Asian Power (October - December 2023)

Issue No. 110

ISSUE 110 | DISPLAY TO 31 DECEMBER 2023 | www.asian-power.com | A Charlton Media Group publication

US$360P.A.

NAVIGATING THE ENERGY TRILEMMA

ASIA NEEDS NATURAL GAS TO BALANCE ENERGY AFFORDABILITY, RELIABILITY, AND SUSTAINABILITY

Asian Power

G7 SETS NO DEADLINE AMIDST CALL FOR COAL PHASE-OUT ASIA TURNS TO BIOMASS CO-FIRING IN COAL PLANTS FOR ENERGY SECURITY CHINA CONTINUES ON COAL ‘PERMITTING SPREE’ FOUR MAJOR HURDLES TO ACHIEVING VIETNAM’S PDP8 ENERGY AMBITIONS

Paul Everingham CEO ANGEA

cladtek.com

Our Experience

Indonesia

Our Products

Mechanically Lined Pipe

Induction Bending

Pipe Spooling

CRA Clad Pressure Vessels

Weld Overlay Clad Fittings & Flanges

Simulation & Testing

Valves for Geothermal Applications

Thermal Sleeves

FROM THE EDITOR

A

sian markets have unveiled their energy master plans, yet they confront a significant challenge that stands prominently at the forefront—investment hurdles. Learn on pages 11 and 14 how Vietnam and Cambodia could face this obstacle and drive support for their ambitious energy goals.

PUBLISHER & EDITOR-IN-CHIEF Tim Charlton EDITORIAL MANAGER Tessa Distor PRINT PRODUCTION EDITOR Anna Mae Rodriguez PRODUCTION TEAM Vann Villegas Aulia Pandamsari Charmaine Tadalan GRAPHIC ARTIST Emilia Claudio COMMERCIAL TEAM Janine Ballesteros Jenelle Samantila Cristina Mae Posadas

ADVERTISING Shairah Lambat shairah@charltonmediamail.com +65 3105 1200 ext. 402 AWARDS Julie Anne Nuñez awards@charltonmediamail.com ADMINISTRATION Eucel Balala accounts@charltonmediamail.com EDITORIAL ap@charltonmediamail.com

SINGAPORE 101 Cecil St., #17-09 Tong Eng Building, Singapore 069533

To mitigate coal dependence for electricity generation, some markets are turning to the co-firing of biomass in coal-fired power plants. However, experts caution on page 12 that whilst this method is innovative, it may unintentionally prolong the life of coal plants, contrary to sustainability objectives.

As countries navigate their energy strategies, they must strike a delicate balance within the "energy trilemma," which encompasses affordability, reliability, and sustainability. On page 16, Asia Natural Gas & Energy Association CEO Paul Everingham shares the pivotal role of natural gas in maintaining this balance.

Read on and enjoy!

Tim Charlton

+65 3158 1386

HONG KONG Room 1006, 10th Floor, 299 QRC, 287-299 Queen’s Road Central, Sheung Wan, Hong Kong +852 3972 7166

MIDDLE EAST FDRK4467,Compass Building,Al Shohada Road, AL Hamra Industrial Zone-FZ,Ras Al Khaimah, United Arab Emirates Asian Power is a proud media partner and/or host of the following events and expos:

www.charltonmedia.com

Can we help?

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

Media Partnerships: Please email ap@charltonmedia.com with “partnership” in the subject line.

Subscriptions: Please email subscriptions@charltonmedia.com.

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

*If you’re reading the small print you may be missing the big picture    

ASIAN POWER 1

CONTENTS

11

12

16 INTERVIEW ASIA NEEDS NATURAL GAS TO BALANCE ‘ENERGY TRILEMMA' FIRSTS

REGULATION WATCH FOUR MAJOR HURDLES TO ACHIEVING VIETNAM’S PDP8 ENERGY AMBITIONS

GENERATION REPORT ASIA TURNS TO BIOMASS CO-FIRING IN COAL PLANTS FOR ENERGY SECURITY

COUNTRY REPORT

06 G7 sets no deadline amidst call for coal phase-out 07 MSMEs key to propel India towards 500 GW RE goal 08 SP New Energy Corporation brings ‘newest’ solar technology to the

14 Cambodia needs a grid upgrade to avoid higher power costs

INTERVIEW 16 Asia needs natural gas to balance ‘energy trilemma’

Philippines

18 Phl power plant seeks 10-year PSA as supply deal ends

VOX POP 10 How AI adoption transforms power plants

REGULATION WATCH 11 Four major hurdles to achieving Vietnam’s PDP8 energy ambitions

GENERATION REPORT

20 Geo Dipa power ups Indonesia geothermal 22 Why ASEAN should accelerate RE with a regional approach

COMMENTARY 24 Indonesia signals it could abandon science-based taxonomy for coal power plants

12 Asia turns to biomass co-firing in coal plants for energy security

Published Quarterly by Singapore: Charlton Media Group 101 Cecil St. #17-09 Tong Eng Building Singapore 069533 2 ASIAN POWER

Hong Kong: Room 1006, 10th Floor, 299QRC, 287-299 Queen’s Road Central, Sheung Wan, Hong Kong

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

www.asian-power.com

MWM gensets.

Efficient, low-maintenance and highly available.

The MWM product portfolio comprises gas engines and gensets in the output range from 400 kWel to 4,500 kWel. Power plants with an output of 100,000 kWel and more are technically feasible. The units are designed for maximum electrical and thermal efficiency, low operating and service costs, and high reliability and availability. Thus, they reach efficiency levels of more than 90 percent. www.mwm.net/en ASIAN POWER 3

News from asian-power.com Daily news from Asia MOST READ

POWER UTILITY

Asia faces financial risks with energy transition Asia’s rising power consumption drives it to continue reliance on fossil fuels in the short term, challenging the region’s decarbonisation plans.

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.

IPP

Mauban-based coal plants bolster Luzon grid’s power supply Since the start of the millennium, the 460-megawatt (MW) coal-fired Quezon Power Plant in Mauban has been reinforcing the PH's Luzon electricity grid under a power supply agreement with private distribution utility firm Meralco.

As the years progressed, a greater demand for electricity gave rise to a second coal-fired unit.

4 ASIAN POWER

IPP

How EGAT contributes to powering Thailand’s energy transition Amidst pursuing Thailand’s ambitious carbon neutrality target by 2050 and net-zero emission goals by 2065, the state-owned electricity company, Electricity Generating Authority of Thailand (EGAT), faces a significant leadership transition as EGAT Governor Boonyanit Wongrukmit will retire on August 23.

POWER UTILITY

Untapped offshore wind potential can power Japan’s shift to clean energy Japan is making progress in its energy transition, with its renewable capacity led by solar power. However, the country 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 energy transition, Japan can tap the potential of offshore wind.

POWER UTILITY

SMRs may deliver their climate promise too little, too late With flexibility and potential to provide uninterrupted clean power, Small Modular Reactors (SMRs) with a capacity of up to 300MWe could be a key solution to the climate crisis.

However, as these nuclear reactors are mainly in development, analysts raised that SMRs might just miss the window when significant reduction is needed.

IPP

Solar PH's system upgrades in the works to energise Calatagan Solar Farm 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.

Your reliability shines Energy & Storage solutions expertise Securing energy supplies Ensuring a reliable power supply is one of the key factors for progress and prosperity around the world. Building on decades of MAN innovation, we can help secure clean and efficient energy supplies for your customers. Our expertise covers solutions for power-to-X, LNG to power, long duration energy storage, thermal power plants and CHP. www.man-es.com

FIRST for energy security reasons, it is incumbent upon the G7 economies to lead by example, at least within their own countries and in countries they may financially support, to phase out coal—both abated and unabated—and to cease or limit investments in fossil gas while increasing investments in renewable energy and green fuels,' Jones told Asian Power.

According to the IEAC, this could jeopardise long-term climate goals and energy security, particularly in Asia.

JAPAN'S HYDROGEN STRATEGY HITS ROADBLOCKS POWER UTILITY

Lack of infrastructure development is one of the challenges Japan faces (Photo courtesy of Canva)

A

fter Japan announced its ambitious plan to increase its hydrogen production tenfold, Wood Mackenzie has predicted significant challenges for the country, including high costs, insufficient demand, inadequate infrastructure, and a lack of carbon intensity standardisation.

In June, Japan unveiled its 2nd Basic Hydrogen Strategy, setting a target for hydrogen and ammonia production at 3 million tonnes per annum (mtpa) by 2030. This represents a tenfold increase from current production levels.

Whilst the country is contemplating a subsidy scheme to offset the costs of low-carbon hydrogen production, the specifics of this subsidy remain uncertain, according to a report from Wood Mackenzie.

Additionally, there is confusion as to whether the targets pertain solely to domestic production or also encompass global supply by Japaneseaffiliated companies.

"If Japan intends to attract imports, it must offer something on par with the US ($3/kgH2) and the EU (€4/kgH2),” said Wood Mackenzie Principal Analyst Flor De la Cruz.

Although there have been announcements for 89 mtpa of low-carbon hydrogen projects, Wood Mackenzie points out that commitments to midstream infrastructure, including maritime, pipelines, and storage, are lagging.

"More details are forthcoming, but Japan has made a positive move by overhauling its hydrogen strategy to develop the entire hydrogen value chain," De la Cruz noted.

US’ Hydrogen Similarly, WoodMackenzie also reported that hydrogen producers in the United States will have difficulty achieving the production targets under the National Clean Hydrogen Roadmap.

“Several factors make meeting these production targets unlikely,” Principal Analyst Hector Arreola said.

“Renewable power costs, electrolyser load factor, and a slower decline in capital expenditures for electrolytic hydrogen (which is projected to be around US$1,600/kW in 2030) are all serious headwinds for potential new production,” he added.

Arreola said the US’ Hydrogen Strategy included the target of reaching low-carbon hydrogen production of 10 million mtpa by 2030. This target will be increased to 20 mtpa by 2040 and 50 mtpa by 2050.

6 ASIAN POWER

The G7’s push for faster decarbonisation includes ending subsidies for coal power (Photo by I. Noyan Yilmaz from Shutterstock)

G7 sets no deadline amidst call for coal phase-out

POWER UTILITY

The Group of 7 (G7) economies has reaffirmed commitments to phasing out coal and accelerating the deployment of renewable energy sources but have not set a specific timeline for these actions. This lack of a definitive timeline raises concerns about the potential for continued growth in fossil fuel capacity, especially in the context of energy security challenges posed by the conflict between Russia and Ukraine.

Experts like Dave Jones, Global Insights Lead at Ember, acknowledge that whilst the G7—comprising Japan, Canada, France, Italy, Germany, the US, and the UK—could have made stronger commitments, the focus on expanding clean power and setting targets for solar and offshore wind energy is positive.

