Report: Sustainable Energy Training– Electricity Generation and Supply Challenges and Opportunities in Asia, November 25-29, 2013, Thailand

APO Sustainable Energy Training, 2013

This project was jointly organized by the International Energy Agency (IEA), the Asian Productivity Organization (APO) and the Asian Development Bank. It aims to explore the different challenges and opportunities of building a modern, secure and sustainable energy system through the latest approaches, solutions, and best practices around the world in terms of policy and market reforms.

Objectives for participation

The Department of Energy means to broaden understanding on electric power industry in other countries, especially the ASEAN members. The session on the electricity generation will be beneficial as it will tackle best available technology, energy efficiency as well as topics on grid management and renewable energy.

The National Grid Corporation of the Philippines (NGCP) may be able to obtain a variety of substantial information that are necessary in achieving its vision – “To build the strongest power grid and maintain the best power utility practice in Southeast Asia, with the collective efforts of a world-class professional work force.”

Profile of participants

Hosted by the Ministry of Energy of Thailand, the participants of the project include 32 representatives from 14 Asian countries, namely, Bangladesh, Cambodia, India, Indonesia, Lao PDR, Malaysia, Mongolia, Nepal, Pakistan, Philippines, Singapore, Sri Lanka, Thailand and Vietnam.

Scope and highlights of the project

a. ASEAN power outlook (IEA, ADB) – ASEAN nation’s energy needs will continue to grow and the coal generation will most likely be the major source of power in the coming years (Indonesia will be a dominant source of coal supply to other nations). Renewables are starting to enter the system to provide clean energy instead of using fossil fuel. Oil importation will be reduced due to high economic cost which will give way for gas to enter the ASEAN market;

b. Market Liberalisation (IEA) – As the power industry starts to be complex due to competition among power supplier, development of market liberalization will provide option to level the playing field for players and will remove constraints that are vertical integrated system (state-ownership) usually provide. This gives way to reform on electric power industry such as wholesale electricity market, energy regulation and asset privatization;

c. Philippine Electricity Reform (ADB) – ADB gave a brief presentation on the current electric power industry of the Philippines. From a vertically integrated power system which is solely owned by National Power Corporation (NPC) in the 1990’s, the power sector started its reform through the passage of Electric Power Industry Reform Act (EPIRA) of 2001;

d. Generation (IEA, Technological University of Berlin) – Globally, coal and gas will be the dominant source of power in the future due to its abundance. Renewables are starting to enter the system due to its clean technology. As for the Nuclear, there are still nations that are planning to put up nuclear plants due to its carbon-free base load operation despite issues on high CAPEX, long planning years, security and waste disposal;

e. Electricity Networks (IEA, Technological University of Berlin) – Grid systems are now being invested with huge capital due to continuous advancement of technology. Current grids, such as on what Germany is doing in their grid system) are being expanded to allow future capacity expansion and reduce constraints that may cause technical and economic problems (such as power deficit and unreasonable/beyond normal market price);

f. Smart Grid (IEA, Korea Smart Grid Institute) – Smart grid will be essential for an integrated system in the future which will allow two-way participation from the consumers to the power supplier and vice-versa, instead of current top-to-bottom approach of the power system. This will give flexibility for power utilization while maintaining system reliability and stability. With case studies citing the smart grid in Ireland, Jamaica and South Korea, this technology would hopefully be achieved and applied by other nations to improve their respective power system;

g. Inter-regional Markets and Bilateral interconnection (IEA, ADB, Electricity Generating Agency of Thailand) – ASEAN is seen to apply inter-regional market in the future in order to provide supply security and reliability among Southeast Asian countries. Citing current samples like the Great Mekong System (GMS) and the system in Nordic (Northern Europe) Market, electricity market should be backed up with proper regulation and policy in order to achieve economic and supply-demand balance;

