Asia’s wind industry overview, opportunities and challenges:

The state of energy transition in Southeast Asia

 

By Narsingh Chaudhary, Executive Vice President & Managing Director, Asia Power Business, Black & Veatch

Peter Clive, Principal Wind Energy Consultant, Black & Veatch Global Power business

 

Energy transition in Southeast Asia (SE Asia) is accelerating. Grid resilience and renewable energy integration remain core investment areas as the region continues to expand its energy system to support surging energy demand created by industrialization and economic developments.

 

Anticipating the soaring energy consumption, regional power leaders are enhancing energy security with a focus on reliability, resilience and sustainability. This has led to diversification of power generation portfolios and investments in renewable energy integration.

 

Renewable energy projects, such as wind installations, compared to conventional generation projects, are more versatile. They can be developed at various scales with shorter installation periods.

 

Another energy priority in Asia is improving electricity access in remote areas. At this point, one-half billion people are without access to reliable power in Asia. According to media reports, in Philippines, for example, 2.3 million households remain without electricity. Responding to emergencies, such as the pandemic, keeps Asia’s power leadership focused on the importance of universal energy access.

 

Distributed energy resources (DER) like microgrids is one strategy regional leaders are investing in to achieve universal electrification in remote parts of Asia that are not connected to the grid. Microgrids provide the power reliability that these locations need while ensuring the facilities are commercially viable. Renewable energy is a key component of distributed energy generation.

 

While the integration of renewable energy into the generation mix advances Asia’s energy transition, its inherent variability also introduces supply fluctuations in the electricity systems. To enhance grid flexibility, SE Asia’s power leaders are considering solutions such as balancing renewable energy generation with battery energy storage systems (BESS) and enhancing transmission system capacities.

 

In the short term, power investments could shrink as economies recover from the global pandemic. However, the demand for increased grid capacity in Asia and the need to decarbonize our infrastructure remains strong. We expect power projects to take an accelerated growth track path in the mid-term.

 

What is the outlook for wind energy in Asia?

 

The outlook for wind energy Asia is promising. Wind energy holds the potential to accelerate Asia’s electricity sector transformation.

 

According to the International Renewable Energy Agency’s (IRENA)’s “Future of Wind” report, Asia would become a global leader in wind by 2050, accounting for more than 50 per cent of all onshore and over 60 per cent of all offshore wind capacity installed globally.

 

Industry observers note that Asia Pacific’s installations of wind turbines exceed those in the EMEA and Americas regions. In Asia Pacific, China has the highest number of wind turbine installations.

 

IRENA projects that Asia will overtake Europe as the world’s largest offshore wind market by 2050, with 613 GW of capacity.

 

China, the leader of Asia’s offshore wind market with nearly 7GW installed, celebrated a milestone in July this year, when it connected its largest wind turbine to the grid at Xinghua Bay Wind Farm Phase II off the Fujian province. This is China’s first 10 MW offshore wind turbine.

 

Another Asian economy that has good wind potential is the Philippines. With the Philippines easing foreign investment restrictions for renewable energy developments to allow 100-percent foreign ownership, we anticipate rapid market growth in the country.

 

Analysts forecast that Taiwan will build around 15GW of new offshore wind capacity by the end of 2035. For Vietnam, at least 10GW of offshore wind power is forecasted to go online by 2030.

 

One growth driver of onshore wind capacity is reduced cost of electricity generation from onshore projects. At the same time, technological advancements and decrease in production cost of offshore wind turbines are anticipated to improve the offshore wind capacity.

 

Some key factors influencing developers’ decisions for onshore and offshore wind installations include:

1. The infrastructure for transmitting electricity from onshore turbines is less expensive compared to infrastructure required for transmitting electricity from offshore turbines.
2. Offshore wind speed and direction are typically more consistent compared to onshore wind. That means, offshore wind turbines are more likely to reach their optimized efficiency compared to onshore wind turbines. When efficiency is optimized, fewer offshore turbines would be required to provide the same amount of electricity as onshore turbines.
3. Offshore wind farms are less likely to face land constraint issues.

 

In what ways can the bankability of wind energy installations be improved?

 

The aim of a wind installation project is to achieve good productivity that conforms to what we expected based on our pre-construction assessments and what we used in order to raise finance, and reliable performance that has not incurred any unexpected operational expenditures.

 

In view of that achieving project bankability requires two things: (i) the level of Annual Energy Production (AEP), considered sufficiently reliable based on the uncertainty analysis, is adequate for financial purposes, and (ii) the resource assessment and related uncertainty analysis upon which this level of production has been predicted is robust, complete, and unbiased.

 

Factors that investors consider when assessing project bankability include its planning, returns and risk allocation.

 

One way to improve the bankability of wind energy installations is through optimal technology integration. Today, renewable energy technology is available and proven. However, the success of the wind installation also depends on how different technologies are integrated. Who is integrating that technology? What is the quality of construction and build? Have appropriate studies, including grid stability, been conducted? With respect to the integrity of the installations, are they being properly maintained after they are constructed?

 

To address the multiple aspects of bankability, developers need the right engineering, procurement and construction (EPC) partner who can provide wind power solutions that will help meet sustainability goals and energy needs, while also addressing emerging challenges and opportunities.

 

Partners with global best practices and regional execution teams, for example, can offer contracting, permitting and operational experience that are relevant for the specific project. This includes site selection which directly impacts optimal returns for the investment. Deep regional insights, combined with the right technical support, can enable safe and timely completion of the project within budget.

 

It is critical to understand that creating new wind capacity is not just about building more wind farms; instead it is about increasing the generation efficiency of existing arrays, and ensuring new arrays are as efficient as we can possibly make them. Key to this efficiency is data-driven investments; extracting the available information from target and reference sites to minimize project uncertainty and boost project value.

 

When it comes to digitalizing power plants, select partners that can support clients with leading-edge, digitally-enabled real-time decision making, artificial Intelligence (AI) and machine learning expertise that will deliver predictive performance insights, and resilience across their assets.

 

Partners with experience in digitalizing power plants and integrating energy infrastructure into the wider economy through sector coupling would be well positioned to accelerate the progress between the utility and the energy developers. Defined as the integration of energy consuming sectors with the power generating sector, energy sector coupling can help to amplify synergies in the grid.

 

Another point to consider: to effectively integrate utility-scale variable renewable energy sources, other parts of the energy system need to be developed. This includes power generation, transmission and distribution systems and storage capabilities. That makes interconnectivity with local utilities essential when integrating renewable energy including offshore and onshore wind power.

 

As these connections are unique to each utility’s requirements and existing assets, the right partner will serve as a conduit between the utility and the energy developers. EPC partners with long-standing relationships with the interconnecting utilities, their preferred subcontractors, and any special requirements of their service territories can help facilitate the direct interconnection into existing substations, additions to existing substations, and addition of new substations assets located near existing facilities.

 

It is also important to select an EPC partner with all the in-house capabilities for comprehensive solutions, including onshore power delivery, submarine cabling, planning, resource assessment and implementation support.

 

When assessing partners for offshore wind installations, additional considerations include horizontal directional drilling, onshore cable and duct bank design, land-based underground or overhead transmission line design, substation interconnection and substation design, including voltage support requirements in substation designs. All these skills are likely to be required due to the long cable lengths required to connect to the offshore collector stations.