Development of ASEAN Power Grid –Implications for Northeast Asian Cooperation

The 3rd Northeast Asia Energy Security Forum
The Plaza, Seoul, Republic of Korea, 17 December 2015
Development of ASEAN Power Grid
–Implications for Northeast Asian Cooperation
SHI Xunpeng (Roc), PhD
Senior Fellow, Deputy Head of Energy Economics
2
Issues
• ●Paradox in ASEAN: Green Vision vs Brown
Outlook (mutual needs)
• ● What are the reality and challenges of the
ASEAN Power Grid?
• ● The case of gas sector
• ● What could be suggested for NEA?
3
Paradox: Green Vision vs Brown Outlook
Primary Energy Demand in Southeast Asia
Source: IEA (2015), Southeast Asia Energy Outlook
4
Electricity Generation in Southeast Asia
Unit: TWh
Source: IEA (2015), Southeast Asia Energy Outlook
5
SWOT Analysis
Helpful
Inter Strengths
nal
 Endowment of low
carbon energy
resources
Harmful
Weakness
 Abundance of fossil fuel
resources
 Lower willingness of
governments
Exter Opportunities
Threats
nal
 Growing new demand  Fragmented energy
 Looming supplymarkets and networks
demand gap
 Nationally focused energy
 ASEAN Economic
security paradigm
Community (AEC)
 Prevailing fossil fuel
building
subsidies
Source: Shi, 2016. The future of ASEAN energy mix: A SWOT analysis. Renewable and Sustainable Energy Reviews 53, 672–680
6
Strategies for a greener ASEAN energy mix
Strengths
Opportu  Promotion of renewable
nities
energy
 Energy market
integration and interconnectivity
Threats  National government
capacity building
 Security paradigm shift
 Political trust building
Weaknesses
 Promotion of
Energy efficiency
 Cleaner use of
fossil fuels
 Fossil fuel
subsidy reform
 National
government
willingness
creation
Source: Shi, 2016. The future of ASEAN energy mix: A SWOT analysis. Renewable and Sustainable Energy Reviews 53, 672–680
Case Study: RE integration
• Intermittence of RE (Wind and solar)
 Geographic difference; Resource
complementary; System complementary
• Resource endowment difference
• Different load profile /consumption pattern
Germany’s electricity generation, consumption and net import (TWh)
Consumption
Generation
Import
640
10
5
0
620
-5
600
-10
-15
580
-20
560
-25
-30
540
-35
520
-40
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
Net import, TWh
Generation/Comspution,TWh
660
Germany’s production, consumption and net export of electricity on 17 Aug 2014
70
10
9
60
50
7
6
40
5
30
4
3
20
2
10
1
0
0
0
1
Biomass
2
3
4
Water
5
6
Wind
7
8
9
Solar
10
11
12
13
14
15
Conventional power plants
16
17
18
19
20
Electricity Consumption
21
22
23
Net Export
Net Export
Generation/Consumption
8
ASEAN Interconnection Projects
(Updated in May 2015)
Earliest COD
North
PEOPLE’S REPUBLIC OF CHINA
YUNNAN
VIETNAM
MYANMAR
LAO PDR
9
11
10
THAILAND
East
13
14
PHILLIPINES
CAMBODIA
12
7
2
1)
2)
•
•
•
•
3)
4)
5)
6)
7)
8)
•
•
•
9)
•
•
BRUNEI
3
SARAWAK
4
15
SABAH
8
1
16
South
5
6
WEST
KALIMANTAN
SUMATRA
INDONESIA
LEGEND
Existing
Under Construction
Future
Political concept
•
•
•
•
•
•
10)
11)
12)
13)
14)
15)
16)
P.Malaysia - Singapore (New)
post 2020
Thailand - P.Malaysia
Sadao - Bukit Keteri
Existing
Khlong Ngae - Gurun
Existing
Su Ngai Kolok - Rantau Panjang
TBC
nd
Khlong Ngae – Gurun (2 Phase, 300MW)
TBC
Sarawak - P. Malaysia
2025
P.Malaysia - Sumatra
2020
Batam - Singapore
2020
Sarawak - West Kalimantan
2015
Philippines - Sabah
2020
Sarawak - Sabah – Brunei
Sarawak –Sabah
2020
Sabah – Brunei
Not Selected
Sarawak – Brunei
2018
Thailand - Lao PDR
Roi Et 2 - Nam Theun 2
Existing
Sakon Nakhon 2 – Thakhek – Then Hinboun
(Exp.)
Existing
Mae Moh 3 - Nan - Hong Sa
2015
Udon Thani 3- Nabong (converted to 500KV)
2019
Ubon Ratchathani 3 – Pakse – Xe Pian Xe Namnoy 2019
Khon Kaen 4 – Loei 2 – Xayaburi
2019
Nakhon Phanom – Thakhek
2015
Thailand – Lao PDR (New)
2019-2023
Lao PDR - Vietnam
2016-TBC
Thailand - Myanmar
2018-2026
Vietnam - Cambodia (New)
TBC
Lao PDR - Cambodia
2017
Thailand - Cambodia (New)
post 2020
East Sabah - East Kalimantan
post 2020
Singapore – Sumatra
post 2020
Priority Projects
11
Evolution of APG Objective
Interconnection is technical but APG is political
Ground breaking needs mutual needs
1999- 20042004 2009
Policy framework

