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Solar 2.0: how engineering will drive new phase of solar power in Southeast Asia

As we emerge from COVID-19, low interest rates, available liquidity and decreasing costs will drive new solar investments

Solar 2.0: how engineering will drive new phase of solar power in Southeast Asia

Southeast Asia is set for a new phase of solar power development, driven by a convergence of low interest rates and available liquidity as we emerge from COVID-19, alongside decreasing costs of technology and new opportunities to leap forward through advanced engineering.

Steady declines in the cost of solar panels, together with favorable government policy, have driven investments to date. The Southeast Asian electricity sector is fiercely competitive and, as the cost of electricity produced from solar heads to parity with conventional generation, the next wave of facilities will see new technologies like battery energy storage systems (BESS) deployed together with solar, promising increased efficiencies and reductions in lost revenues.

Battery storage is approximately twenty five percent cheaper than it was only ten years ago and projected to be less than half of today’s current price by the end of the decade.

“We’re looking at the dawn of Solar 2.0 in the region as developers need an edge that drives down the cost further through this new wave of solar technologies,” said Mitesh Patel, Renewables Director Asia, Black & Veatch. “Compared to the United States where BESS has been proven alongside solar farms, the energy storage market is very nascent in Southeast Asia and has huge potential to gain cost advantages alongside other advanced technology and engineering solutions that are now possible. There is a big upside for developers to realize with a little extra planning.”

To compete against the cost of conventional generation in the region, improving the economics through increasing of the firm power dispatch will be the focus of the next round of renewable energy developments, according to Patel. Hybrid systems that integrate BESS solutions and other technological advances such as bifacial solar work together to create even more efficient and optimal facilities.

“In simple terms, storage means a solar facility can produce electricity at night. Combining it with bifacial panels means better output with the same sunshine, overcoming revenue impacts from both clipping and curtailment,” continued Patel. “This also reduces a lot of the stability concerns that are associated with intermittent renewable energy generation.”

“580-watt larger modules are now coming to market increasing efficiency potentials further. Longer term there is also exciting possibilities around other hybrid systems like solar and green hydrogen together improving the efficiencies and capacities of solar generation.”

Solar will continue to face price competition from other generation sources in the region. An International Energy Association report, updated in May 2020, sees growth in solar and wind generation rebound in 2021 in spite of year-on-year declines this year and view renewables as more resilient to the COVID-19 crisis. However, coal and gas have weakened on world markets and are likely to maintain competitiveness in the near term, especially in Southeast Asia where conventional generation remains very much in the mix. To overcome these competitive challenges, solar development needs to explore and take advantage of the emerging technology breakthroughs to improve operating efficiencies and allay concerns around grid stability and management associated with intermittent generating sources.

This means that to kick start Solar 2.0 in Southeast Asia, the plant’s design and engineering become critical in driving greater performance, especially the sizing of the BESS to achieve optimum returns over the plant’s life. Not only that but such more advanced engineering will provide greater confidence in the eventual re-sale value of the facility. Technologies like bifacial module configuration, energy storage systems, and next generation panels can be optimized to improve commercial prospects. All these new technologies feed off each other and work better together and will drive even greater adoption of solar energy, better realizing southeast Asia’s sunshine potential and creating renewable energy that is as firm and dispatchable as conventional generation.

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