"It doesn’t worry me too much because part of the way that a coal phaseout is going to happen is through more investment in clean energy, and clean electricity to replace coal and gas power," Jones told Asian Power.

"What I really welcome is the real focus on its ambitions for rolling out clean power, specifically the targets on solar, the targets on offshore wind, which really put a focus on the solution rather than on the problem," he added.

However, the International Energy Advisory Council (IEAC), represented

by President and Chair Allan Jones, criticises the G7's omission of a phaseout deadline and notes that continued investment support for gas expansion, potentially driven by vested interests, could undermine efforts to reduce reliance on coal and fossil gas.

Whilst countries will take whatever action they think they need to take

Dave Jones

What I really welcome is a real focus on its ambitions for rolling out clean power

Fossil fuel phase-out The G7 also sought to prioritise the faster phase-out of domestic unabated coal power generation to decarbonise the energy sector by 2035. So far, the G7 has ended new direct government support for unabated international thermal coal power in 2021. It also plans to end inefficient fossil fuel subsidies by 2025 or sooner.

“It is necessary to accelerate the phase-out of our dependency on Russian energy, including through energy savings and gas demand reduction, in a manner consistent with our Paris commitments, and address the global impact of Russia’s war on energy supplies, gas prices, and inflation, and people’s lives, recognizing the primary need to accelerate the clean energy transition,” the Communique read in part.

In line with reducing dependence on Russian energy, the G7 views investments in the gas sector as a temporary but “appropriate” solution.

However, to address the larger issue at hand, the G7 economies needed to confront their own contributions to global emissions.

According to the energy think tank Ember, G7 economies collectively accounted for 21% of emissions in the energy sector in 2022. While commendable progress had been made in reducing electricity generation from coal, with a 35% decrease since 2015, these leading economies still relied heavily on gas as a source of energy. Current data indicated that the G7 was responsible for a staggering 40% of electricity generated from fossil gas in 2022.

Recognising the urgency of the climate crisis, the G7 set a target to achieve 100% clean electricity generation by 2035.

Among the seven nations, France led the way with the highest share of clean electricity at 87.8%, closely followed

by Canada at 82.6%, the UK at 56.3%, and Germany at 49.2%. On the other end of the spectrum, the United States stood at 40.5%, Italy at 36.4%, and Japan at 29%, highlighting the need for greater progress in these countries.

To read the full story, go to https:// asian-power.com/

FIRST horizon, we are optimistic that MSMEs will drive the next wave of expansion in the rooftop solar market," said Prabhakar Sharma, a consultant with JMK Research.

Rooftop solar can be a game changer for greening the overall national energy mix (Photo by Trinh Trần from Pexels)

MSMEs key to propel India towards 500 GW renewable goal SOLAR POWER

W

ith nearly seven years left, India could potentially fall short of its ambitious target to achieve 500 GW of renewable energy capacity by 2030. Attention is now turning to the country's micro, small, and medium enterprises (MSMEs) as key players to help address this challenge.

A joint report by the Institute for Energy Economics and Financial Analysis (IEEFA) and JMK Research & Analytics reveals that capacity additions from April to July were marginally lower than the previous year's, totaling nearly 2 GW. Despite this, the declining costs of solar modules are expected to maintain, if not increase, the momentum of growth in

Prabhakar Sharma

the short to medium term.

The MSME sector in particular holds promise for amplifying India's rooftop solar market, which could expand by an additional 4 GW by 2024 if current regulatory uncertainties are resolved and if there is more support from local power distribution firms.

IEEFA and JMK Research anticipate that the World Bank will announce a credit guarantee mechanism this year. This initiative will offer a $100m payment guarantee fund, covering up to 50% of the debt financing from participating financial institutions for grid-connected rooftop solar projects.

"With new financing avenues on the

Jyoti Gulia

Kapil Gupta

Regulatory concerns In general, Jyoti Gulia, report coauthor and JMK Research founder, said uncertainties in regulations and lack of support from local electricity distribution firms forced developers to focus on other segments or leave the rooftop solar business altogether.

Whilst the states of Gujarat, Andhra Pradesh Telangana, and the union territory of Delhi have the most favourable ecosystems for commercial & industrial (C&I) customers setting up rooftop solar projects, the report found that there is a need for several other states to develop their rooftop solar sector further.

“Several states are moving away from net metering to lesser beneficial gross metering and net billing arrangements.

This has led to C&I consumers shifting focus to other greening options, such as open access,” said co-author Kapil Gupta, manager, JMK Research.

“The Green Open Access Rules, 2022 gave smaller C&I consumers access to off-site solar power. Going forward, consumers will prefer offsite open access, especially in states like Uttar Pradesh and Tamil Nadu with net metering restrictions for C&I consumers,” he added.

IEEFA and JMK Research said policymakers should craft a separate renewable purchase obligation for rooftop solar and states should allow behind-themetre systems to help distributors predict their load schedule.

The central government should also have uniform regulatory provisions similar to the Green Open Access Rules, they added.

ASIA WILL DOMINATE BATTERY ENERGY STORAGE SYSTEM INSTALLATIONS IN 2030

T

he world will see 110 gigawatts (GW) of new battery energy storage systems (BESS) installation in 2030, with Asia accounting for 58% of the added capacity, according to Rystad Energy.

Asia will be followed by North America with 20 GW BESS installation, Europe will deploy 18 GW, whilst the remaining 8 GW will be coming from the rest of the world. Rystad Energy said this is a shift from the current trends wherein North America is expected to dominate the projected installations by the end of 2023, comprising 45% of the total BESS capacity.

“Batteries will [solve] the intermittency problem of renewable energy generation,” Sepehr Soltani, energy storage analyst, Rystad Energy, said. “To decrease reliance on coal and gas as back-up power generation sources, countries must invest in battery energy storage systems now.”

In terms of energy units, annual BESS installations are expected to grow by more than 400 GW-hours (GWh) by 2030, a ten-fold increase in the current additions per year. Rystad Energy reported that

BESS capacity additions globally expanded 60% year-on-year (YoY) in 2022 with total new installations exceeding 43 GWh. The report projected BESS installations will increase by 72% in 2023 with the additional 74 GWh new capacity. The capacity additions are boosted mainly by the cost reduction in BESS systems as well as incentives in North America, governmental funding programs in Europe, along with the strong capacity expansion in mainland China.

Government policies will be vital in incentivising investments and capacity expansions. Amongst the notable moves globally, it cited the US Inflation Reduction which helped increase the solar and onshore wind capacity by 40% and is expected to install over 20 GW of battery compared to before the Act. This policy will bring the country’s capacity to over 130 GW by 2030. It also noted that China, which committed to peak its emission by 2030, considers battery developments "as a stepping stone to achieving its goal."

Global new residential BESS installations by region Gigawatt-hours (GWh)

Source: Rystad Energy's Battery Solution, June 2023 A Rystad Energy graphic

ASIAN POWER 7

FIRST CHINA CONTINUES ON COAL ‘PERMITTING SPREE’ COAL ENERGY

SP New Energy Corporation brings ‘newest’ solar technology to the Philippines SOLAR PROJECT

G

U

nder a tight schedule to curb global carbon emissions, China’s recent energy policy decisions have left experts questioning its commitment to environmental goals. Despite pledges to peak carbon emissions by 2030 and initiate a downward trend in coal use from 2025, the nation is on a coal plant approval spree that undermines these targets.

The Global Energy Monitor (GEM) and the Centre for Research on Energy and Clean Air (CREA) have unveiled startling figures: a proposed addition of 392 gigawatts (GW) of coal power spread across 306 projects.

The statistics presented are staggering. In the first half of the year alone, China greenlit 52 GW of new coal power plants, maintaining an alarming pace of two new plants per week. This rush to approve coal-based power generation is perceived as a strategic push by China’s coal industry to secure its future before the country's carbon emissions reach their zenith. These developments occur even as China sees an uptick in installations of renewable energy sources, suggesting a contradictory approach to energy policy.

“China is on track to start delivering all of electricity consumption growth from solar, wind, nuclear, and hydropower. This leaves no space for power generation from coal to grow,” CREA Lead Analyst Lauri Myllyvirta, co-author of the GEM and CREA report.

The contradiction deepens: Why is China simultaneously ramping up coal capacity when its renewable sector shows robust growth?

Coal surge dilemma The trend is further compounded by the rate at which these plants are not just approved but also constructed. Within the same reporting period, China commissioned 17.1 GW of coal capacity — twice the amount that was operational in the previous year. With 243 GW of plants currently under construction or approved for commencement, the potential expansion to 392 GW if all proposed plants proceed, paints a concerning picture of China’s energy trajectory.

The report suggests this could lead to a potential 23% to 33% increase in coal power capacity from 2022 levels, implying "either a massive increase in coal power generation and emissions or a massive drop in plant utilization, resulting in financial losses and potentially stranded assets."

According to GEM and CREA, without the cancellation of already permitted projects or massive early retirement of existing plants, China will fail to reduce its coal power capacity as outlined in the 15th Five-Year Plan, unless permitting stops immediately.

8 ASIAN POWER

oodbye to pollution, moving parts, and noise. That is the promise of the latest technology SP New Energy Corporation is introducing to its 500-megawatt solar farm in Nueva Ecija–a significant step up from the "quite old" solar technology at its Calatagan facility.

Holger Schenk, Engineering, Procurement, and Construction head at Solar Philippines, said the Nueva Ecija solar farm has high, high-efficiency solar modules and the newest technology in terms of the electronics and the control they are using. “The latest tech we’re using right now delivers green electricity. 100% renewable power,” he added.

The Nueva Ecija plant is the third solar project under the company, following the 63.3-MW solar farm in Calatagan, Batangas in 2016, and the 150-MW solar farm in Concepcion, Tarlac in 2019. Schenk said the solar technology used in the Tarlac farm was sourced in-house.

Schenk noted that the company also executed a technology competition between string and central inverters to determine which is best to use for the first 50 MW of the project.

The Nueva Ecija solar farm will be connected to the grid system of Luzon. It will largely provide power to households in Metro Manila and the Greater Metro PLANT WATCH

The solar farm project in Nueva Ecija will have a capacity of 500 MW to address the power needs of 1.5 million Filipinos

Holger Schenk

The project is now basically 10 times the size of our first project

Manila area. Schenk said once the 500MW solar farm is fully operational, it is will provide electricity to about 1.5 million Filipinos.

“The project is now basically 10 times the size of our first project.

Projects are becoming bigger; the technology has advanced.”

Schenk emphasised the importance of integrating day-today learnings from operational maintenance, ensuring that the project evolves and improves over time with the new plant designs.