Implementation modalities

electricity networks

Interconnection Master Plan
2010 2016-2015 2025




technical standards

operating procedures

regulatory framework

multilateral electricity
trade

Physical Flow
115 kV HVDC
300 kV HVDC
300 MW
275/230kV HVAC
TNL, PT-NK
PX-BKN
Lao PDR
(L)
KNE-Gurun
TKH-NN
PB-MD2
Thailand
(T)
Malaysia
(M)
PlentongWoodlands Singapore
(S)
BY-SRD
Note:
•Between Lao PDR-Thailand: without Power Flow Control (without ACE)
•Between Thailand-Malaysia: Controlled by Pole Control of HVDC
•Between Malaysia-Singapore: AGC setting of Area Control Error (ACE)
Laos-Thailand-Malaysia-Singapore
Power Integration Project (LTMS-PIP)
• Proposed in December 2013 (100MW)
• To enable the power trade from Lao PDR to
Singapore via the existing Interconnection
 the first multilateral power trade in ASEAN
 pave the way for other power integration projects in
ASEAN to follow up (i.e. GMS and APG).
• the main issues on the Singapore Market and
Business Model (Lao PDR-Singapore Bilateral Meeting 8 April 2015):
• Dependent on wheeThe basic requirement to import and sell electricity in
Singapore;
• The introduction of 2 bid approaches: 1. Sell in the Singapore Wholesale Market
(“SWEM”) and 2. Sell to a Singapore Buyer and settle outside SWEM. These 2
options, the Import Company requires to submit their offer within the time
schedule;
14
Progress (up to Oct 2015)
• 11 official meetings and the plans to continue
cooperation in
o assessing the technical viability of using existing interconnections;
o exchanging information on existing and planned electricity
generation sources and electricity demand within each respective
country;
o identifying the legal and regulatory issues that need to be addressed;
and
o exploring possible commercial arrangements for cross border power
trade amongst the parties.
• the possible signing of a LTMS MOU on Power
Integration
o Protocol issues
15
Way forward
•
•
•
•
LTMS Working Group (LTMS-WG)
LTMS Technical Taskforce (LTMS TTF)
Not a technical challenges
More on economical and national decision
(tariffs)
• With trust, no regional architecture may
be needed
• Without Singapore?
16
Future
• ASEAN Plan of Action for Energy Cooperation
2016-2025
• Green ASEAN (2020: energy intensity
20%;2025:23% renewables/TPES, 33EMM)
• Vs. brown outlook (2015: 8%; 15% Elec/9%
TPES)
• Green Energy Network Initiative
(interconnectivity, clean, and poverty reduction)
• Green interconnection
• Energy driver?
17
Bottom up vs. Top down
• Political willingness is the key
• It is not a prerequisite
• ASEAN electricity interconnection started before
ASEAN was established
• “Grass-root” cooperation key to break ground
18
Natural gas cooperation
• Trans-ASEAN Gas Pipeline/Partnership (TAGP)
• Pricing mechanism: Oil Indexation vs. hub
indexation
• Removal of destination clauses
