the transition when executed correctly. The aim is to “promote inclusivity without compromising credibility and interoperability,” she added.

It could also advance dialogue within the international community for effective implementation.

“Having coal phase-out is a very important step towards meeting our climate goals, knowing the climate vulnerability that the region has,” Dr. Victor Nian, co-founder and CEO of the Centre for Strategic Energy and Resources, an independent think tank with a global headquarters in Singapore, told Asian Power

“But of course, it also has its implications because of our heavy dependence on it. That means we must find a viable solution to get ourselves out of coal,” Nian said.

He noted Southeast Asia will particularly benefit from coal phase-outs, considering the region’s vulnerability to sea level rises.

Phasing out coal without measures could jeopardize energy security and economic competitiveness

The ASEAN Taxonomy steers the region in the direction where there is a viable option for investments in the coal supply and value chain. However, Nian concedes that the move, whilst admirable, falls short of tackling social and economic issues, resulting from coal phase-outs.

The dependence of Southeast Asia’s on coal energy goes beyond its abundance in the region and its stability as a power source, Nian said.

Coal power represents a multi-billion industry for Southeast Asian countries, such as Indonesia, Malaysia, and Vietnam. It also employs hundreds of thousands of workers across the supply chain.

On top of this, Nian noted that current geopolitical tensions have driven markets back to coal for energy security.

Socio-economic implications

“From an economic and social point of view, these people will be the first ones that will be impacted, if we have a drastic coal phase-out,” Nian stated, adding that this will likely lead to a rippling effect that could also jeopardise jobs in the mining and transportation side amongst others.

“Coal is really the most abundant and reasonable energy resource in the region, and we have really been capitalising on coal to develop our economy. With Southeast Asia countries, and with most of us being developing countries, economic development will still be the first priority,” he stressed.

Nian said that as the Taxonomy is not designed to address these concerns, this will call for governments to come up with measures that will make the transition more sustainable on the socio-economic aspect. This is not to say, however, that the ATB cannot expand the Taxonomy anew to cover other solutions outside coal phaseouts “as soon as possible.”

“[The] ASEAN Taxonomy now needs to accelerate and look at all the options. We’re at the stage of coal phase-out, which will still need more clarity as to what that means and how we do that, but we still need to look at options and measures that need to be codified and come into the Taxonomy,” told Nian.

Nian added that whilst other options such as nuclear energy, carbon capture, utilisation, and sequestration (CCUS) have already been considered relevant and economically viable in the region, their inclusion in the Taxonomy remains to be seen.

He cautioned that phasing out coal without these measures could jeopardize energy security and economic competitiveness.

“In Southeast Asia, this can be quite a difficult situation for us to be in if coal-fired power plants can no longer be financed. But of course, this is an opportunity to rethink or reshape our future sustainable development plans — gradually moving out of coal, whilst looking at how we can leverage the Taxonomy in charting our way in the energy transition,” Nian concluded.

The ASEAN Taxonomy Board introduced an extended ASEAN Taxonomy for Sustainable Finance.

Southeast Asia’s dependence on coal energy goes beyond its abundance in the region and its stability as a power source

Victor Nian

Noorrafidah Sulaiman

SOUTHEAST ASIA

EVENT COVERAGE: WORLD SMART ENERGY

Global effort to meet Paris Agreement highlighted at World Smart Energy

Despite the forecasted decline in coal-fired generation by 2025 and the tripled production growth of solar and wind power, the industry is still far from achieving net-zero emissions, a key part of the Paris Agreement.

This was highlighted by one of the World Smart Energy Week keynote speakers, Brent Wanner, the head of the Power Sector Unit at the International Energy Agency (IEA).

Manufacturers were called to ramp up the production capacity of clean technology supply chains and for governments to strengthen their green policies.

Wanner mentioned that PV capacity needs to grow four times by 2030, sales of electric vehicles by 10 times, and electrolyzer installation by 200 times to achieve net-zero emissions by 2050.

“Only solar PV has about 20% of the manufacturing capacity that would be required in 2030 in the net-zero emissions by 2050 scenario. In the case of electric vehicle batteries, manufacturers have been anticipating 15 times higher demand at around 5,600 gigawatt-hours per year— telling us all of these plans, we come up with a production capacity of only 4,700 gigawatt-hours, 15% of the amount needed,” Wanner said.