This is in line with SPNEC’s overall strategy to build a 100% renewable electricity future for the Philippines.

“We also have future projects bigger than that in the pipeline. We take it step by step, take the learnings from the plant when it’s operational, and integrate it into the next, next projects,” Schenk said.

AGL completes 2nd largest battery

Anegasaki Power units now operate

SunAsia, Blueleaf to build floating solar

AUSTRALIA

JAPAN

PHILIPPINES

The 650-megawatt liquified natural gas-fired Anegasaski Thermal Power Station New Unit 3 has started operations, according to JERA. In a statement, JERA said that the new unit, which they had replaced through its subsidiary JERA Power Anegasaki G.K., uses a gas turbine combined-cycle power generation system (GTCC).

The plant also uses a “stateof-the-art” power station which contributes to power generation efficiency, reducing its carbon dioxide emissions.

The thermal power station’s new units 1 to 3 started in 2023.

The Laguna Lake Development Authority issued lake lease agreements to SunAsia Energy and Blueleaf Energy, granting them the right to develop 10 floating solar projects with a 1,300-megawatt total capacity.

In a statement, Blueleaf said the project on the largest freshwater lake is expected to start construction in 2025 with the operations targeted between 2026 and 2030. The projects will supply electricity to thousands of homes and factories, and avoid greenhouse gas emissions of over 1 million tonnes of CO2 equivalent annually.

need new photo (lowres) AGL Energy and technology group Wärtsilä finished the construction of the 250-megawatt (MW)/250 MWhour Torrens Island Grid Scale battery energy storage system, the second-largest operational battery in the country.

In a statement, technology group Wärtsilä, the project in South Australia can supply power to around 75,000 South Australian homes for an hour and could be extended to four hours in the future.

AGL CEO Damien Nicks said the project will contribute to increasing its renewables by 12 gigawatts by 2035.

ASIAN POWER 9

VOX POP

How AI adoption transforms power plants APAC

Penny Murphy Partner and Regional Digital Services Lead for Asia ERM Robin Kennish Asia Lead – Renewables & Climate Change Services ERM AI provides immense scalability for supporting energy management and emission tracking as the industry accelerates to a low-carbon energy transition. The benefit of leveraging AI for high-intensity power operations is the ability to move towards “Smart Grids,” allowing for forecasting and coordinating supply management at scale.

With AI technology, we see unprecedented benefits in how power plants collect, synthesise, and analyse bulks of data to streamline operations and energy allocation.

AI is now integral in optimising energy generated by renewable energy power plants. CLP Power, for example, uses AI to continuously monitor all wind and solar energy assets in China. The system CLP utilises incorporated digital technologies, including big data and AI, which gives CLP real-time data to help it monitor and manage over 1 gigawatts (GW) of renewable energy assets. It is beneficial for predictive maintenance. By analysing operational data and equipment performance, AI models can predict when machinery or equipment will likely fail, allowing plant operators to conduct maintenance before costly failures occur.

AI is also used for optimised operations. AI can continuously monitor and analyse real-time data from sensors to adjust operational parameters, such as fuel mix and combustion rates, to achieve optimal efficiency. AI can monitor emissions in real time and optimise combustion processes to minimise emissions, ensuring compliance with environmental standards.

Optimising operations, production process, enhanced monitoring, and compliance to standards all help to reduce emissions, minimising the environmental impact of power generation, which is especially crucial given global concerns about climate change and air quality.

Significant disadvantages over time Whilst not adopting AI does not mean a power plant will immediately become obsolete, the cumulative effects of missed opportunities can lead to significant disadvantages over time. The pace of technological change in the energy sector means that plants that do not innovate could find themselves outpaced by competitors and facing increased challenges in a rapidly evolving energy landscape.

Dealing with intermittency. Renewable energy is generated from natural sources, which fluctuate according to the prevailing environment (e.g., wind resource or solar intensity), and seasonal and daily cycles, and this can limit their use or efficiency. The harsh winter in parts of Europe and North America limits wind power generation, which means the grid must switch to more reliance on fossil fuels. AI is an essential tool to allow power generators and grid operators to handle intermittency and, when coupled with emerging larger-scale battery energy storage solutions (BESS), minimise the need to switch back to fossil fuel generation. The energy sector is evolving rapidly with the rise of renewables, changing demand patterns, and new market structures. AI allows plants to be more agile and responsive. Without it, they may struggle to adapt to these changes.

The technology also has an environmental impact. AI can help reduce emissions and enhance environmental compliance. Without it, power plants might face higher environmental degradation, potentially leading to stricter regulatory scrutiny and associated penalties. As grids become smarter and more integrated with renewable sources, AI can help balance supply and demand, ensuring grid stability.

10 ASIAN POWER

Sharad Somani Partner & Head – Infrastructure Advisory Head of Infrastructure, Asia Pacific KPMG ESG The infrastructure sector is among the late adopters of emerging technologies such as AI and machine learning, commonly categorised under the fourth industrial revolution. We believe the key megatrends driving transformation across sectors are: decarbonisation, decentralisation, and digitalisation.

The energy sector is under immense pressure from regulators, policymakers, and environmental activists to reinvent how energy is generated, stored, distributed, and consumed. Energy generation companies have started adopting emerging technologies such as artificial intelligence, machine learning, cloud, and IIoT (Industrial IoT). Whilst it is nascent, many energy generation companies are now exploring and sandboxing innovative use cases to embed AI across the value chain.

One of the areas where AI can make a significant difference is grid stability.

In recent years, the introduction and adoption of Distributed Energy Resources, Electric Vehicles, and Community Energy Storage are impacting grid stability, and it is also an area of concern for regulators.

Generation companies need technology and policy-level interventions to manage generation capability to respond to dynamic demand scenarios, ensure grid stability, and avoid over/under-generation. By leveraging AI, thermal and clean energy generating companies can contribute towards grid stability through load forecasting, optimising generation, frequency regulation, and assisting in predictive demand management.

Improving overall sustainability Thermal power plants are categorised as critical infrastructure and integrating AI can enhance their cyber security resilience. AI algorithms continuously monitor network traffic and system behaviour to detect unusual patterns that may indicate a cyberattack. Deviations from normal operations trigger alerts for further investigation and review. AI-powered cybersecurity platforms can automate threat detection and intelligence, provide firewall optimisation, detect and prevent intrusion, and detect phishing.

Thermal power plants also face pressure to reduce emissions, decarbonise energy generation, and improve overall sustainability. AI can assist thermal power plants in reducing their emissions by adjusting the fuel-air mixture and combustion parameters in real-time. AI can also help operators reduce fuel wastage, thereby increasing fuel efficiency largely through process optimisation and simulation. Additionally, AI is applied to strategise the positioning and alignment of clean energy systems like solar panels and wind turbines, aiming to maximise their energy output. It can create highly detailed plant designs maximising asset yield and reducing the gestation time involved in setting up energy plants.

AI can help reduce unplanned outages across thermal units through alarms and warnings and help effectively manage dynamic operations and preventive power equipment maintenance. Artificial intelligence-powered maintenance platforms can continuously monitor the health of equipment in real-time against industry-accepted performance benchmarks. AI can process extensive datasets, facilitating the identification of patterns. Additionally, AI-driven maintenance platforms can simulate scenarios for a virtual assessment of equipment fitness.

Energy transition is the most pressing agenda today, and to meet the climate goals, the companies need to innovate using AI and emerging technologies, because they can deliver immense value to power plant companies and help them reimagine how they manage day-to-day operations, compliance, and performance.

REGULATION WATCH: VIETNAM

Four major hurdles to achieving Vietnam’s PDP8 energy ambitions The country is on an expensive path, requiring an estimated $134.7b to meet its comprehensive 2030 energy targets.

Existing power plants will be forced to be repurposed to burn biomass or ammonia (Photo by Catalin M from Pexels)

V

ietnam may be advancing towards its recently approved Power Development Plan VIII (PDP8), but experts caution that this transition comes with a hefty price tag— requiring investments of approximately $134.7b by 2030.

“This ambition could lead to an expensive pathway for Vietnam to achieve its national energy and climate objectives,” Victor Nian, CEO of Centre for Strategic Energy and Resources told Asian Power.

This is just one of the four areas of concern experts identify as the country works to reduce its reliance on coal and eventually phase it out by 2050, under PDP8. The other three include the strategy’s economic impact, retrofitting of power plants, and energy security.

Investment capital Of around $134.7b to meet the power sources and transmission grid development for the 2021–2030 period, around $119.8b will be for power sources and $14.9b for transmission grids.

For the 2031–2050 period, the country would need between $399.2b and $523.1b of investments, of which around $364.4b–$511.2b will be allotted for power sources, whilst $34.8–$38.6b will be for transmission grids.

Renewables, even projects with energy storage options, may still be insufficient and not “economical enough” to justify the massive replacement of coal. This could also affect the grid, Nian said.

The plan to phase out coal will not only come at a high cost but will also be challenging to implement, especially at a time of the current power shortage.

Technical barriers may be the most crucial

Operators should start to prepare and make early plans to stay profitable

Victor Nian

Cao Yanqi

Robert Liew

challenge for the country to overcome as significant investments are needed to improve the grid to achieve renewable scale deployment, coupled with energy storage.

Economic repercussions Vietnam could face economic challenges such as its potential to attract sufficient foreign direct investment, and international support, and encourage domestic investors to support the goal.

“There could also be regulatory barriers associated with Vietnam’s ambition to include hydrogen and ammonia in the energy mix. In the absence of a robust regulatory framework, it will be difficult to finance hydrogen, ammonia or related projects due to safety and other risks associated with such projects,” Nian said.

It will be difficult for the country to implement the necessary policies to attract sufficient investments for its renewable targets whilst avoiding severe transmission issues that are caused by large wind and solar installations, which happened from 2018 to 2021, Cao Yanqi, analyst on APAC Power and Renewables Research at WoodMackenzie said.

In attracting investors for gas and renewable projects, it is important to provide assurance for project off-taking,” Nian stressed.

Nian said Vietnam should be able to provide some form of guarantee to investors on power purchase agreements from wind or solar power projects.

The government should be able to identify projects that could secure renewable energy certificates or carbon credits and enable green financing for them.

Achieving this would require Vietnam, as well as the members of the Association of

Southeast Asian Nations (ASEAN), to speed up the development of a taxonomy that will indicate “regionally appropriate technologies and solutions” that would include nuclear and carbon capture and storage.

Converting coal plants Under the plan, the capacity of coal thermal power is expected to reach around 30 megawatts, comprising 20% of its total power plant capacity by 2030. But in 2050, the country aims to no longer generate electricity from coal power plants.

The plan also only allows projects under the adjusted Power Master Plan VII and under construction until 2030 to be carried out. Also, plants with a lifespan of over 40 years are mandated to stop operations and, if not, convert to biomass and ammonia for lower carbon emissions.

