Asia’s energy transition is extensive and rapid. Google’s commitment to use excess renewable energy from rooftop solar panels of 500 public housing blocks to power its Singapore operations is a clear indication of the shift to sustainable development. Google has two data centers in Singapore and is constructing a third one.
The growth in corporate power purchase agreements (PPAs) reflects the findings of our first-ever survey of opinion leaders in the electric industry in Asia. Respondents anticipate that data centers (50 percent), banking (43 percent) and large IT companies (40 percent) will be the most vocal in demanding renewable sources of electricity.
As explored in “Technical advances and lowering costs will drive renewables in Asia (page 14),” decarbonizing Asia’s power infrastructure is not seen as a major technical challenge. Respondents believe government policy, regulation and socio-economic factors will drive investments more than the technology itself. This suggests the possibility that large commercial and industrial users — driven by sustainability commitments — will demand more renewable generation and, where possible, build their own solutions.
Distributed energy resources (DER) such as microgrids offer large users the reliability and resilience of supply they require alongside direct control in meeting environmental targets.
Key survey findings include:
#1: Much more investment in microgrids and other DER
Of all generation technology categories, survey findings suggest a significant investment jump in microgrids and other DERs over the next three to five years. Respondents ranked microgrids third in terms of receiving “much more investment,” reflecting the category’s potential for use both by large users as well as remote and island communities throughout Asia that lack connection to reliable, resilient and sustainable supply. “Much more investment” in microgrids and DERs ranks just behind solar and energy storage — which are likely components of many microgrid solutions, particularly in Southeast Asia’s sunny and archipelagic locations.
Implications: Introducing greater levels of renewable energy and DERs — such as microgrids — will increase the complexity of grid management and operation throughout Asia. Higher penetration of variable generation will require increased grid flexibility to respond to sudden increases and decreases of supply due to changes in season, weather and time of day.
#2: Mindset change post-pandemic
Add variable load to increasingly variable supply and challenges facing future grid management come clearly into view. Recent lockdowns due to the COVID-19 pandemic — where load curves shifted from industry and offices to people’s homes — have completely changed the way Asia’s power industry views operations, asset management and its workforce.
Respondents see the biggest threats to reliable grid operations and performance as network capacity investment not keeping pace with demand (41 percent); underinvestment in more reliable transmission networks (38 percent); and introduction of too much intermittent renewable energy (32 percent). Also prominent and tied for fourth are not enough energy storage capacity and natural disasters (29 percent).
Implications: Better grid flexibility could be achieved by deploying BESS, increasing the capacities of existing transmission systems and integrating and upgrading flexible generation such as gas-fired facilities. Informed and rigorous investment prioritization will be required to deliver integrated grid solutions that target system gaps with the right opportunities.
#3: Existing assets, digital systems to receive investment boost
Our industry’s changing mindset to asset management and operations — while facing inevitable financial constraints — will see short term investment reprioritized to existing assets and channeled to the replacement of existing units, conversion of analog systems to digital systems, and increased remote monitoring and diagnostics.
In the face of specific COVID-19 restrictions, both remote asset management performance monitoring, and remote command and control also feature as two of the top five solutions respondents would find most useful in managing through the pandemic; others were related to health and workflow management.
Implications: While the power sector had started assessing digital solutions before the global health crisis, survey findings suggest that the pandemic is likely to accelerate the digital transformation of Asia’s power sector.
Benefits of digitization
Transforming Asia’s power sector through technology is a compelling business case. Optimizing the impact of individual technologies to enhance grid performance is one such digital application. For example, starting with data collected by smart sensors is particularly useful for renewable energy applications. With wind and sunlight affecting power generation production, sensors and smart grids ensure that renewable energy plants are operating to their optimal potential.
Operationally, adoption of predictive asset maintenance monitors equipment performance in real-time, forecasting and optimizing maintenance schedules. Such advances will help mitigate costly outages and other equipment failures across entire systems and extend the equipment lifecycles. Further still, prescriptive analytics will enable autonomous management, where machines act on the information the artificial intelligence (AI) has extracted, offering even further operational savings long term.
These roll up to asset performance management (APM) solutions in which the health, performance and optimization of multiple critical generation, transmission or distribution assets can be managed. The APM approach will minimize failures and improve the operational efficiency of power facilities, ultimately reducing the cost of energy production over time.
Digitization will enable the holistic management of DER assets across different capacities and installations. For example, insights can help identify the weakest link in the distributed energy portfolio. If one project is not performing on a rooftop, how will that affect the entire portfolio in terms of revenue? With respect to project returns, if projects start generating different half-hourly performances, how does that impact the grid?
Digitizing improves project bankability
With financing at the core of Asia’s energy transition success, improving the bankability of infrastructure projects is critical to achieving grid resilience.
Digitizing power assets will make it easier for investors to assess the planning, returns and risk allocation of projects. Data analytics across complex grids will provide insights that will help investors visualize risks across many inter-dependent factors that determine financial success. These factors include grid stabilization, peak load management, system flexibility and reliability.
Digitizing power systems will support investments in decarbonized grids and enable a more efficient and flexible grid operation. This will, in turn, reduce the cost to investors, operators and ultimately consumers.
Digitizing the grid requires an integrated strategy and execution across generation, transmission and distribution, as well as prioritized planning that factors both capital and operational expenditures.
To achieve energy transition success, Asia’s power and commercial and industrial sectors need technology-agnostic partners with global best practices and regional execution teams that can provide integrated strategy, transaction advisory, business operations, regulatory and technology solutions. Partners experienced with every aspect in the lifecycle of generation, transmission and distribution assets and the complex integration of these assets will be well-positioned to optimize grid synergies.
About the Authors
Harry Harji is an associate vice president at Black & Veatch and leads Black & Veatch Management Consulting business for Asia, India, Middle East and Africa. Harji has more than 30 years of management consulting experience in the power, finance, O&G and telecommunications industry. He has extensive international experience across Southeast Asia, the United States and Europe through traveling, working and living worldwide, thus enabling him to quickly adapt to diverse business methodologies, easily work across multicultural boundaries and effectively manage multicultural teams.
Yatin Premchand is a strategic specialist in Asia and the Pacific across public and private sectors, including finance, with successive achievements in de-risking investment and project development, technology diligence and transfer across the CleanTech (energy, waste, water, green buildings, agritech, environmental and climate change) sectors. In 2018, Premchand joined Black & Veatch as their managing director in Management Consulting to spearhead the growth of innovative low carbon / sustainable solutions and decarbonization, de-risking business strategies around cleantech investments, and smart utility / digital transformation.