He then urged policymakers to strengthen clean technology supply chains and remove barriers to the uptake of new technologies in order for the demand to meet supply.

First ‘real’ global crisis

According to Wanner, Russia’s invasion of Ukraine is the first truly global energy crisis.

“The crisis is causing severe damage to the global economy, and the lowest income citizens of the world are facing significant challenges with rising energy and food prices,” he said.

One way to measure the impact of the invasion is through inflation, a benchmark against the 6% rate.

“For the first time in decades, the number of people around the world without access to electricity is set to rise. Due to the pandemic and the current energy crisis, 75 million people that recently gained access to electricity are likely to lose the ability to pay for it,” Wanner noted.

The IEA said that whether the current crisis will be a hindrance to moving towards a more sustainable and resilient energy system primarily depends on the governments, and the crucial test for them is whether their policies will bring additional capacity capital into clean energy.

As of today, IEA sees the crisis as a pivotal moment in energy history.

“Prior to Russia’s invasion of Ukraine, it was the world’s largest fossil fuel exporter. Putting oil and gas together, Russia exported about 50% more than the next biggest exporter, Saudi Arabia. At that time, our expectation was that Russia would easily maintain this position, but this has now changed,” Wanner said.

Once the European Union ban on imports kicks in, which has just occurred in February 2023, and gas sees an even steeper drop, Russia’s exports are set to be half of today’s level by 2030.

“The reduction in oil and gas sales we see here equates to more than $1t of lost income over the next decade. The next few decades, we will be drawing down a system based on fossil fuels and building one up based on clean energy,” Wanner concluded.

The World Smart Energy Week held at Tokyo Big Sight, Koto, Japan, from 15 to 17 March, attended to by energy industry stakeholders—including 1,500 exhibitors from the fields of hydrogen and fuel cells, PV systems, rechargeable battery, smart grid, wind energy, biomass power, thermal power, decarbonisation solutions, and circular economy systems. They gathered to discuss the latest trends and advancements in the clean energy sector.

One crucial step to achieving the global climate goal is to increase clean energy at least four-fold, IEA said during the event

The industry is still far from achieving netzero emissions

Only solar PV has about 20% of the manufacturing capacity that would be required in 2030 in the net-zero emissions by 2050 scenario (Photo by Hoan Ngọc from Pexels)

Brent Wanner

EVENT: ASIAN POWER FORUM BANGKOK

SEA energy opportunities explored in Asian Power Forum

“The most impactful way to decarbonise in Southeast Asia is increasing the share of renewables,” Billen said.

Asian energy sector’s future

The second speaking session was held by Dr Florian-Patrice Nagel, First Senior Vice President and Head of Corporate Strategy at B.GRIMM Power, who gave a power producer’s perspective on how the world has been evolving and what has been driving the energy sector given this shift.

Nagel explained that with the reduction of greenhouse gas emissions in the global economy becoming imperative, renewables are seeing exponential growth in Southeast Asia. In addition to this, he noted that installed capacity is showing a tremendous growth trajectory, but it does not realistically get close to the target as a multiple of at least two or three times more is needed to meet the required production.

“I personally believe that this is only possible if the private sector will invest and puts up all this money. To be able to do this, we need sector reforms to enable more business cases and attract more private investments into the energy sector of this region. For example, unconditional third-party grid access and a supplydemand driven energy prices would make energy storage viable as a business for the private sector,” Nagel said.

Many industry leaders are focused on the progress of sustainable energy in Asia, which has seen significant advancements in recent years. The region’s energy leaders have set an example for others to follow, making Asia a key player in sustainable power development.

Asian Power brought together key stakeholders in the region at the Bangkok leg of the 2023 Asian Power Forum, held on 5 April at the JW Marriott Bangkok. This is the first forum held in Bangkok after years of holding events virtually. During the event, industry professionals got to connect with experts in the sector through presentations and a panel discussion.

Hydrogen opportunities in Southeast Asia

For the first speaking session of the event, Dieter Billen, partner for Energy, Sustainability & InfrastructureSoutheast Asia at Roland Berger, offered his perspective on green hydrogen opportunities. Particularly, he talked about the point of view of power producers in Southeast Asia, the huge interest in green hydrogen, and the opportunities within Southeast Asia.