• Take of Pay
OUTLINE
TRADING
HUBS
NATURAL GAS
IN EAST ASIA
GAS PRICING
IMPORTERS’
ASIA PREMIUM
POWER
EAST ASIAN
CHAMPION?
SIMULATIONS
IMPLICATIONS
CONCLUSIONS
19
Gas Pricing Mechanisms
GoG vs. Oil-Linked Markets
Asia – oil-linked LNG market
Europe – a hybrid market
Since the late 1980s
North America – a spot market
Source: Poten & Partners
% of Spot Trade in Total Imports
Share of spot trade is growing
45%
World
40%
Asia Pacific
35%
30%
In Asia Pacific, growth is slower
25%
World average: ~31%
15%
20%
10%
Asia Pacific average: ~12%
5%
0%
2005
2007
2009
2011
2013
Source: IGU 2014
OUTLINE
TRADING
HUBS
NATURAL GAS
IN EAST ASIA
GAS PRICING
ASIA PREMIUM
IMPORTERS’
POWER
EAST ASIAN
CHAMPION?
SIMULATIONS
IMPLICATIONS
CONCLUSIONS
East Asia’s Quest for Gas Trading Hubs
LNG Prices
Motivations
Asia Premium (IEA, 2014)
LNG Prices
Gas Prices
Pricing power (Tong et al., 2014)
Inter-hub competition (IEA, 2013)
LNG Prices
20
21
Impact of LNG pricing and contract
changes on East Asia
Base Shanghai Tokyo Hub - No Oil - No Hub Oil –
Hub (I) Hub
DS
DS (IV.a) No DS No DS
(II)
(III.a)
(III.b) (IV.b)
World 2229
21770 21635 21360 21547
21870 22055
4
China 6772
6208
6017
5973
6356 64406442
Japan 2263
2097
2065
1913
1915 20752075
Korea 1099
995
977
844
845958
960
Chinese
362
362
Taipei
380
356
348
340
340
22
Implications for NEA
• Grid interconnectivity takes long time and faces
significant challenges and barriers, despite significant
economic and environmental benefits
• Mutual needs and ground breaking works are
important
• Bottom up dialogue and cooperation is a key driver and
can be in parallel with political efforts
• LNG market changes creates new dynamics for
cooperation
• NEA needs initiate regular multilateral cooperation
frameworks in various levels, in particular utility level
• LNG markets have more chances to cooperate than
before
23
Thank you!
Energy Studies Institute
29 Heng Mui Keng Terrace
Block A, #10-01
Singapore 119620
For
enquiries:
Dr. Xunpeng Shi
Tel: (65) 6516 5360
Email: [email protected]
24
References
• Shi, X., 2016. The Future of ASEAN Energy Mix: A SWOT Analysis. Renewable &
Sustainable Energy Reviews, 53:672-680.
• Shi, X., 2014. ASEAN Power Grid, Trans-ASEAN Gas Pipeline and ASEAN Economic
Community: Vision, Plan and the Reality. Global Review, 2014 (Fall):115-131.
• Shi, X and Malik, C, 2013. Assessment of ASEAN Energy Cooperation within the
ASEAN Economic Community. ERIA Discussion Paper Series 37. Link:
http://www.eria.org/ERIA-DP-2013-37.pdf .
• Shi and Kimura, 2014, The Status and Prospects of Energy Market Integration in
East Asia, Chapter 2 in Wu, Kimura and Shi (2014), Energy Market Integration in
East Asia, Rutledge, pp9-24 (Political trust)
• Full papers available at:
https://www.researchgate.net/profile/Xunpeng_Shi/contributions