h. Renewable Market & Policies, Integration of Variable Renewables (IEA) – As the renewable energy-based technology started to bloom, a proper field must be established to achieve supply security and quality despite the intermittent capacity these technologies provide. ASEAN region has a great potential for RE players as long as there will be market that support and properly allow incentivize them (such as Feed-in Tariff or FIT) so they can maximize their participation in the power system;

i. Sustainable Cities and the challenge of Rapid Power Demand Growth (ADB) – Due to fast growth of demand of power (electricity now a commodity), we must think possible solutions to somehow slow this down by pushing Energy Efficiency (EE). There is as much capacity saved through EE as putting up new capacity from power plants. EE programs such as Building retrofitting (making it “green”) and implementation of policies would be a great start to develop efficiency in energy utilization;

j. Demand-Side Management (IEA) – Several nations such as Chile, Japan, New Zealand and Africa were already struck by electricity shortfalls. These shortfalls may occur whether due to lack of MWh (energy constrained), lack of peaking MW (capacity constrained) or both. With this possibility of recurrence, nations must develop DSM to enable the power system to mitigate, if not possible to eliminate, the effect of shortfall. These can be done by evaluating measures such as price signals, effective information campaign to consumers, technology replacement, rationing and developing country-appropriate market mechanisms;

Site visit

The site visit was at Sunny Bangchak, located in Bang-Pa-In, Ayutthaya. It has a production capacity of 38MW using photovoltaic, poly-crystalline.  APO Sustainable Energy Training, 2013-2

Visit started with a tour of micro-algae farm. The micro-algae is added to petroleum to become biodiesel. This was followed by a 30-minute 3D presentation of the overview of the solar farm. Picture taking took place at the platform of the solar farm museum that enabled participants to view the entire 78 hectare solar farm.

 

 

Outcomes and evaluation

DOE

The training met the participant’s expectations to build up knowledge on different structures of power industry, as well as current and future challenges the ASEAN region might experience. Experts from IEA, ADB, TUB, KSGI and EGAT were able to share their knowledge, as well as their personal insights, on current challenges of the power industry and how ASEAN nations can see opportunities in these challenges. Their approach in engaging participants in discussions helped to share point of view to relate the topics to current situations in respective countries.
The organizers of the training handled the situation in Bangkok well (despite ongoing political crisis), and kept the participants safe. The training went on smoothly.

NGCP

Based on the perspective of a transmission system, it appears that:

a. Market reform and liberalization that was presented in the project has already been achieved in the Philippines consistent with the provisions set forth in the Electric Power Industry Reform Act of 2001 (EPIRA). This market reform includes:

  • Unbundling of the generation and transmission functions of the National Power Corporation;
  • Removal of cross subsidies;
  • Establishment of the Wholesale Electricity Spot Market (WESM) in Luzon and Visayas;
  • Privatization (thru Concession Agreement) of the transmission business;
  • Privatization of NPC-owned generating plants;
  • Setting of Open Access and Retail Competition (OARC);
  • Promulgation of various resolutions on Feed-in Tariff (FIT); and
  • Establishment of Interim Mindanao Electricity Market (IMEM);

b. Smartening of grids requires smart grid technologies to be applied across the entire electricity system, and thus, needs high amount of investment.

c. Interconnection of different countries in Southeast Asia is not as easy as there is still a need to establish legal and regulatory framework for bilateral and cross-border power interconnection and trade. There is also a need to formulate institutional and contractual arrangements, including the taxation, tariff, and third party access.

Recommendation and action steps

DOE

It is recommended that the next trainings of APO on power industry development to involve all sectors. The DOE participant commits himself as resource speaker to APO-related trainings to shed light in the electric power industry in the country and share the learning during the five-day training in Thailand.

NGCP

Based on the foregoing, it is recommended that further studies be undertaken on how effective the market reform in the Philippines is, and how this will affect future development such as smartening grids and interconnection projects.

Reported by:

MR. MARK CHRISTIAN MAROLLANO
Science Research Specialist II
Department of Energy

MR. JULIUS RYAN DATINGALING
Business Development Head
National Grid Corporation of the Philippines

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