“We expect the global market for green hydrogen to rise very rapidly, especially in Europe and North America – with strong government support like the Inflation Reduction Act in the US. Although only

a fraction of the announced projects will materialise, this will still represent strong growth in green hydrogen capacity”, Billen said. However, the growth in Southeast Asia is lagging behind, given limited to no support in most countries in the region.

Billen also stressed the need to assess hydrogen opportunities by project archetype: small-scale green hydrogen (less than 10MW), on-site industrial green hydrogen production (less than 250MW), and centralised large-scale green hydrogen gigaprojects for exports (more than 250MW). Although there are a number of announcements for largescale export projects, Billen expects the majority of projects in Southeast Asia by 2030 to be small-scale projects or on-site industrial production projects, given the high cost of transport at this stage.

With these challenges in Southeast Asia, Billen advised starting with smallscale hydrogen projects and ensuring nearby demand before exploring other large-scale opportunities.

Outside hydrogen, Billen noted the strong opportunities in solar and geothermal energy that a lot of Southeast Asian markets still offer, as well as wind power in certain geographies in the region.

Ultimately, renewable energy is expected to have the biggest impact on Southeast Asia’s decarbonisation, but this will need investments, not just in terms of generation, but also in the modernisation of grids and storage capacity.

He then suggested digitalisation to enable real-time control of grids using AI and machine learning, amongst other things. This is imperative to manage grids becoming ever so complex.

Nagel put forward B. Grimm’s GreenLeap Strategy, which is rooted in the insight that the reduction of greenhouse gas emissions of the global economy is the S-Curve for decades to come. The said strategy aims to build resilience to geopolitical events and public sector decision-making, especially regarding the main cost driver of B.GRIMM Power—the gas pool price.

The GreenLeap Strategy is focused on increasing and improving margins, continuing to look for efficient operation of combined cycle gas power plants, taking part in the growth of renewables worldwide, and investing in sustainable fuels and feedstock such as ammonia and hydrogen.

Nagel also raised the role of demand shaping strategies complementary to technologies for storage of green energy. This may be in form of incentives that encourage the shift in production times, thereby reducing the need for storage capacity.

“Incentivise the customer to shift their production to times where we actually have excess power is a way to reduce the load during times where you don’t have enough power,” he suggested.

Read the full event coverage at https:// asian-power.com/

The event is the first Asian Power Forum to be held in person after years of virtual events.

Asian Power publisher, Tim Charlton moderating the Asian Power Forum’s panel discussion

The most impactful way to decarbonise in Southeast Asia is increasing the share of renewables

THAILAND

EVENT: ASIAN POWER FORUM JAKARTA

Indonesia unleashing potential in new and renewable energy

Indonesia’s power sector is poised for growth, thanks to new renewable energy initiatives, modernised transmission infrastructure, and the country’s unique archipelagic and resource-rich environment.

These conditions were the center of discussions among industry leaders and stakeholders at Jakarta 2023 Asian Power Forum held at the Pullman Hotel last May 4.

In attendance were nine speakers from various sectors of the power industry, with representatives from the ministries, stateowned enterprises and the private sector, and around 50 audience participants.

Bold steps towards RE

In the first session, Harris Yahya, director of geothermal for the Directorate General of New Renewable Energy and Energy Conservation, teed off Indonesia’s efforts to reduce greenhouse gas (GHG) emissions in abidance to the Conference of the Parties (COP) — the United Nations Framework Convention on Climate Change (UNFCCC) held last November.

The official from the Ministry of Energy and Mineral Resources said Indonesia has increased its target to reduce emissions by 31.89% on its own and up to 43.20% with international support. The country’s capability to do so, said Yahya, is owed to the fact that the archipelago is blessed with abundant natural renewable energy

(NRE) resources that include solar, hydro, bioenergy, wind, geothermal, and ocean, which have a potential capacity to generate gigawatts (GW).

However, only 12.570 MW has so far been utilized from these NRE resources. To optimise these resources, Yahya suggested the need for a modern and integrated super grid to establish a resilient and robust transmission infrastructure. This would help streamline renewable energy development, maintain transmission stability and security, and address the mismatch between RE resources and the location of high electricity demand areas.

He also emphasised the importance of implementing Renewable Energy Based Industry Development (REBID), which is expected to attract investment and increase regional economic development.

