Pima 6

PLUS• South Korea Market Review

• India Energy E! ciency• Kogas

AUGUST/SEPTEMBER 2011

FEATURES INSIDE: Emission Control Standards APAC | Fukushima Developments | Offshore Cables for Wind Farms | World Nuclear Association

| Inverter Awareness | Plus more great articles!

A S I A’ S L E A D I N G P O W E R R E P O R T

POWERINSIDERPI

EAST ASIA: THE HOTBED OF NUCLEARPOWER

PI_AugSep_Cover.indd 1 21/09/2011 20:30

KAEFER Integrated Services

KAEFER, one of the most experienced construction and maintenance companies in its field throughout the Oceania & Asia LNG industry.

Our services include Project Management, Planning, Installation and Supply of:

Insulation & Cladding

Hot Insulation Acoustic Insulation Cryogenic Insulation Online Insulation Pre-Insulation INSTA-LAG® TIPS® TufSeam

Access Management

Scaffolding (Multiple Systems & Tube and Fitting) Rope Access Mechanical Access

Surface Treatment

UHP Water Blasting Blasting & Painting Passive Fire Protection

Asbestos Removal

Removal Encapsulation Hazard Management

KAEFER Integrated Services Pty Ltd 8 Bradford Street KEWDALE, Western Australia, 6000 Tel: +61 8 9224 4600 Fax: +61 8 9224 4691 [email protected] www.kaefer.com.au KAEFER OCEANIA & ASIA: Australia | China | Indonesia | Korea Malaysia | New Caledonia | New Zealand Singapore | Thailand | Vietnam

KAEFER Integrated Services

KAEFER, one of the most experienced construction and maintenance companies in its field throughout the Oceania & Asia LNG industry.

Our services include Project Management, Planning, Installation and Supply of:

Insulation & Cladding

Hot Insulation Acoustic Insulation Cryogenic Insulation Online Insulation Pre-Insulation INSTA-LAG® TIPS® TufSeam

Access Management

Scaffolding (Multiple Systems & Tube and Fitting) Rope Access Mechanical Access

Surface Treatment

UHP Water Blasting Blasting & Painting Passive Fire Protection

Asbestos Removal

Removal Encapsulation Hazard Management

KAEFER Integrated Services Pty Ltd 8 Bradford Street KEWDALE, Western Australia, 6000 Tel: +61 8 9224 4600 Fax: +61 8 9224 4691 [email protected] www.kaefer.com.au KAEFER OCEANIA & ASIA: Australia | China | Indonesia | Korea Malaysia | New Caledonia | New Zealand Singapore | Thailand | Vietnam

More than good ideas PI_Issue_5_Kaeffer.indd 2 21/09/2011 20:58

W E L C O M E

POWER INSIDER AUGUST/SEPTEMBER 2011 3

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27A big welcome to this exciting edition of the Power Insider Asia magazine. As per our usual editions, we have a regional focus and of course many independent articles that you will find of interest and of course use.

South Korea is a strategically yet very diverse country which offers many opportunities on a local level for national and international businesses alike. Often with the diverse nature of many Asian countries, international companies often misunderstand how and how best to capitalize on the many opportunities.

In this issue we have delved deep into the country to give any company looking to truly understand the market an opportunity to do their homework before throwing thousands of dollars of market research at the area.

Global markets are continuing to cause fluctuations and a spike on the Asian market, but one thing remains, and that is growth in the energy markets of Asia and the Pacific. Whether domestically or internationally, Chinese, Japanese, Korean brands are continuing their global march in securing natural resources throughout MENA and Latin America.

One thing is for sure; Asian based companies are not satisfied with the huge opportunities that sit in front of them in their own countries, they want more and are certainly being aggressive in getting new business.

This edition also looks at a follow up to Fukushima, energy efficiencies in India, offshore cables for wind farms in SE Asia.

I hope that you enjoy this edition. If you have any questions, or in fact have any editorial ideas that you would like to see us cover, please do not hesitate to contact me.

CHARLES FOXEDITOR




FEATURES INSIDE: Emission Control Standards APAC | Fukushima Developments | Offshore Cables for Wind Farms | World Nuclear Association

| Inverter Awareness | Plus more great articles!


