Commentary

The months of November and December saw a huge influx of FIT applications submitted to METI and the respective Utility Companies. Reason behind was the fact that the first revision of the current FIT is due by end of March 2013, after which the new tariffs will become effective from April onward. Considering an application period around 3 months, makes end of December a cutoff date to secure the current rates.

Many power generation facilities have been constructed or are under development in Asia. Thus, many plant personnel will encounter issues related to water/steam chemistry.

Before 2008, encapsulant suppliers from Germany, the U.S., and Japan, such as STR Solar, Mitsui Chemicals, Bridgestone, and Solutia (Etimex), were the dominant companies producing EVA film – taking 60% of the global market share. However, Chinese encapsulant suppliers have steadily increased their market share with players like Hangzhou First PV Material, exceeding Bridgestone and Solutia, to become one of the top three suppliers in 2008.

The October 2012 All India Seminar On Clean Energy & Energy Conservation, Nagpur, seemed more developed and urgent than in 2008. Exemplified in that conference and after the 2012 blackouts, the seminar focused on the fact that conservation, only, will not offset energy requirements. Whole systems replacement, or augmentation, is required and coincides with integrating clean energy sources. Actionable methods and wares for increasing renewable energy efficiency were directly addressed. Intriguing descriptions of solar power, wind energy, and control topologies were prominent. Discussions rounded out on using intelligent grids to allocate loads of existing or new utilities.

Electricity industry has witnessed certain trends during the last decade which can potentially bring significant changes in the industry structure and the relationship between consumers and their utilities. One of these trends is the rising share of intermittent sources of energy, such as wind and photovoltaics, in the overall energy generation portfolio. Another is the ever rising level of consumer dependency on electricity which makes it a basic core necessity and absence of which can cause severe economic and health damages. This was evident during the recent super storm Sandy which effected large densely populated areas on the northeast shores of the United States.

So, hence my interest to find answers and solutions on some of our key and pressing question(s):

Electricity market reform moves slowly in Japan. Recently, however, the Japanese government further clarified its position and called for legal unbundling in the sector – one of the options previously proposed for breaking up the electricity industry.

We live in interesting times. Our world civilisation is experiencing an accelerating and dynamic change. Through technology, through innovation and through social changes.

Interest in the Asian power game has shifted to Southeast Asia for thermal and renewable power. These nations are mostly emerging markets with a mix of fuel options and underserved markets.

At the recently concluded climate change summit in Doha, Qatar, world leaders met and extended the carbon markets till 2020.

Development of hydropower projects in Asia, especially small and medium scale, has received significant interest over the past decade as important advantages for power system generation expansion are being recognized. Importantly, hydropower provides predictable long term energy cost, after the initial capital investment during construction is completed. As a source of renewable energy, hydropower offers lower carbon energy with the attendant global benefits while having no exposure to fuel pricing uncertainty. From the perspective of the power system, hydropower projects offer dynamic benefits such as frequency regulation, reserve capacity, and peaking capacity. If some storage can be provided there can be significant energy storage potential that can assist with the scheduling of other renewables such as wind and solar energy. Energy storage provides the opportunity to increase the value of renewables by converting non-scheduled generation from the off-peak to on-peak periods. Small hydro will often be distributed through a power system, which can provide some advantages in the cost and operation of the power transmission grid.

In November, the government announced early elections, funny way of expressing this as all elections in Japan can be considered “early”. The government also created the NRA (Nuclear Regulation Authority), which has the task of defining the new safety regulations for the Japanese Nuclear Industry as well as making assessments of its implementation. In short, NRA needs to approve any reactor startup. Within weeks of establishing this entity with “enhanced independence” it was revealed most of its senior management are or very recently have received contributions from the same Nuclear Industry they are supposed to assess. The lack of Nuclear power being operational is increasingly showing its impact on the financial situation of 9 out of 10 Japanese Utilities, with only Okinawa having no Nuclear power reporting positive results. Utilities are lobbying hard for further tariff increases as well as reactivation of their nuclear cash cows. At the same time hardly any progress has been made in the restructuring of the Utility environment in Japan. The outgoing government intended to implement a new energy policy, but the final document was not endorsed due to strong objections from Utility and Industry representatives. The “Society not dependent on Nuclear power” document was reduced to a policy paper, which can be easily mothballed by the new government. On a positive note, the new FIT implemented in July is potentially proving to be a game changer. From July to October a total of more than 2GW PV FIT applications have been approved, of which mega-solar (>1GW) accounted for about half. To put this into perspective, up to July this year a total of around 5GW of PV was installed in Japan. The PV boom is a clear evidence that the current 42Yen/kW is very attractive, both for domestic as well as overseas players. Even the March 2013 first revision of the rate is not expected to dampen the enthusiasm, as the market forecast still remains in the range of 3GW to 5GW annual for next two years. The government target of 28GW PV power in 2020 seems to be very much in reach. With such an increase in renewables the challenge of the utilities will be to best integrate these highly decentralized and intermittent resources in a cost efficient way. Considering the lack of restructuring in the utility industry, this will become one of the bottlenecks to achieve a higher renewable portion in the overall energy mix. Competition in the transmission market is one critical element to reduce cost for the consumer. Procurement is another element. So far only Tokyo Electric (TEPCO) has prepared a number of public tenders in a bid to reduce procurement cost. Behind the scene driver is the fact that TEPCO is now under control of the government, who injected huge amount of cash in the company to prevent it from going bankrupt, and as such must comply with the World Trade Organization (WTO) guidelines. It makes more than common sense other Utilities follow suit to do their part to reduce cost. A new 300MW HVDC connection that is being planned in the near future can provide some indication. The respective Utility is not TEPCO and international market prices for such a link are substantially lower than what is available by Japanese manufacturers. In the interest of the consumers this can be the next game changer, let’s keep our fingers crossed. The views expressed are mine alone and do not necessarily reflect the views of my employer.  

After Japan announced a generous feed-in-tariff (FIT), Japan has become one of the hottest new PV markets in the world. Like all significant PV markets where there is also domestic manufacturing, the issue of protecting that fragile manufacturing base in a hostile solar market is bound to come up. The U.S. and Europe have to take on competing countries head-on by proposing – or implementing, in the U.S. – import tariffs on Chinese cells and/or modules and China is retaliating. Rumors from manufacturers in Taiwan suggest that Japan will announce more stringent efficiency standards on imported modules: reportedly increasing minimum monocrystalline (c-Si) module efficiencies to 18.2%, and multicrystalline (mc-Si) to 17.4%. Other examples of indirectly incentivizing domestic content are present – for example, wind projects in Brazil can only access low-cost financing from state banks if they contain 60% domestic content.

Since the beginning of the power sector reform in India, several initiatives have been taken for commercial performance improvements of distribution companies; however, the desired results have not been achieved even after significant investment in the sector during last ten years. Situation is unlikely to go for a rapid change until there is a strong regulatory enforcement, effective project management and accountability at all levels. Our recent experience with government utilities portray that key challenges in the sector during pre-reform was lack of investments and smart technological solutions, which has been shifted over time to the lack of commercial process acumen, project management skills, inefficient asset and technology utilization and ineffective monitoring tools during post reform era.

Market change has been a force for evolution in Asian power companies in this new millennium. Reviewing how these forces are playing out leads to some interesting conclusions about where companies and the industry as whole is heading.

My friends at Asian Power asked if I would do another article so I decided to do a follow up to my May article on Rotating Equipment Condition Monitoring and Condition Based Maintenance (CBM), in May 2012.