At present, the government already has a program called Integrated Development of Large Scale Hydro and Geothermal within Industrial Development and Synergy of NRE Development with Economic Cluster Development, which focuses on developing large-scale hydro and geothermal resources in synergy with economic cluster development, he said.

In his presentation, titled “Development of Geothermal Energy in Indonesia,” he said Indonesia has one of the largest geothermal capacities in the world at 2,368 MW. He outlined strategies to increase geothermal

competitiveness, including improving data quality through government drilling, optimising funding utilisation, and using small-scale generators in existing fields.

IPP strategies for RE independence

On “IPP Development for RE Energy

Independence,” the speaker was Arthur Simatupang, chairman of the Indonesian Independent Power Producer Association, who emphasised the importance of collaboration between energy companies and government agencies in Indonesia to achieve RE independence.

One of the key strategies highlighted by Simatupang is the early retirement of coal-fired power plants (CFPP) in tandem with the development of renewable energy sources. He suggested that this approach could kickstart the transition to renewable energy and help companies to achieve their RE goals more quickly.

Simatupang also recommended accelerating the dieselisation program of PT PLN (Persero), the state-owned electricity company in Indonesia. The program aims to replace diesel-powered generators with RE sources, particularly in areas that are not connected to the national power grid.

Another strategy highlighted by Simatupang is the mapping of potential demand and RE supply. This can help companies identify areas where RE can be utilized effectively and efficiently.

Developing geothermal and hydro energy

The Jakarta 2023 Asian Power Forum also gave way to state-owned Geo Dipa Energi, whose Operations & HSSE director, Supriadinata Marza, discussed the challenges of meeting the growing demand for natural resources amidst increasing competition for them.

Marza kicked off his presentation, titled “GDE Role as Geothermal SMV in Future Energy Sector” by citing the 2045 worldwide megatrend which highlighted the competition for natural resources as seen in Asia and Africa.

This, he said, poses a challenge, especially when available natural resources are not able to meet the growing demand. He expressed certainty on the importance of RE as the next trend in technological advances and the need to reduce emissions to address climate change.

As the government’s Special Mission Vehicle (SMV), GDE is tasked to utilise geothermal energy for electricity generation.

True to this mandate, he said that they are responsible for developing geothermal power plants like those in Dieng and Patuha, and act as an exploration implementing agency in East Indonesia. By 2060, Geo Dipa Energi is expected to contribute 5.5% of geothermal power plants in Indonesia, he said.

Read the full event coverage at https:// asian-power.com/

Nine speakers at Jakarta 2023 Asian Power Forum flex government-private sector team-up to power up Indonesia’s energy landscape into the future.

Asian Power Forum 2023 at Jakarta, discussing Indonesia’s steps toward renewable energy

Indonesia has one of the largest geothermal capacities in the world at 2,368 MW

EVENT: GASTECH 2023

Gastech unveils 2023 strategic conference programme, high-level keynote speakers

Global energy experts convening in Singapore for Gastech 2023 will include CEOs, company presidents, and executive chairs of highlevel international energy businesses and organisations, including Baker Hughes, Shell, ExxonMobil, and the International Energy Forum.

This year’s edition of Gastech is supported by Enterprise Singapore and Singapore Tourism Board, and co-hosted by ExxonMobil, Chevron, Shell, and Venture Global LNG. It will take place at Singapore EXPO on 5-8 September 2023.

The 2023 programme, which includes high-level ministerial sessions, leadership roundtables and technical and commercial conferences, will focus on the major themes of energy supply security, low-carbon energy for sustainable global growth, energy transition alliances, and the development of the energy industry workforce globally. This year’s Gastech Executive Committee, which oversees the strategic leadership agenda, is chaired by Alan Heng, Group Chief Executive Officer, Pavilion Energy Pte Ltd.

Taking place in the build-up to COP 28, Gastech 2023 will elaborate on the ideas, solutions, and innovations that will enable the energy industry to manage and deliver the transition to low-carbon energy, whilst continuing to supply the world with its energy needs. Through high-level panel discussions focused on the importance of low-carbon solutions and climate technologies industries, global business leaders will elaborate on the investment and regulation strategies required to ensure global energy security, affordability, and sustainability.