POWERINSIDERPI


PI_AugSep_Cover.indd 1 21/09/2011 20:30

CONTACT US:

Editor: Charles Fox Journalist: Robin Samuels

Creative Director: Colin Halliday Designer: John Dickinson Sales Director: Jacob Gold

Business Development: Alec Piercy Account Manager: Sam Thomas Accounts & Customer Service Manager: Katherine Godfrey

Managing Director: Sean Stinchcombe

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PI_AugSep_Eds_Letter.indd 3 21/09/2011 20:34

They can be ruined by simple dust Viledon® air filters protect gas turbines and turbo compressors

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PI_Issue_5_Freudenberg.indd 2 21/09/2011 20:59

C O N T E N T S


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News 6Nuclear Power in East Asia 12Post Fukushima 16Emission Control 18South Korea Focus 20KOGAS Global Overview 36India Energy Effi ciency 42Renewable Energy 46Offshore Wind Projects 50Asia’s Power Growth 52Fuel Cell Energy 54Turbine Powered Cogeneration 56Vietnam Winfarm 62Wind Power 64Events 66

PI_AugSep_Contents.indd 5 22/09/2011 13:42

Malaysia Explores IS RE PotentialMalaysia’s potential for renewable energy generation is substantial. Its equatorial location is superb for solar, and its extensive tropical forests can supply large quan-tities of biomass. Hydropower already plays a signifi cant part of the nation’s energy mix, particularly on the island of

Borneo, and mini-hydropower from streams and rivers has boosted the electricity supply in rural areas.

Industry participation in EV Test-bed Interested companies and organizations are welcome to participate in the EV test-bed. They may apply for the En-hanced Technology Innovation

and Development Scheme (TIDES-PLUS) which is jointly administered by EDB and LTA. The scheme waives all vehicle taxes such as Additional Regis-tration Fees (ARF), Certifi cate of Entitlement (COE), road tax and excise duty, for the purposes of R&D and test-bedding of transport technolo-gies. Under the TIDES-PLUS scheme, participants can enjoy

the tax waiver for an initial period of six years. Interested parties can visit www.ema.gov.sg for details.

While Bosch has been ap-pointed to roll out the initial charging infrastructure for the test-bed programme, other players are welcome to set up EV charging stations on a commercial basis.

Ratchaburi buys into 10MW ! ailand biomass projectThai utility Ratchaburi has bought a 40% stake in a 10MW local biomass project.

Ratchaburi paid 80 million bhat ($2.7m) for a share of the power plant in Thailand’s Songkhla Province.

The plant is due to start commercial operation in 2014

6 AUGUST/SEPTEMBER 2011 POWER INSIDER

COMPANY NEWS FROM AROUND THE WORLD

NEWS DESK

Schneider Electric announced today that it has entered into a partnership with NVC Lighting Holding Limited (“NVC Lighting”) to speed up its market penetration in smaller cities in China via NVC Lighting’s well established diffused channels.

The number of homes, small offi ces and buildings in smaller Chinese cities and townships is rising continuously and presents a huge potential market for Schneider Electric’s LifeSpace* business.

The partnership with NVC Lighting, which will accelerate the market penetration roadmap of Schneider Electric in those cities, is materialized by: • a mutually benefi cial distribution agreement to sell LifeSpace products

throughout NVC• Lighting’s vast distribution network,• the acquisition of 9.2% of NVC Lighting’s capital,• the acquisition of some of the assets of Chongqing Enlin Electric Co. Ltd.

that manufactures NVC brand wiring devices and low voltage products under licensing agreement, representing approximately ~EUR16m of sales and about 700 employees.

The partnership will give Schneider Electric an exclusive access to diffused

channels and bring forth strong revenue synergies. NVC Lighting has a solid presence in China with broad diffused channels and extensive retail management experience. It has the access to over 3,000 retail outlets, half of which are located in smaller cities and townships. This distribution channel is well suited for the Group’s LifeSpace products and is complementary to the already wide Schneider Electric network for other low voltage products.

Eric Rondolat, Executive Vice-President of Schneider Electric’s Power Asia Pacifi c, commented: “It is estimated that in China as many as 120 million people will migrate to cities in the next fi ve years. Our LifeSpace offering is particularly attractive for these customers and a partnership with NVC

Lighting will be a fantastic opportunity to make it widely available throughout their diffused network. We’re also confi dent that the collaboration with NVC Lighting will be a successful and mutually benefi cial experience for both companies.”