This means that no new coal-fired power plants will be built in Vietnam, whilst the existing power plants will be forced to be repurposed to burn biomass or ammonia.

Otherwise, they risk their plants’ shutdown after the end of their lifelines, Nian said.

“This means a number of coal-fired power plant operators will need to start looking for solutions for retrofitting and at the same time looking for supply of alternative fuels (i.e. biomass or ammonia) to continue their presence in the market,” he said.

Coal power accounts for 34.2% of Vietnam’s energy mix as of May 2023, according to a Global Energy Monitor Briefing, citing data from PDP8.

Cao said that funding new coal plants will be difficult as financing institutions are moving away from coal. And since Vietnam signed the Just Energy Transition Partnership with the Group of Seven countries (worth around $15.5b) and approved the PDP, Cao said new coal plants will face more challenges in implementation.

“For existing plants, as the PDP is planning to eventually switch coal to burn biomass and ammonia after 2030, operators should start to prepare and make early plans to stay profitable with the coming transition,” he said.

Energy security Robert Liew, principal analyst of Power and Renewables Research at Wood McKenzie, also said that the 2030 target will be challenging as there are still several stranded wind projects. There are also concerns about the timely completion of new gas power capacity.

Handling the increase in generation costs due to larger deployment of LNG plants whilst completing projects on time for energy security needs will also be another problem, Cao said.

“It will take a lot of decision maker’s wisdom to meet the target of all coal plants switching to biomass/ammonia and over 60% of gas plants burning hydrogen by 2050 whilst ammonia and hydrogen production is very limited now,” he said.

ASIAN POWER 11

GENERATION REPORT: BIOMASS

Asia turns to biomass co-firing in coal plants for energy security

However, doing so means that the operations of coal-fired power plants would be extended, experts cautioned.

Biomass and co-firing should be undertaken with a holistic approach (Photo by CEphoto, Uwe Aranas from WikiCommons)

C

oal-reliant Asia could not afford to phase out the fossil fuel industry immediately to accelerate the transition to renewable energy. They shift to co-firing biomass in the coal plants instead to not jeopardise energy security whilst reducing emissions. In a way, this results in prolonging the life of power plants.

Biomass could potentially reduce the reliance on fossil fuels, and blending it with coal in power generation presents an opportunity for Asian markets to lower power plants’ net carbon emissions as biomass combustion is carbon-neutral, Alejandra Leon, project officer at World Bioenergy Association (WBA) said.

“As the Asian region works towards cleaner and more sustainable energy systems, the strategic deployment of biomass and co-firing can play a crucial role in achieving emission reduction goals, fostering energy security, and supporting local economies,” Leon told Asian Power.

“It’s essential, however, that these initiatives are undertaken with a holistic approach that considers technological advancements, environmental 12 ASIAN POWER

To get more biomass in the energy mix you will need to consume more coal

Alejandra Leon

sustainability, and long-term energy strategies,” Leon added.

The adoption of bioenergy in Asia has increased four times in the past decade to 64,193 megawatts (MW) in 2022 from only 16,270 MW in 2012, data cited by the WBA from the International Energy Association (IEA) showed. China is leading in terms of capacity with 34,088 MW, followed by India with 10,670 MW, and Japan with 5,476 MW. In India, the government is requiring all coal-fired power plants to co-fire with biomass with a ratio of around 5% to 7%, the association said. Similar mandates were issued in China, whilst Japan and South Korea have ramped up their biomass share in power generation by giving incentives such as feed-in-tariffs and renewable certificates.

One of the recent projects cited in India is the National Thermal Power Corporation’s (NTPC) co-firing of 77,000 tonnes of agro biomass at 14 power plants, with a plant to increase the capacity rapidly, WBA said.

Putra Adhiguna, Energy Technologies Research lead for Asia at the Institute for Economics and Financial Analysis, also

noted that China and India mostly use solid biomass from crops and residues, even forestry residues, whilst Japan and South Korea, which are major importers, use wood pellets or palm kernel.

Southeast Asia’s situation The biomass capacity of Southeast Asia is only around 6,000 MW as of 2020, and is mainly installed in Thailand with 2.2 gigawatts (GW), and Indonesia with 1.9 GW capacity, Suwanto, senior officer of Power, Fossil Fuel, Alternative Energy and Storage Department at the ASEAN Centre for Energy (ACE), said.

This is compared to the power generation coming from oil and coal which accounts for 76% of the region’s total, he said.

Despite this, there is significant progress in driving biomass use in the power sector, particularly in Malaysia, Thailand, Vietnam, and Indonesia, as cited in an ACE report.

In Indonesia, state-owned electric utility firm PT PLN issued a regulation that provides a basis for the implementation of co-firing in coal-fired plants.

Malaysia laid out four strategic pillars for renewable energy targets in power generation composition until 2035 under its roadmap, with the second pillar aimed at exploring potential support mechanisms for biomass co-firing. Thailand also included a “Community-Based Power Plant for Local Economic Project” in its plan with a total capacity of 1,993 MW comprising biomass, biogas, and solar hybrid.

In Vietnam’s recently-approved Power Development Plan, coal plants have to burn biomass and ammonia fuel after 20 years of operation starting at 20% and increasing to 100% as it aims to phase out coal by 2050, according to the ACE report.

“In terms of supply, Vietnam has become the world’s largest supplier of wood pellets (after the USA). Utilising resources from the furniture industry, the country has become a major player in the biomass sector in the region,” WBA said.

Whilst biomass co-firing is seen as beneficial, markets should take caution in dealing with blending it with coal, cautioned Adhiguna.

“Forcing its application may seem to bring benefit, but to get more biomass in the energy mix you will need to consume more coal, a proposition which will increasingly be scrutinised by stakeholders,” he said.

Extending coal plants’ lifespan A typical co-firing ratio entails around 2% to 10% biomass and 90% to 98% coal, Adhiguna said, noting that more coal would be needed to generate more biomass power under this kind of arrangement.

“Focus to increase the biomass mix is needed, but going to dedicated biomass power plants seemed to be more promising as coal power plants have their limitations in accepting biomass, he said.

“Many will scrutinise the basic tenet to this co-firing, which can be perceived as

GENERATION REPORT: BIOMASS

Putra Adhiguna

Suwanto

Going to dedicated biomass power plants seemed to be more promising (Photo by nostal6ie from Shutterstock)

an effort to extend the social license of the coal power plants,” he added.

Leon explained that coal is still the top supplier of electrical baseload power globally, so “it is not economically feasible in many emerging economies to switch to alternative renewable power sources overnight.” She added, "There is and will still be a need for dispatchable baseload power and biomass provides that. It also helps to utilise local resources, develop local economies, and reduce dependencies on imported fossil fuels.”

For Suwanto, it is important to consider the energy trilemma of energy security, sustainability, and affordability, particularly on the level of the Association of Southeast Asian Nations (ASEAN), which represents the region where coal is still needed for energy security.

Under the ACE’s 7th ASEAN Energy Outlook, the region would need coal from around 2040 to 2050, Suwanto said. He added that the average age of coal power plants in the region with a lifetime of around 40 to 50 years, is about 12 years.

Biomass co-firing will also contribute to the power plant’s business performance as early retirement of power plants would translate to financial losses. Aside from this application, carbon capture, usage, and storage technologies can also be installed in coal plants.

“I think combining the biomass in the coal power plants is one of the actions to mitigate or to reduce the emissions from the coal power plants, which means that we can prolong the life span of the coal power plant itself,” Suwanto said.

Hurdles to biomass use The adoption of biomass in power generation is also faced with various hurdles including in logistics and supply chain, according to WBA. It said that biomass is available in small and dispersed land holdings. Thus, the collection, transport,

and storage push feedstock costs. Aside from the costly material collection, Adhiguna said that “in many places, the benefit of biomass is propped by the benefits of handling residues and waste, such as avoiding open burning of agricultural waste.” He added, “There is no ‘one story’ in biomass adoption; they remain largely location-specific where biomass resources can be easily sourced within proximity.”

There are also hurdles in the technological aspect as some technologies require updates, such as replacing coalfired boilers to accommodate biomass or installing dedicated biomass power generation units, the WBA noted.

Investment in research and development will also be critical in driving biomass use.

According to the ACE report, pulverised coal (PC) boilers are used the most amongst the common types of boilers, which include circulating fluidised bed boilers and stokers. However, the PC boiler can only use wood pellets as biomass fuel.

It also said that direct co-firing, the cheapest and easiest amongst the three methods of co-firing, would need proper biomass pre-treatment or poor handling could lead to reductions in the boiler’s efficiency. “Technical support from the original CFPP (coalfired power plants) manufacturer is critical to ensure the capability of the existing CFPP,” the ACE report read.

“Knowing that any modification to the existing CFPPs will add more costs, a comprehensive feasibility study is needed to determine the most effective approach to implementing biomass co-firing, in terms of the selection of potential biomass feedstock, type of co-firing, etc.”

Suwanto also cited the unequal access to information about biogas extraction techniques and suitable feedstocks. The power sector would also have to compete

Biomass adoption remains largely location-specific where biomass resources can be easily sourced within proximity

with other sectors that use the feedstocks such as food and agriculture. “This means that the scarcity of the feedstock might be another challenge for the utilisation of biomass for power in ASEAN,” he said.

Policymakers lack awareness of the sector, WBA said, adding that biomass is put back on the agenda for renewable power generation as international and national commitments focus on climate change and fossil fuel displacement.

Driving capacity In the ASEAN, ACE said it is important for a country to collaborate with other markets that have experience and advanced technological capabilities in co-firing. There should also be a national standardisation for biomass in power generation like in Indonesia to enhance power plants’ efficiency.

Whilst biomass co-firing is not new, ASEAN has only adopted it in the last decade so there is a need for further research and development.

There is also a need for a biomass database and mapping system to ensure a steady supply of high-grade biomass.

Suwanto also highlighted the need for incentives or feed-in-tariffs to attract investment in biomass co-firing in Southeast Asia, since investments in coal are already limited in view of its phaseout. “We need mechanisms to support the transition from coal power plants to biomass co-firing in coal power plants,” he reiterated.

Adhiguna said the sector will grow “quite substantially,” but flagged that more care should be considered in evaluating the sustainability of biomass power generation, backed with scientific evidence, noting that sustainability standards for biomass sourcing could still vary.

Chiming in on the subject, Leon said biomass adoption could see several key developments and this could be supported by the potential increase in policy support that could drive investment, and supported by the growing energy demand.

There could also be regulations and certifications that will be implemented to ensure that biomass is secured from sustainable sources. Projects focused on biomass could drive local economic benefits and may be explored as cleaner alternatives once public awareness is raised on the environmental impact of conventional energy sources, amongst others, Leon said.