The energy supplies needed in the years ahead, and the need for energy systems to be on track for net zero emissions by 2050, are already heightening the pressure on the investment community. During the Gastech 2023 Strategic Conference, global energy leaders will share insights on the investment landscape required to stimulate adequate funding for both new and existing energy production as well as nextgeneration energy solutions and climate technologies. Shifts in financing strategies, a changing appetite for risk and a demand for greater flexibility are transforming partnership models. As the gas industry both expands and fragments, introducing greater liquidity and optionality, Gastech will examine how new opportunities for partnerships are being established in the global LNG market and demonstrate the resilience and agility of natural gas.

Timed two months ahead of COP 28, Gastech 2023 will lay the groundwork for the critical conversations that will take place in the UAE, by demonstrating how the gas sector is already delivering practicable short, medium, and long-term solutions to energy security, affordability, and sustainability.

Speakers slated to attend Gastech 2023 include: Joseph McMonigle, Secretary General of the International Energy Forum (IEF); Lorenzo Simonelli, Chairman and CEO of Baker Hughes; Meg O’Neill, CEO & Managing Director of Woodside Energy; Peter Clarke, Senior Vice President, Global LNG of ExxonMobil; Alan Heng, Group CEO of Pavilion Energy; Takayuki Ueda, President and CEO of INPEX; Russell Hardy, CEO of Vitol; Michael Lewis, CEO of Uniper; Akshay Kumar Singh, Managing Director and CEO of Petronet LNG Ltd; Proscovia Nabbanja, CEO of Uganda National Oil Company (UNOC); Paul Everingham, CEO of Asia Natural Gas & Energy Association (ANGEA); Dan Brouillette, President of Sempra Infrastructure; Maria Rita Galli, CEO of DESFA; Iqbal Z Ahmed, Chairman of the Pakistan Gas Consortium; Paul Varello, Founder and Executive Chairman of Commonwealth LNG; Andree Stracke, CEO of RWE Supply & Trading GmbH; Freeman Shaheen, President of Chevron Global Gas; Federica Berra, Senior Vice President, BP; and Cederic Cremers, Executive Vice President – LNG, Shell.

Lorenzo Simonelli, Chairman and CEO, Baker Hughes said:

“We believe that transforming the global energy landscape necessitates highly collaborative business models and constructive partnerships across the energy industry value chain. We are committed to working together with our partners to

drive impactful change and create a better energy future for all. Gastech will facilitate the cross-industry partnerships needed to make a real difference in the global energy sector and improve energy reliability, affordability and sustainability.”

Peter Clarke, Senior Vice President –Global LNG, ExxonMobil International Limited, said:

“The global LNG market is dynamic and resilient – unlocking its potential is key to meeting society’s future energy demand. As co-host of Gastech 2023, ExxonMobil remains committed to driving innovation and providing customers around the world with reliable, lower-emission LNG solutions. Gastech is the premier global platform with the power to accelerate energy leaders’ and other stakeholders’ shared ambition: providing affordable and reliable energy to a growing population which is seeking a higher standard of living while lowering emissions.”

About Gastech

Gastech, which takes place annually, is the world’s largest natural gas, LNG, hydrogen, low carbon solutions, and climate technologies event, attracting upwards of 40,000 international attendees, and providing heads of state, government officials, ministers and global business leaders, disruptors, innovators, and students with a platform to engage in conversation.

Gastech will take place at Singapore EXPO, Singapore, from 5-8 September 2023.

For more information, please visit www. gastechevent.com

Gastech unveils its 2023 strategic agenda and speakers, including participation from senior executives of Baker Hughes, ExxonMobil, Shell, and the International Energy Forum, as well as other global business leaders in energy, finance, and technology.

Lorenzo Simonelli, Chairman and CEO of Baker Hughes

Peter Clarke Senior Vice President, Global LNG of ExxonMobil

GHEE PEH

Keeping Indonesia’s downstream coal projects afloat wIll require hefty government subsidies

Downstream coal projects in Indonesia need a government subsidy of at least US$354 per tonne of dimethyl ether (DME) fuel to maintain a profit margin, according to the latest calculations by the Institute for Energy Economics and Financial Analysis (IEEFA).

The extent of financial support necessary should send a signal that subsidizing such projects makes no economic sense to the Indonesian government or taxpayers.

On 10 March, United States industrial gas company Air Products and Chemicals was reported to have withdrawn from all downstream coal projects in Indonesia, including a DME facility that would buy coal from state-owned supplier Tambang Batubara Bukit Asam (PTBA) for conversion. Despite talks of new investment partners, the projects’ financial viability remained questionable.