The acquisition of the assets of Chongqing Enlin Electric Co. Ltd. is subject to regulatory approvals.• LifeSpace activity includes wiring devices, control devices and systems

and VDI (Voice, Data and Image) systems

SCHNEIDER ELECTRIC FORGES A DISTRIBUTION PARTNERSHIP WITH NVC LIGHTING TO EXPAND COVERAGE IN CHINA AND BOOST ITS LIFESPACE BUSINESS

PI_AugSept_News.indd 6 21/09/2011 20:49

THE ASIAN DEVELOPMENT BANK (ADB) IS EXTENDING UP TO $200 MILLION IN LOANSThe Asian Development Bank (ADB) is extending up to $200 million in loans to reconstruct roads in northeast India that will reduce its isolation and open up badly needed growth and development opportunities in some of the country’s poorest states.

The ADB Board of Directors has approved the multitranche financing facility for the North Eastern State Roads Investment Program. The funds, which will be released in two tranches, will upgrade over 400 km of roads in the states of Assam, Manipur, Meghalaya, Mizoram, Sikkim and Tripura. The improvement work will include widening existing sections of roads, strengthening pavements, raising embankments, and providing permanent structures at river crossings.

“More than 30% of the population in these states lives below the poverty line,” said Hideaki Iwasaki, a Portfolio Management Specialist in ADB’s South Asia Department. “By upgrading these roads we will be able to improve mobility and accessibility for many communities that will help provide new economic opportunities, boost growth and reduce

poverty.” Better roads in the region will also significantly improve the investment climate for the private sector, both domestic and foreign.

Assistance will also be given to raise the capacity of state public works departments to carry out effective planning and asset management. An associated technical assistance grant of $1.2 million from the Japan Fund for Poverty Reduction, administered by ADB, will be provided to introduce modern road management practices.

The first tranche loan of nearly $75 million will be used to fund improvements to over 200 km of roads in three states. It will have a 25-year term, with a grace period of 5 years and interest determined in accordance with ADB’s LIBOR-based lending facility. The central and state governments will provide counterpart finance of $98.2 million for a total program investment cost of $298.2 million.

The Ministry of Development of North Eastern Region, along with the six state governments, will carry out the program, which is due for completion by the end of December 2016.

using rubber tree wood-residue as a fuel.

The remaining 60% of the plant is owned by fellow Thai company Precise Power Producer.

Thailand may double solar target to 1GW as investors queue up.

Thailand could double its solar generation targets to

1GW by 2022 following strong investor interest in the sector, say energy ministry officials who will propose the move to the country’s new government.

!ai Ministry of energy looks for more sources of LNGThe Ministry of Energy has suggested PTT plc to find al-

ternative sources of liquefied natural gas (LNG) as a large portion of global supply is be-ing sent to Japan for its post-disaster power production.

According to Permanent Secretary for Energy Norkhun Sitthipong, Japan’s demand for oil and LNG for electric-ity generation has dramati-cally increased after its major

nuclear power plants were destroyed by the earthquake and tsunami disaster, result-ing in a 30 percent cut to its total production capacity. As a consequence, Thailand’s negotiation for imports of LNG has become difficult as much of the supply by 62 LNG traders in the global market is being delivered to the

disaster-stricken country.The Energy Ministry thus

instructed PTT to seek addi-tional sources of LNG in order to ensure sufficient import within the set timeframe. The company was also ordered to expedite its exploration and production of natural gas, both domestically and abroad.

At present, Thailand deals

Responding to developing customer requirements in the valve industry, new functionality has been introduced to SIPOS 5 Flash electric actuators. Actuator position control is now available for SIPOS’ variable speed actuation technology to produce near linear fluid flow characteristics: as a result, the non-linear characteristics of valves

inherent during opening/closing procedures is addressed.