“It’s important to note that the pace and nature of these developments will depend on various factors, including government policies, technological advancements, public acceptance, and global market dynamics,” Leon said.

“The next five years are likely to witness a growing role for biomass in the Asian energy landscape, but the extent of its adoption will be influenced by a complex interplay of these factors,” she added.

ASIAN POWER 13

COUNTRY REPORT: CAMBODIA

Cambodia needs a grid upgrade to avoid higher power costs — ERIA The country rolled out its Power Development Masterplan 2022-2040 to ensure a reliable power supply.

A

nation struggling with power shortages, Cambodia has set a goal to achieve energy supply stability through its Power Development Masterplan 2022-2040 (PDP). To realise this goal, the country would have to ramp up its capacity. But an expert flagged that consumers could bear the brunt of a high electricity cost if the implementation of the roadmap is not carefully planned.

Phoumin Han, senior energy economist at the Economic Research Institute for ASEAN and East Asia, said meeting the demand is easy but ensuring that the costs are affordable may not be guaranteed.

“If you keep building new power plants in a way exceeding the demand, the public will bear the cost through higher tariffs. So, it is very costly if it is not planned carefully.

Some countries are concerned too much about energy supply security, and they have built too much power supply reserved capacity. As a result, it makes electricity very costly as well,” Han told Asian Power.

Han added that an “unplanned and inexperienced” PDP because of a weak transmission and distribution system could lead to a “too high reserved capacity.”

As such, there is a need to upgrade the grid and roll out smart grids to save energy costs and cut reserved capacity.

The masterplan In one of the scenarios under the PDP, the domestic installed capacity of coal in 2030 will be at 2,266 megawatts (MW) comprising 40.4% of the total mix. The capacity will remain the same in 2040 but its share will be reduced to 21.4% due to the growth in other sectors. The share of fuel oils will be at 490 MW for both 2030 and 2040 but their share in the energy mix will be at 8.7% and 4.6%, respectively.

Its solar power capacity will increase to 3,155 MW in 2040 (29.8%), from 1,005 MW (17.9%) in 2030. Hydropower will be at 1,558 MW (27.7%) in 2030 and increase to 2,973 MW (21.4%) by 2040.

Biomass will grow from 98 MW (1.7%) in 2030 to 198 MW (1.9%) in 2040.

Battery Energy Storage Systems will account for 3.6% of the total in 2030 at 200 MW and will increase to 420 MW, comprising 5.8%. Cambodia will not have natural gas in 2030 but it will account for 8.5% in 2040 at 900 MW. Meanwhile, its imports from Laos and Thailand will be at 3,095 megawatts (MW) and 700 MW, respectively by 2030. By 2040, imports from Laos will be retained but 14 ASIAN POWER

Cambodia aims a cleaner power mix, whilst meeting existing governmental commitments and security (Photo by Dmitry Makeev from WikiCommons)

Cambodia has quite a challenging task ahead of balancing both reducing emissions and also ensuring energy security

Phoumin Han

the imports from Thailand will be raised to 1,000 MW. In 2030, it will have around 1,215 MW of capacity saved through energy efficiency measures and it will increase to 2,205 MW in 2040.

“Whilst there has been a fair amount of developments in the market, from the enactment of policies such as the power development plans, regional cooperation, and power project commissioning, we expect that there will be a strong expansion of Cambodia’s power market in the coming years,” said David Thoo, analyst for power and low carbon energy at BMI said.

Cambodia’s energy landscape The country’s total final energy consumption is expected to double from the 2020 levels to reach 14 million tonnes of oil equivalent (mtoe), according to a report by the ASEAN Centre for Energy (ACE). This will be led by the transport sector (46%), industry (24%), and residential (16%).

At present, the government’s focus appears to be ensuring energy security over the next 10 years before looking at

deploying renewables on a larger scale, Thoo said. He noted that the project pipeline of coal projects in the Southeast Asian nation is around 3.5 gigawatts (GW), the largest of all power types. The amount of hydro, solar and wind power projects is about 530 MW. “Cambodia has quite a challenging task ahead of balancing both reducing emissions, and also ensuring energy security as its economy expands, and its power consumption grows,” Thoo said.

The PDP estimates the country would need around $9.2b of investment to support the expansion of its generation capacity. Of which around $2.5b has been committed for projects under development from 2022 to 2025.

For 2026–2031, investments were expected to be low because of the full uptake of the scheduled power imports from Laos and progress in its energy efficiency initiative. But for 2032 onwards, Cambodia would need the remaining around $6.7b to fund hydrodams, solar plants, and battery energy storage systems projects.

“This is actually an indication that

COUNTRY REPORT: CAMBODIA Cambodia is looking to attract more investment into its power sector,” said Thoo.

“We expect this to be one of the key features that [we] could see happening in the coming years as the government becomes more open to foreign investments.”

Banking on energy efficiency In a bid to establish sector-specific energy efficiency policies, Cambodia has instituted the NEEP. This strategic policy aims to curtail total energy consumption by a minimum of 19% by 2030, in contrast to a business-as-usual scenario.

Per sector, the government aims to reduce residential consumption residential by 34%, industrial by 20%, and transport by 5%, according to the ACE report.

Also, the report underscored how the policy needs to be supported by an increase in awareness among residential consumers on the benefits of shifting from traditional biomass to modern energy sources. This sector is a priority for the government as it accounts for over half of the total energy consumption.

Through this effort, the programmes under the policy can be implemented efficiently. “Moreover, the potential linkage of upscaling investment on energy efficiency with the one for the energy supply side must also be explored. Thus, it could reduce costs and improve coordination among relevant stakeholders involved in both PDP and NEEP,” it said in the report.

Affordable electricity rates According to the ACE report, Cambodia needs to re-evaluate its electricity tariff structure to provide a “more comprehensive access and affordable electricity price,” particularly for residential users.

The agency said that several tariff structures in the markets have created a wide gap between the rural and urban areas.

The prices – ranging from $0.18 to $0.18 per kilowatt-hour (kWh) – are also higher compared with neighbouring countries.

To illustrate the disparity, the cost of electricity in Thailand and Indonesia is considerably lower, with tariffs as low as $0.07 to $0.10 per kWh. “Subsequently, rural areas either lack service or have limited access to power since they cannot afford electricity. Despite various tariff structures, EDC’s mandate is weak and favours poor tariff policies as the implementing agency in power sectors,” the ACE report read.

In Cambodia, there are 245 villages or only 1.73% of the total villages, that have not yet been reached by power distribution networks, it added.

Challenges Han said that whilst the goals under the PDP are “good news,” particularly the significant increase in solar power,

deploying them faces policy and power purchase agreement risks such as curtailment issues.

According to the ACE report, Cambodia is also facing challenges on the technical side, particularly in water storage management. It noted that the country had a 400-MW electricity shortage during the dry season, resulting in uncertainty in the future of hydropower.

The report also noted that the development of hydropower projects in the Mekong River contributed to water security issues as the dam is not used to prevent floods, inundating lower ground when water needs to be released from the dam.

“Low resiliency to natural disasters and climate change effects impeded the government’s implementation of the PDP,” the report read.

Driving investments Cambodia may face challenges in securing green funding to boost its local generation capacity and high-voltage network infrastructure beyond 2025 as it continues to be reliant on coal power plants, Marko Lackovic, managing director and partner at Boston Consulting Group said, noting the country’s 2040 target. It also has no plans for early retirement of coal plants.

Ambiyah Abdullah, senior office of the Energy Modelling and Policy Planning Department at ACE, said the private sector will play a crucial role in Cambodia’s energy security as the current government policy allows their involvement.

“The private sector involvement is really crucial because we need a lot of means, a lot of investments. There is really a need for the share or the contribution from the private sector investment at this moment,” she said.

The ACE Policy Brief noted a “weak state utility or low capacity of the government to intervene in Cambodia’s electricity system” as the current policies support private sector involvement.

Whilst the support for the private sector is “appropriate” due to the limited capacity of the government, this is elevating tariff rates and resulting in private electricity providers levying higher electricity charges.

“Consequently, the ability of the government to implement rational economic and poverty relief policies is hindered by a privatised system in Cambodia with many small private actors,” the report read.

“The upscaling investment is needed to secure the required investment for the power sector and improve technical capacities for power generation, and institutional reform stated in the previous section. Thus, the government design of the institutional framework and financial plan on the energy supply side would be the key factors to complement the PDP,” it added.

Overcoming barriers Han said the Cambodian government has

David Thoo

Marko Lackovic

Ambiyah Abdullah

The ability of the government to implement rational economic and poverty relief policies is hindered by a privatised system

to craft policies that will attract investments in renewables to ensure that the risks, such as on the policy side, can be managed.

“In addition, policy support and overall cost of renewables need to be understood.

Fiscal incentives must be clearly stated to support the overall cost of renewables and some specific policies to ensure the increase of return from investments need to be in place, such as feed-in-tariff or others, he said.

Achieving energy security will be difficult and depend on the political environment, Han said.

Han believes that even if Cambodia relies on imported natural gas and coal for electricity, the country can still achieve energy security as the majority of its electricity will be produced domestically.

“To achieve full energy security, Cambodia may need to develop large scale of solar PV with battery storage combined with hydropower, biomass, wind and some other indigenous fuels,” he said.

Lackovic said one approach the Cambodian government can pursue is implementing additional incentives to promote rooftop solar and distribution generation, particularly for the remaining 245 unconnected villages. This can help cut the government’s investment requirement average cost of electricity.

Rolling out measures that reduce peak demand such as demand response programmes and grid-connected energy storage systems can also reduce the need for additional generation capacity needed whilst maintaining a high reliability.

Abdullah also said that other member states of the region will play an important role in contributing to Cambodia’s energy security, citing the ASEAN power grid connection which will connect the country to Thailand, and Singapore, amongst others.

“There will be a significant increase of the energy demand among the ASEAN and maybe each ASEAN member state can empower the national capacity to meet the demand,” she said, adding that the regional cooperation will also secure energy supply.

Cambodia PDP Energy Demand Forecast 2021-2040 (GWh/TWh)

Source: Cambodia Power Development Master Plan 2022-2040

ASIAN POWER 15

CEO INTERVIEW

Asia needs natural gas to balance ‘energy trilemma’ Natural gas is cleaner than coal and would support the intermittency of renewables, ANGEA said.

APAC

T

he region’s pursuit of energy transition and security would have to take into consideration balancing the “energy trilemma” — energy affordability, reliability, and sustainability. Ensuring that all three are met would entail the adoption of natural gas in the energy mix.