Since 2018, coal gasification to produce DME fuel for Indonesian households has been touted as a more affordable substitute to the country’s liquefied petroleum gas (LPG) imports. However, IEEFA pointed out in a January 2022 report that DME prices were cheaper than LPG for only 15 months over a 20year period — and estimated that the total per-tonne production cost of a DME plant would be nearly twice what Indonesia was paying for LPG imports. In this commentary, we demonstrate that it is just as difficult to establish the case for PTBA or other plant operators to produce DME fuel without sizable government subsidies, even with potential investors from China, which already has a developed coal-to-DME industry.

Making sense of project profitability

Two downstream projects affected by Air Products’ pullout are under development at an estimated cost of US$4.1 billion to reduce reliance on exports, stimulate foreign investments and fuel demand for low-rank coal. The coal gasification plant in Sumatra, which held a groundbreaking ceremony in 2022, is to produce 1.4 million tonnes of DME a year to replace 1 million tonnes of LPG imports. The other proposed plant, located in Kalimantan, is a US$2 billion coal-to-methanol project.

In the case of the US$2.1 billion Sumatran plant, the operator needs to receive US$2.5 billion over 10 years. This sum is derived from calculations of the coal production cost plus a minimum profit margin that gives a 20% cushion, and

Ghee Peh Energy Finance Analyst Institute for Energy Economics and Financial Analysis

takes into account a borrowing cost of 6%, an increase compared to the previous 2% as a result of the U.S. Federal Reserve jacking up the cost of debt at an unprecedented pace over the last year.

On its part, PTBA recorded a profit margin of 58% in 2022 based on an average coal production cost of US$57/tonne (Rp851,000/tonne) and an average selling price of US$90/tonne (Rp1.33 million/tonne). Assuming that it is willing to accept an average 10-year profit margin of 25% on the deal with the Sumatran DME project, PTBA should price its coal supplies to the latter at an average of US$72/tonne.

It takes 4.6 tonnes of coal to produce a tonne of DME, so the conversion project has to get from PTBA an annual 6.4 million tonnes of coal to meet its annual DME target of 1.4 million tonnes.

Over 10 years, the total coal received will be 64 million tonnes tagged at US$72/tonne, amounting to US$4.6 billion. Add this sum payable to the DME plant’s capital expenditure and profit requirement of US$2.5 billion, and the total required, excluding operating costs, is US$7.1 billion over 10 years. On a per-tonne basis, this works out to US$509/tonne of DME fuel produced.

Based on our previous estimate that a DME plant operates at a cost of US$300/ tonne, the total DME cost is US$809/tonne. This includes profit margins for both the DME plant operator at 20%, and PTBA at 25%.

We then take reference from the Saudi Aramco LPG price of US$650/tonne in December 2022. Given that DME has 70% of the energy content of LPG, the equivalent cost of LPG at 70% energy is US$455/tonne. This means the imported LPG is 44% cheaper than the DME cost of US$809/tonne.

For the DME project to work at the same level as LPG imports, at least US$354/tonne of government subsidies are required under current conditions unless PTBA or the DME plant operator is willing to forego its profit margin.

Our calculations reinforce the conclusion made in previous IEEFA reports that Indonesia will not find it economically viable to subsidize a coal downstream project.

Royalty payment exemptions and additional relief programs have been proposed. However, the financial black hole for the government will only get bigger for the DME project to be finally profitable for incoming investors.

Source: IEEFA estimates based on PTBA presentation

HANEEA ISAAD

Gwadar coal power plant: One step forward, two steps back

In a breakthrough development last month, the government of Pakistan took a policy decision to go ahead with the Gwadar power project, which, despite being a “fast track project” under the China-Pakistan Economic Corridor (CPEC) in 2016, hasn’t made any substantial progress since its conception. The decision, made at a high-level forum hosting bilateral talks between China and Pakistan, points to a deeper issue that has been prevalent in the country’s power sector for a long time: the dissociation between evidence-based research and policy decisions.

Decision-making mostly happens in the highest echelons of power, without any public disclosure of the analysis or work (if any) that went behind it. In this case, whether the country’s poor state of economic affairs will be able to sustain another import dependent source of power generation, which may be subject to price shocks in the future, does not matter. What matters is that Pakistan will be able to appease its powerful allies in the hopes that they may provide some support for the country to stay afloat.