SIPOS Aktorik, the established actuation supplier to the power industry, reports that the design innovation for valve control means that ‘Linear’, ‘Fast Opening’ and ‘Equal Percentage’ functions can now be set via the local control station, or its

COM-SIPOS software. Commenting, Matthias Rebhan, SIPOS’ General

Manager and Head of R&D said:“The development means that SIPOS 5 Flash

provides the most popularcharacteristics for valve linearisation. We have

introduced the new valve characteristic control capability alongside our existing setting options, which include ‘travel-positioning time’, ‘travel-speed setting’ and ‘analog speed control’ functions.

“Benefits of this enhanced control functionality include improving the modulating behavior of complex systems. Additionally, valuable host DCS calculation time is saved by using SIPOS’ intelligent actuators.”

In line with SIPOS’ service ethos, customers can select characteristics for its modulating actuators, without additional cost.

SIPOS’ STRENGTH OF CHARACTER FOR POWER SECTOR ACTUATION



THE IEA SECRETARIAT has completed its 30-day review of the Libya Collective Action launched on 23 June. The review concludes that the Action served a market need by adding liquidity and bridging the gap to additional supplies from OPEC countries. The Secre-tariat continues to closely monitor market conditions, and the IEA stands ready to augment the Libya Collec-tive Action if market conditions again warrant. While we are not now seeking the release of additional stocks, the Action is not yet complete as stocks are still entering the market. To date, the Libya Collective Action involves just over 2.5% of public and industry obligated stocks.

On 23 June, the IEA announced a release of 60 million barrels of oil in response to the ongoing supply disruption of Libyan light sweet crude, an anticipated oil demand increase in the third quarter, and to act as a bridge to incremental supplies from major producers. Market appetite for the government stocks made available has been greater than during the Hurricane Katrina Collective Action in 2005, and the measure has largely achieved its aims to date.

The provision of extra supplies of crude, notably light-sweet crude from the US Strategic Petroleum Reserve, and products has had a number of beneficial impacts in the market. Sweet-sour crude differentials have narrowed overall, rendering light-sweet crudes

more economic for refiners at a time of peak transport fuel demand. Tightness in prompt supply for light sweet crudes has diminished. Refining margins, notably upgrading margins, have improved, thus reducing the danger that suppressed refinery activity levels over the summer would lead to a products-driven supply crunch later in the year.

The IEA also notes a sharp rise in OPEC oil production. IEA estimates put June OPEC crude production at 30.03 mb/d, a rise of 840 kb/d from May, and a possible further rise of 150 - 200 kb/d in July. The IEA estimates that higher OPEC production and the Libya Collective Action should substantially cover the expected 1.3 mb/d increase in the 3Q11 ‘call on OPEC crude and stock change’. However, a number of uncertainties remain which demand vigilance, notably the duration of the Libyan disruption, the future evolution of OPEC supply as well as the final impact of the stock release itself; much of the oil is only now entering the physical market. The Secretariat has encouraged member governments to allow industry the maximum of flexibility in replenishing stocks, preferably waiting until year-end or beyond. Given that the action has not required any country to drop below the 90-day net-import requirement, the timing and pace of any replenishment are unlikely to be disruptive to the market.

with 6-7 LNG traders and is scheduled to import its first lot of 280,000 tons within this month. A total of 5 million tons are tentatively set to be brought in within this year in accordance with the first phase of the LNG import plan.

As for the second phase of another 5 million tons, the Ministry has resolved to

reschedule the import from the year 2021 to 2017. The decision was made after the National Energy Policy Committee had postponed the construction of a nuclear power plant for three years and replaced it with three combined cycle power plants, each of which would be able to produce 800-1,000 mega-

watts of electricity but would also require 1 million tons of LNG per year.

China leads world in green energy investmentCoal remains the prime energy source in China, accounting for 70% of the energy mix

Global investment in re-

newable energy jumped 32% in 2010 to a record $211bn (£130bn; 149bn euros), ac-cording to the Global Trends in Renewable Energy Invest-ment 2011 report.

Published jointly by the UN Environment Programme and the Frankfurt School of Fi-nance, it shows that China has become the largest investor in

renewable energy projects.But the country still

faces grave cases of pollution despite progress in cutting down on the number of new coal-burning power stations during the last five years.

According to Zhang Lijun, vice-minister of environmental protection, coal consumption increased by a billion tons

COMPANY NEWS FROM AROUND THE WORLD

IEA 30-DAY REVIEW OF LIBYA COLLECTIVE ACTION

Paradox Engineering announces the introduction of PE.AMI – Advanced Metering Infrastructure, the complete solution for remote control, machine-to-machine(M2M), data monitoring and two-ways communications.