The Asia Natural Gas & Energy Association (ANGEA) released a study, along with Rystad Energy and in partnership with the American Petroleum Institute, on the region’s energy security which found that almost all countries in Asia would require much more energy to keep up with the economic and population growth.

ANGEA CEO Paul Everingham said this creates the trilemma where energy should be supplied affordably, reliably, and sustainably.

“The report looked at different ways in which that could take place and found that natural gas plays an important part in any of the possible solutions in meeting that energy trilemma,” he told Asian Power. Everingham also discussed how markets in the region could balance the energy trilemma and achieve energy security.

How important is the energy trilemma in ensuring national energy security?

Every country takes energy security, energy affordability, and energy sustainability very seriously, including all of the nations in the Asia Pacific. The problem with just looking at one of them is often it may harm the outcome of the other two. So, if an emerging Asian economy cannot get a form of energy affordably, then they’re not going to be able to access it, regardless of whether it’s clean or not.

At the moment, with the price of gas being high, relatively historically, because of the Russian-Ukraine situation, you’re seeing many emerging Asian countries priced out or being kept out of the natural gas market. That means their coal-fired power generation continues indefinitely until they are in a position to be able to affordably and reliably get access to a much cleaner hydrocarbon such as gas. That does not help anyone in terms of sustainability, because that means those countries continue to burn coal when they could be using a fuel like gas, which is 60% cleaner compared to coal when you use it in electricity.

Why is it important to balance these factors and what are the barriers in pursuing them?

Globally, we need to be able to balance the energy trilemma: affordability, reliability, and sustainability. That is because if poor or emerging nations cannot get affordable energy, then they’ll keep using whatever is affordable. At the moment, in developing nations, that is not just coal, it is wood. In Africa, some people use wood for heating their food. In countries, such as India, the use of wood indoors is still very high.

As for reliability, a lot of the advanced nations in the world are switching to renewable power, using wind and solar, and the problem with those is that they are intermittent. If you try to go to 100% wind and solar power anywhere in the world, then you are going to have large parts of the day where there is no electricity.

Affordability is a primary concern for emerging nations; reliability is a primary focus for developed economies; and sustainability is the third part of the equation. The entire world wants a cleaner, more sustainable energy system, and lower carbon. Every country in its own different way is on a journey to a more sustainable environmental future. Some are more advanced than others but everybody’s trying their best. When you add up those three, you can 16 ASIAN POWER

Paul Everingham, CEO of Asia Natural Gas & Energy Association (ANGEA)

Coal-fired power generation continues indefinitely, until the countries can affordably and reliably get access to a cleaner hydrocarbon

SCAN FOR FULL STORY

say that everybody wants sustainability, emerging or poorer nations have a pressing requirement for affordable energy and developed countries are in a position where they are seeking reliable energy.

What policies or measures can Asian markets adopt to balance the energy trilemma?

To encourage investment in gas and related energy assets in countries throughout Asia, a few things have to happen. One is that there has to be a stable fiscal and regulatory environment. That means an easy-to-understand and transparent tax system and a set of clear regulations, which govern the safety and the operation of the gas or energy system. There is investment required to build the relevant processing and storage infrastructure. Whether that is development finance or bank finance, it takes time and it requires detailed negotiations.

In terms of supply, countries looking to access new forms of energy, whether it be gas or renewables, need to start their preparation now, because sometimes these negotiations take years. Starting preparations and contracting commercial arrangements now, rather than waiting until you think it might be a more opportune time, means countries will be in a much better position to access energy when it is really needed. There are things that can be done right now, in our view, which would make the future much more secure for people’s energy.

Let’s zoom in on Asia. Which markets are leading in terms of ensuring the energy security of their respective markets?

It is not really a race, per se. Some countries have been doing it a lot longer than others, and everyone has their own journey. This is not about saying there are winners and losers, but Japan, Korea, Taiwan, and China, have been working very hard on energy security, reliability, and more recently on sustainability for a long time, compared to say, some South and Southeast Asian nations.

Feb. 28 (Wed) - Mar. 1 (Fri), 2024 | Tokyo Big Sight, Japan | RX Japan Ltd.

Visit and Discover the Latest Renewable Energy Tech. & Decarbonisation Solutions SMART ENERGY WEEK Consists 7 Shows:

Exhibitor No. 1,700*

ln the business of building businesses

Visitor No. 70,000*

Visitor

Pre-registration

ASIAN POWER 17 *Exhibitor and visitor numbers is expected including concurrent shows.

INTERVIEW

Phl power plant seeks 10-year PSA as supply deal ends Quezon Power confirms plans to extend the plant’s life and explore cleaner energy initiatives.

PHILIPPINES oal-fired power plant Quezon Power’s 25-year power supply agreement (PSA) with the Philippines’ electric distribution company Manila Electric Co (Meralco) is set to expire by 2025. To keep the 460-megawatt plant running, Quezon Power is eyeing a partnership with a power retailer for a 10-year supply deal.

Frank Thiel, managing director of Quezon Power, sees this contract as a means to extend the life of the plant. Also, sufficient investment is vital to refurbish the power plant which has been in operation for over two decades now.

“The idea of a 10-year contract on the contractor side capacitywise lines up perfectly with our ideal of having a longer-term fuel supply contract which gives us better prices,” Thiel told Asian Power. The general manager of the 455-megawatt San Buenaventura Power Limited, also confirmed the company’s plans to study ammonia co-firing to reduce Quezon Power’s carbon footprint. Here’s more on his responses during the interview.

C

Can you provide us with a brief overview of the Philippine electricity sector?

The Philippine energy sector is a very dynamic sector. I first came to the Philippines in 1992 when Manila was undergoing 10-hour shutdowns every day. Things have changed a lot. Over the years, different administrations have brought in more investment. There is a lot more power in the country but is there enough power? The answer is we probably could use more baseload capacity. I think at this point in time, it is safe to say that additional power plants are needed.

The power demand is going up at around 4% per annum. We are seeing more buildings, more people, and more BPOs that increase the power demand. Now that LNG has landed in the country for the first time ever, we are hoping that there will be an opportunity to do more LNG-combined cycle plants that will provide the needed baseload capacity and will really help things along in the energy sector.

How have Quezon Power and San Buenaventura performed so far this year in terms of revenue and profit?

Both Quezon Power and SBPL have been performing rather well this year. We track some things that are very important to us: security, safety, and environmental impact. We have performed really well in all of those. Profit is important to the company, because you know, we are a business like any other business. But at the end of the day, what we focus on is reliability — making sure that we can deliver on our commitments to our customers; and making sure that the plants can deliver electricity at the lowest cost to consumers.

What are the challenges and risks faced by the two power plants this year?

Security or supply to our fuel. We buy all our coal in one single country, in this case, Indonesia. The Indonesian government from time to time has limitations for exporting coal. So that’s one of the risks that we always face. We keep a very large inventory of 45 days for QPL (Quezon Power Plant) and 30 days for SBPL (San Buenaventura Power Plant). That’s how we are able to mitigate the risk associated with fuel supply which is by far the biggest risk that a power plant like ours is facing here in the Philippines.

18 ASIAN POWER

Frank Thiel, Quezon Power's Managing Director

We are constantly looking to see if we can increase or diversify the fuel supply by going to other countries

Aside from ensuring coal supply, what other initiatives are you implementing?

Well, we are constantly looking to see if we can increase or diversify the fuel supply by going to other countries. I have to say we are looking to try and bring coal from Australia, for instance, as an alternative that we are trying to evaluate at this point in time… that is something that we are focused on. Obviously, in the future, we want to become even more competitive than where we are right now. So we are evaluating different types of coal, coming from different jurisdictions.

What measures do you plan to take to ensure that the plant continues operations?

We are focusing on trying to see if we can get another long-term contract in particular with a retailer. That will be a 10-year power supply agreement. We are focused on how we are coming into that contract because we want to become very competitive and we want to offer ourselves as a really good company; somebody that can be trusted and can become quite reliable.

At the same time, we are looking at the plant proper. The plant has been operating for 23 years now and by the time the power supply agreement lapses, it will be 25 years; so we have to refurbish the plant. We are in the process of evaluating different parts of the plant to try and see how we can technically refurbish the plant and make it last longer, so that we can operate safely and reliably for another 10 years. We embarked on a technical evaluation of the power plant at the same time a commercial evaluation, trying to see if we can marry the two: On the one hand, by enhancing and refurbishing the plant; on the other hand, extending it by getting a different contract.

INTERVIEW We try to sign for a longer term because if we are going to be making an investment to refurbish the plant, that’s a very sizable investment. The idea of a 10-year contract on the contractor side capacity-wise, lines up perfectly with our ideal of having a longerterm fuel supply contract which gives us better prices. Also, since we are making a significant investment in refurbishing the plant, we need time that will allow us to recoup that investment as well.

How is the targeted 10-year PSA different from your current PSA with Meralco?

The contracts will be similar but, at the same time, different.

Similar in the sense that we do have an uptake, and basically contracting for the entire capacity of the plant. The terms will be different because things have changed a lot in the last 23 years.

There’ll be perhaps a more balanced approach, and there’ll be a little more risk on us — a little more based on the retailer who’s going to be buying the contract capacity.

Having a long-term contract is similar to what we currently have, which gives us a projection of our revenue streams, and makes it easier for banks to get behind it if we were to finance it. There are 16 retailers in the country. We are approaching different retailers and we are hoping that one of them will be happy enough to sign with us. As we know, they have options and they have other generators approaching them. We have to make ourselves competitive, we have to be very good about what we do in order to entice a retailer to sign with us.

There are calls to shift to cleaner energy sources. How would this affect the operation of the two coal-fired power plants?

The company that we represent, the EGCO Group, has solar power, wind power, and fuel cells. Our company is very high on renewable energy already in different parts of the region. In the Philippines, Quezon Power is now looking at something quite interesting. It’s called ammonia co-firing. The idea is to try and reduce the consumption of coal by burning ammonia. Ammonia is a cleaner fuel, it doesn’t create any carbon dioxide when it burns.

We have engaged with an engineering company to support us with that. I’m quite optimistic that towards the end of the year, or next year, we may be able to try to co-fire ammonia in our boiler. \ In addition to that, we are looking constantly at the plant itself, trying to see if we can make it more efficient so that we can minimise the overall carbon footprint.

Quezon Power Plant

We are trying to find something [that will] bring down the level of greenhouse gas emissions whilst allowing the plant to continue operating

View of the double walled, vertical, cylindrical ammonia storage (Photo by Funtay from Shutterstock)

How effective is co-firing ammonia as a strategy for decarbonisation?

There are many ways to approach decarbonisation and ammonia cofiring is just one of them. You also have biomass co-firing. The other thing coal-fired plants can consider the same thing as a 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 down greenhouse gas emissions.