The revival of the 300-megawatt (MW) Gwadar power plant on imported coal comes after years of ambivalence from the government of Pakistan to move forward with the project in its original form. The project was first proposed to be shifted to liquified natural gas (LNG) on environmental grounds during the Pakistan Muslim League-Nawaz (PML-N)-led government in 2016.

No progress was seemingly made on this front and the project’s future remained uncertain until the Pakistan Tehreek-e-Insaf government announced a moratorium on coal-based power generation in December 2020. Many in the policy circles speculated that the project would get shelved since it had not achieved financial closure. However, no official statements came forth on the matter.

In July 2022, the Gwadar power plant made national news again when the current government, pressed by its economic woes and a rising import bill, decided to convert it to solar power instead, with imports from Iran as a backup.

Considerations were also being made to shift it to Thar coal as a cheaper alternative. However, nothing was concrete as any change to the project plans first had to be approved by the Joint Cooperation Committee (with members from both China and Pakistan) on CPEC. Therefore, any amendments to the project could not have been made unilaterally.

Whilst the government of Pakistan contemplated shifting the project to an alternate fuel, their Chinese counterparts were still committed to the idea of imported coal. Ultimately, the Pakistani side was “compelled” to reverse its policy objectives and shift the plant back to imported coal.

Running the Gwadar power plant on imported coal may add to Pakistan’s current economic stress. Last year proved to be tumultuous for imported fuels such as LNG and coal. Free on-board price for South African coal, which accounts for around 70% of Pakistan’s coal imports, reached a historic high of US$457/ton in March 2022.

Pakistani coal power plants weren’t isolated from these price shocks and faced delivered costs as high as US$419/ton. Since fuel costs are pass-through items, this directly impacted the cost of power generation from imported coal which went as high as 19.3 US cents/KWh (PKR 51/KWh).

Although international coal prices have now come down (South African coal is currently trading at US$140/ton), this is still higher than the price of coal in 2017 (US$109/ton), when the project’s feasibility was first considered.

Pakistan’s incumbent foreign exchange (forex) crisis has also severely impacted the ability of coal power plants to procure fuel from their coal suppliers. The State Bank of Pakistan has been unable to fulfill foreign exchange requests for some coal power plants due to the country’s gravely reduced forex

Haneea Isaad Energy Finance Analyst Institute for Energy Economics and Financial Analysis

reserves. Just recently, Port Qasim Electric Power Company (Pvt.) Limited had to shut down their 660-MW units due to the plant’s inability to pay off its coal supplier. It may not be prudent to bring on another imported coal power plant under such circumstances when the existing ones are having such difficulty continuing operations.

The use of indigenous Thar coal, which currently costs US$47/ton, would make more sense, but Pakistan is caught between a rock and a hard place when it comes to Gwadar. The Thar coal mines are located almost 1,000 kilometres away from the Gwadar port, with no rail network connecting the two regions. Transporting Thar coal to Gwadar would therefore require significant investments in rail and road infrastructure, dampening the feasibility of using domestic coal as an alternative.

The forex crisis hasn’t spared domestic production of Thar coal either, as Sindh Engro Coal Mining Company struggles to pay its Chinese operation and maintenance contractor, which is threatening to suspend mining operations if the current situation prevails.

On the other hand, Gwadar holds immense geostrategic importance and is the linchpin to China achieving access to warmer waters. Without access to a reliable electricity supply, the region will not achieve the level of industrialization needed to make the port city a successful trading hub. Even with this, the push for imported coal seems ill-suited, given that other viable alternatives may be present.

The port city currently operates on electricity imported from Iran, which until now is limited in volume, putting the region at risk of prolonged outages. However, a new scheme was launched on March 1 whereby Gwadar will receive 100 MW of imported power from Iran. These increased volumes should be sufficient to meet the present needs of the region, and any incremental demand that arises with further development in the region could be met with solar or wind power coupled with more imports.

What is perhaps missing from the picture is the utter lack of research into the applicability of these alternatives, not only on economic rationale but also on social and environmental grounds. The decision to move ahead with imported coal should have been made after carefully considering all other options available rather than being politically motivated.

For now, Gwadar may have taken a step forward but remains two steps back.

300-MW Coal-fired power project at Gwadar (Photo from the China-Pakistan Economic Corridor official website)

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