There are many challenges to ammonia co-firing. The first challenge is supply. Another challenge is the 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 regulations.

What other projects are in the pipeline for both plants?

We have the biomass co-firing and we also have the ammonia co-firing, which is up to 20%. We also have some projects in development and some years ago we started a wind development not very far from our facility. We have five years’ worth of wind data which is pretty solid and bankable, so we’re looking for an opportunity for that project to go forward.

At the same time, we are looking to see if we can participate in Meralco’s competitive selection process. If that were to be successful, then we would have three units in our hands. This time around, it’s not going to be coal because of the Department of Energy’s moratorium on coal-fired plants. We are very keen to develop an LNG combined-cycle plant. We do have land available for now and a transmission capacity for that. We also have a lot of support from the local community. We are very familiar with combined-cycle plants because we have several of them in the company. We are hoping to simply have an opportunity and be competitive, and we’ll have a third unit on the construction before too long.

ASIAN POWER 19

INTERVIEW

Geo Dipa drives Indonesia's geothermal This state-owned enterprise has set a target of 1,000 MW from geothermal power plants by 2060.

INDONESIA ndonesia, despite its vast geothermal resources, has tapped into just 10% of its potential. The slow pace of geothermal energy development faces high exploration risks, a protracted development cycle, and the absence of solid power purchase agreements (PPA). Addressing these challenges, the Indonesian government has designated PT Geo Dipa Energi (Persero) as a Special Mission Vehicle (SMV), specifically tasked with accelerating geothermal development. This move underscores a commitment to a more sustainable energy profile, but also reflects the reality that renewable sources cannot immediately supplant fossil fuels.

Supriadinata Marza, the Director of Operations & Health and Safety, Social, and Environmental at Geo Dipa, stresses the need for medium and long-term regulatory frameworks to support the transition to renewables. Speaking to Asian Power, Marza, known as Rio, highlighted the great opportunities that geothermal energy presents, particularly as a consistent base load power source capable of replacing coal plants due to its ability to provide an uninterrupted electricity supply around the clock.

Rio points out that geothermal power, unlike coal, is not subject to the vagaries of global commodity prices and transportation costs. “Geothermal energy can consistently generate electricity, as long as we effectively and sustainably manage primary energy by channeling steam to the power plant,” he asserted.

With an impressive availability factor of 90% to 95%, geothermal energy is positioned to outperform other renewable sources such as hydroelectric power, which has an availability factor of about 30%. The implication is clear: Indonesia's energy future could well be grounded in the reliable and sustainable production of geothermal power.

I

Special Mission Vehicles In accelerating and expanding geothermal development, Geo Dipa has a special task. First, as a state-owned enterprise, the company is responsible for organising, operating, and managing existing geothermal fields such as the Dieng Geothermal Working Area (WKP) in Central Java and Patuha in West Java, whilst implementing state (Government) values and objectives.

At present, Geo Dipa has been operating the geothermal power plants (PLTP) Dieng and Patuha for Unit 1, each with a 60-MW gross installed capacity. The development of Unit 2 in Dieng and Patuha is underway with a capacity of 60 MW (gross) each and is projected for completion by 2026.

Geo Dipa obtained an energy sales contract (ESC) with the state electricity company or Perusahaan Listrik Negara(PLN) for ESC Dieng and Patuha, which was signed in 2004.

The company also received an assignment from the Government for geothermal exploitation in 2017 for the Geothermal Working Area at Candi Umbul Telomoyo with a potential of 54 MW and WKP Arjuna Welirang with a potential capacity of 230 MW. Second, Geo Dipa’s role extends to acting as a Special Mission Vehicle (SMV) in accordance with Minister of Finance Regulation 80/2022. This positions the energy company as a mechanism for alleviating bottlenecks and mitigating risks in geothermal development. “Debottlenecking primarily addresses the resource 20 ASIAN POWER

Supriadinata Marza, director of Operations & Health and Safety, Social, and Environmental at Geo Dipa.

Geothermal can serve as a base load to replace coal plants, as it provides uninterrupted electricity supply 24 hours a day

risk of geothermal along with the issue of financing, which has historically hindered geothermal development. Thus, Geo Dipa secures funding from both state equity and green funds,” said Rio. The management of this Green Fund lies with another stateowned enterprise, PT Sarana Multi Infrastruktur (PT SMI), with potential funding sources including institutions, such as the World Bank. “In light of the considerable risk inherent in exploration, successful developers will have their funds fully reimbursed, whilst those that unsuccessful may potentially receive a maximum amount of 50% forgiveness,” Rio said.

Conversely, with regards to derisking, Geo Dipa’s primary role involves conducting comprehensive studies on geothermal exploration, a critical risk in managing this energy source.

This exploratory phase usually targets fields that may be less enticing, possessing exploitable distribution potential but also bearing a price risk that might render them economically non-viable for developers. “Consequently, through PMK PISP 80/2022, we were assigned with a technical implementing agency role, whilst PT SMI as financial management, and IIGF for ring fencing. Following Geo Dipa’s completion of surveys and drilling activities, the data is then returned to the government. This risk reduction renders the field more appealing and open for auction,” he explained. The fields designated by the government for Geo Dipa under the governmental drilling initiative are categorised as green fields. Amongst these green fields are WKP Jailolo situated in eastern Indonesia.

In promoting the utilisation of geothermal energy, Geo Dipa embraces the latest technology to enhance electricity generation

INTERVIEW more efficiently. Geothermal energy utilisation is divided into two approaches: directly utilised, where heat energy is used without conversion; and indirect utilisation, involving the conversion of heat or fluid energy into electrical power.

Geo Dipa is on-going carrying feasibility studies on the direct use of geothermal, including critical mineral extraction from geothermal separated brine. So far, they have found that there are associated minerals in the process, such as silica to produce colloidal silica and lithium to produce lithium carbonate and lithium hydroxide, which have a potential value that can match financial benefits from geothermal electricity generation.

In terms of indirect utilisation, Geo Dipa employs the latest technology that is increasingly efficient. One of the examples of technology applications for indirect utilisation is the shift from using a double to a single flow. Another example is stream extraction, where the separation of non-condensable gasses from steam has transitioned from using steam to now using a pump called a liquid ring vacuum pump.

Fundimg Innovation goes beyond technological advancements and extends to funding strategies. Besides receiving financial support from the government, the state-owned enterprise also received funding managed by the Asian Development Bank (ADB) through the Clean Technology Fund (CTF) for the geothermal power plant (PLTP) Unit-2 project in Dieng and Patuha and the Japan Fund Joint Crediting Mechanism (JFJCM) for the PLTP Patuha Unit-2 project. JFJCM is an additional investment grant for the latest equipment that can reduce carbon emissions and enhance the reliability of PLTP. “The advantage of geothermal development is that it can be carried out by implementing efficient technology and reducing carbon or CO2 emissions,” Rio told Asian Power. Meanwhile, to support the acceleration of geothermal development and Indonesia’s net-zero emission target in 2060, a strategy is needed in the medium term. Rio suggested that SMV role can be widened to developing brown fields, not only green fields, which require

Geo Dipa's Dieng Unit

The advantage of geothermal development is that it can be carried out by implementing efficient technology and reducing carbon emissions

Geo Dipa's Patuha Unit

a long exploration process of around 10-12 years to operate.

Green fields are areas where there has been no prior activity, requiring studies and exploration and lacking proven reserves; thus, taking a long time. Meanwhile, brown fields are preexisting areas with proven reserves. “In the brown field it might take up to five years like we did at the Patuha Unit-2 WKP, which received US$300 million (IDR4.56t) in funding or soft loans from ADB and our exploitation has reached 90% with a success ratio of 70% and within 5 years already able to generate electricity. To implement this, regulations from the government are needed,” he explained.

He emphasised that the implementation plan for shifting from fossil energy to new renewable energy must be prepared in advance now by strengthening it through regulations.

Contribution With the geothermal development efforts undertaken, Geo Dipa managed to record dividends for the government of US$1.18m (IDR17.9b) in 2022. The company’s total production bonus in 2015 at WKP Unit-1 Dieng and Patuha was US$2.16b (IDR32.75b). The geothermal development carried out by Geo Dipa is also in line with the goals of the government’s sustainable and low-carbon energy targets. This state-owned enterprise has a target of installing 1,000 MW out of geothermal power plants in 2060.

“As I mentioned before, geothermal energy is not situation dependent like coal-generated energy. We have managed the field with good performance so that it can supply electricity as a base load. If it is calculated that a 60-MW PLTP can reduce carbon emissions equivalent to 400,000 tonnes per year,” Rio furthr emphasised.

In the end, Rio believes that the acceleration of geothermal development can be achieved through a combination of government supportive regulations, funding, and the establishment of comprehensive plans and infrastructure for both the long and medium terms.

ASIAN POWER 21

INTERVIEW

Why ASEAN should accelerate RE with a regional approach Report outlines collaboration's role in achieving 35% renewable energy capacity in the region by 2025.

SOUTHEAST ASIA embers of the Association of Southeast Asian Nations (ASEAN) have set an ambitious goal of achieving 35% renewable energy (RE) capacity installed by 2025. Whilst this is a vital step towards energy transition, countries in the region could not reach this target without taking a regional approach.

In the report titled, "ASEAN Renewable Energy: The Regional Approach Report,"the ASEAN Centre for Energy said significant challenges remain in pursuing the regional approach such as the alignment of policies and regulations that will enable integration through cross-border electricity trade, renewable energy certificate market, and carbon pricing.

The report identified actions that governments could take to address these challenges and drive regional integration in the power sector. “Integrating the 10 countries in the region will allow us to escalate the efforts in bringing renewable energy into our power system,” Acting manager of the Sustainable Energy, Renewable Energy Department at the ASEAN Centre for Energy Beni Suryadi told Asian Power in an exclusive interview.

According to the report, the region, which has a wide array of renewable resources available to support the energy transition, could push for "stronger ambitions" and eventually reach a target of 100% renewable energy. ACE cited that Malaysia and Singapore are both working to ramp up their capacity for solar generation, whilst Vietnam, Laos, and the Philippines both have robust hydropower and wind-installed generation capacity.

Read more of his insights on the report.

M

Can you provide us with an overview of the report’s findings?

The Regional Approach Strategic Report is a joint report developed by the ASEAN Centre for Energy, ASEAN Renewable Energy Sub-Sector Network, and the United Nations Economic and Social Commission for Asia and the Pacific.

The report aims to demonstrate possible decarbonisation pathways through more coordinated and solid cooperation amongst the ASEAN countries. [It] developed a SWOT analysis or strengths, weaknesses, opportunities, and threats for each ASEAN country to ramp up regional renewable energy development and provide a guideline to establish an enabling environment for renewable energy investment, extend energy interconnectivity, and increase renewable energy ambitions by mid-century.

The ASEAN Renewable Energy Regional Approach captures the most ambitious scenario from the 7th ASEAN Energy Outlook, the ASEAN Interconnection Master Plan Study and also the joint report, The Renewable Energy Outlook for the ASEAN, which was developed with the International Renewable Energy Agency and direct translation from the national commitments such as a national energy policy, national power development plan or conditional, and unconditional target of the nationally determined contribution, and other national level policy movements and roadmaps.

This report seeks to demonstrate the most progressive regional energy cooperation in decarbonising the ASEAN energy system, which also considers country-specific merits and vulnerabilities.

So based on the country-level analysis of the energy status and policy, the report has shed light on each ASEAN country's potential and challenges in contributing to the regional target and laid the foundation for the ASEAN Renewable Energy improvements, providing important insight to take into consideration for the ASEAN policymakers.

22 ASIAN POWER

Beni Suryadi, acting manager of the Sustainable Energy, Renewable Energy Department at the ASEAN Centre for Energy

How vital is a regional approach when it comes to the adoption of renewable energy?

We do realise that individual countries might have a challenge to speed up their aspirations for renewable energy. Looking at the existing conditions they have, some countries may have more potential for renewable energy but then have a limited demand or have limitations on the financing capacity. We also have other countries that may have a higher demand with higher purchasing power. So, integrating the 10 countries in the region will allow us to escalate the efforts in bringing renewable energy into our power system.

Each country has a different priority and different status on their national energy policy development. But one thing that they have in common is that they are guided by the ASEAN Plan of Action for energy cooperation, where ASEAN has set to achieve 23% of renewable energy share in total primary energy supply and 35% of renewable energy in total installed capacity by 2025.

This effort can only be made through a regional approach by integrating the collaboration and implementation of the [plan by the] 10 ASEAN countries.

Which countries are leading the adoption of renewable energy in Southeast Asia?

Looking at the statistics, Vietnam is the leading country. Out of around 22 gigawatts (GW) of the newly installed capacity in the ASEAN [in] 2020, 82% was generated by renewable energy, and 50% of it came from Vietnam. But of course, it’s not as simple

INTERVIEW as the statistics. We may as well recognise the efforts made by various countries in ASEAN. Indonesia, for example, has put a massive number of installed capacity and generation electricity coming from renewable energy, particularly from solar, in its recent development plan.

It has a target of 23% of renewable energy in the energy mix by 2025. We may expect that it may not be able to fulfil the target by that year due to the challenge of harmonising the regulation and the market mechanism. But if the process of policy development continues as it is — especially recently that we also have a new director general for renewable energy under the Ministry of Energy in Indonesia who put a strong commitment to bringing this electricity coming from renewable energy — it’s not impossible for them to bring 20 GW of solar capacity in the coming decades.

The Philippines and Thailand have power development plans where renewable energy is a main priority for bringing electricity.

Some countries like Indonesia, Malaysia, and Vietnam specifically mentioned that renewable energy will be referred to as compensation for the limitation on coal. But, of course, the regulatory issue will continue to remain a challenge.

There is still the need for a strong effort to build the capability of the system operators to handle renewable energy

What challenges to accelerate the installation of renewable energy in ASEAN markets remain?

There will be a long list of challenges. But if we go with the two challenges that we have: the first is financing. In many cases, financing is still not favouring renewable energy.

We’re talking about the interest in projects which did not gain strong confidence from the private sector. There is a missing link between the financing institutions and the regulatory bodies.

One of the challenges is how to connect or drive proper financing mechanisms for renewable energy projects in the region.

Another challenge will be more on the technical side. There is still the need for a strong effort to build the capability of the system operators to handle renewable energy.

We see this in the context of Vietnam, where they have a significant amount of renewable energy but the system is not strong enough to cope with the demand. We are also seeing the system operator’s lack of capability in handling that system.

The same is the case with Indonesia, where strong efforts to build the capability of the system operators in managing the intermittency issue of renewable energy is needed.

Preliminary ASEAN Renewable Energy Long-term Roadmap

Source: ACE (2023). ASEAN Renewable Energy Regional Approach. ASEAN Centre for Energy (ACE). Jakarta. Available for download from http://aseanenergy.org/.

They can also consider the emerging technology that might come into the region such as green hydrogen (Photo by Audio und werbung from Shutterstock)

What should ASEAN member-states do to address these challenges and drive a regional approach to energy transition?

We identified a number of actions that ASEAN countries can work on together to address these challenges and drive a regional approach to energy transition. It could start with enhancing regional knowledge within ASEAN countries as there are some countries that will be able to share their best practice or the lessons learned with the less-advanced countries in the region.

We can also make a joint effort to strengthen renewable energy investment for economic integration. We can make a joint effort to re-evaluate fossil fuels and other traditional technologies, and also put more effort into the regional aspirations.

We can focus on climate financing, where we can gain technical support and access to the climate financing that can be utilised, based not only at the national level, but also on a regional level. The region should also continue to promote and implement capacity-building activities for the decision-makers, for the policymakers, and also for the technical levels. This training programme on capacity building will be very critical in equipping the decision-maker with wellinformed knowledge about the importance of renewable energy.

On the other hand, they can push the public to consume energy more efficiently. Last but not least, as we’re speaking of regional effort, there is a need to also improve the ambition whilst optimising the resources that we have in all of the 10 countries in this region.

They can also consider the emerging technology that might come into the region such as green hydrogen or the cross-border connectivity for electricity supply.

How feasible is this regional approach?

We recognise the challenge that we are facing to bring the regional approach by looking at the different situations in every country.

But what is more important is the 10 countries in Southeast Asia currently have a common understanding that this issue cannot be solved only by individual countries.

This issue can be only addressed if the countries can work together by synchronising the grid, by harmonising the regulation, and by sharing the resources so that we will have laws to address the challenges. But of course, it’s not an easy way to harmonise a pact between two countries; and now, we are talking about 10 countries.

We fully recognise the issue that we will encounter, but we have a strong commitment from the governments and from the policymakers. We have also received strong support from the private sector that we will drive our efforts on renewable energy.

ASIAN POWER 23

OPINION

ADHIGUNA AND NG

Indonesia signals it could abandon sciencebased taxonomy for coal power plants Putra Adhiguna Energy Technologies Research Lead, Asia Institute for Energy Economics and Financial Analysis

Christina Ng Research & Stakeholder Engagement Leader, Debt Markets Institute for Energy Economics and Financial Analysis

I

ndonesian financial regulators indicated they were considering a place for new coal-fired power plants in the country’s green taxonomy. This appears to be going beyond their plan to recognise, under the green label, targeted coal power plants scheduled for early retirement. The U-turn not only marks a backsliding of the official position displayed early last year but, if implemented, would also relegate Indonesia to the bottom of the pack of global green or sustainable finance taxonomies.

Indonesia’s green taxonomy, published in January 2022, was welldeservedly applauded by the Institute for Energy Economics and Financial Analysis for reserving its green label only for projects sourced from renewable energy. The taxonomy uses the traffic light system to define types of activities viewed from a sustainability lens: green for activities that “protect or improve the environment,” yellow for activities “not significantly harmful to the environment,” and red for activities “harmful to the environment.” It is extremely concerning that now, new coal-powered generation could be seen as protecting or improving the environment. This simply goes against scientific evidence.

The issue is made all the more disturbing because of the professed rationale for colouring certain coal-fired power plants as green, specifically, those that will be developed “for the sake of energy transition.” It sends out a bad signal to global sustainability-focused investors and administrations who are counting on the Indonesian government for policy certainty and the country’s seriousness in making the transition toward a clean energy future.

Growing risk of greenwashing News broke on August 29 that Indonesia’s Financial Services Authority (OJK) would revisit the national green taxonomy to include newly built coalpowered generation as a green activity, as long as it was aimed at the energy transition, for example, if the plant supplied power to a smelter project.

OJK’s taxonomy now categorises coal-fired power under yellow or red activities. It is one of at least 10 green or sustainable finance taxonomies that have been published globally. None recognise coal power as green.

The European Union’s (EU) taxonomy for sustainable activities excludes coal. Even markets such as China and Russia, where coal still has a heavy presence and new coal-fired power plants are in the pipeline, have kept coal and gas-powered generation out of their respective green taxonomies.

China’s first green taxonomy, published in 2015, categorised “clean coal” as a green project that qualified for green finance but drew widespread criticism, particularly from foreign investors. To its credit, China recognised the significance of a truly green taxonomy and, in mid-2021, removed fossil fuel-related projects. Its current green taxonomy excludes gas, liquefied natural gas, and coal-fired power activities.

Before last week’s announcement, Indonesia was already considering labelling coal power plants scheduled for early retirement as green, to align with version 2.0 of the Association of Southeast Asian Nations Taxonomy for Sustainable Finance. If the country goes ahead with the latest idea, of 24 ASIAN POWER

using the aim of energy transition to justify new plants’ eligibility for green finance, its taxonomy would be the first to recognise coal as green. Not only would national credibility be hurt, but the move might also border on statesanctioned greenwashing.

A blow to foreign investor confidence Taxonomies have been in the limelight, and usually not for good reason. A huge controversy erupted last year when the EU labelled gas power plants as sustainable. Gas was touted as less dirty than coal and a necessary interim fuel whilst the bloc ramped up renewable energy capacity.

International investor reaction was swift and negative. Financial firms with more than US$52.83t (EU€50t) in assets under management criticised the European Commission for weakening the EU taxonomy to accommodate the interests of some member states and the gas industry.

OJK should realise that it does not need to call coal-fired power plants “green” in order to obtain financing. Withholding the green label does not deprive them of conventional capital funding. Instead, recognising such plants as sustainable sends misleading signals to investors wanting assurance on the alignment of their assets and obliges them to do more due diligence on each opportunity, raising transaction costs. This risks Indonesia losing high-quality foreign direct investment and rendering the taxonomy ineffective.

The authority’s plan also leaves the reputation of domestic financial players vulnerable if they blindly support investments in coal-fired power plants on the sole basis of the green label in the taxonomy. Their commitment to decarbonisation becomes questionable, and their global relevance risks diminishing.

Muddying waters in the name of energy transition is the wrong call OJK appears to believe that it is acceptable to call projects green if they are critical to the economy. However, the authority is making the mistake of confusing a transition need with providing certainty and clarity to investors that its taxonomy is backed by science. International investors view labelling fossil fuels as “green” investments as unjustified, even if these projects play a role during the transition. Indonesia can surely deal with its energy transition without jeopardising the credibility of its capital market.

PT Jawa Power, a 1,220 MW Coal-Fired Power Plant located in Paiton complex, East Jawa, Indonesia (Photo by YTL Power International Berhad from WikiCommons)