Developed for the specific needs of utilitiesand multi-utilities, PE.AMI provides a unified commu-nication platform to enable smart meteringand smart grid infrastructures, therefore contributing to shaping smart cities.

PE.AMI allows multi-utilities to manage ad-vanced information from any type of meter (water, gas,electricity) and has a full range of applications from AMR and remote control of distribution networks,to street lighting, solid waste, traffic, public transportation and parking management.

“A smarter management of energy resources is crucial to the development of a low carbon econo-my, as recently confirmed by the EU Commission

PARADOX ENGINEERING PRESENTS PE.AMI, THE INNOVATIVE SOLUTIONTO IMPLEMENT SMART GRID PROJECTS AND SHAPE SMART CITIES


NEWS DESK


between 2006 and 2010.“And it is likely to see an-

other one-billion-ton rise in the coming fi ve years,” he adds.

Security concernsYet the Chinese government is spending tens of billions of dollars every year on so-called clean-tech projects - common-ly referred to as green energy.

“There is a very clear trend in Asia that people are becom-ing more and more interested in clean energy and clean-energy investing,” says Vivek Tandon of Aloe Private Equity.

“One major reason is the need for energy security, particularly in China, which has an enormous demand for energy,” he says.

At current levels of produc-tion, China has coal reserves which should last 40 years, although most reserves are located in the north and north-west - and that poses logistical problems for supply-ing electricity to the heavily populated coastal areas.

Demand for coal is cur-rently outpacing production

- a situation made worse by the govern-ment’s increasing closure of antiquated and unsafe coal mines.

The public’s percep-tion of the deteriorating ecology and environment around them has been instrumental in the growth of renewable energy.

Honeywell Process Solutions (HPS) to Provide In-ternational and Domestic Services and Long-Term Customer Support to FuelTrax® Customers.

Honeywell has announced that it has entered into a global agreement to provide implementa-tion consulting services, project management, and long-term end-user support with Nautical Control Solutions, LP (NCS) for its FuelTrax® Marine Fuel Management system.

Under the agreement, Honeywell Process So-lutions (HPS) will provide upfront vessel surveys, installation supervision and quality control, initial system commissioning and crew training onboard vessels around the world. HPS will also provide ongoing global maintenance and service support for the Fuel Management Systems as needed.

“As we continue to grow our business, the chal-lenge for us is the never-ending 24/7 nature of the maritime industry,” said Anthony George, CEO of NCS. “We are expanding our installations into more blue water fl eets, which includes offshore support vessels that operate anywhere oil is pro-duced. These vessels are worked hard and their

schedules refl ect this, so continuing to support them solely from our Houston headquarters is no longer a viable business model. Having HPS with us provides our customers with an experienced services group that can attend to their needs at any time and at any shipyard or port.”

“With our position as the industry leader in precision marine tank level gauging and our ex-tensive experience in retrofi ts, it made sense for us to expand our relationship with NCS beyond sales representation to include full service sup-port,” said Philippe Despagne, General Manager, Honeywell Process Solutions, Marine Division. “As NCS continues to expand FuelTrax® installations beyond domestic U.S. brown water fl eets, we can provide services wherever the vessels take them with a consistent, reliable support infrastructure 24 hours per day and seven days per week. This approach fi ts well in our one-vendor, one-solution approach in selling and supporting our own prod-ucts and we look forward to adding the FuelTrax® customer base to our own.”

when launching the Smart Cities and Communi-tiesInitiative. Implementing smart metering and smart grid projects are signifi cant steps to offer clean,secure and affordable energy to citizens, reduce consumption and create new services”, explains Gianni Minetti, CEO at Paradox Engi-neering. “PE.AMI represents the cornerstone of any smartgrid and it allows multi-utilities to suc-cessfully face some emerging competitive and environmental challenges, such as rising energy costs and increasing regulatory requirements, as well as the need to lower carbon emissions while improving customer service”.

PE.AMI is an out-of-the-box, self confi guring and self healing solution composed by hardware (Nodes, Repeaters, Gateway), software and management system building a full bidirectional network toconnect any sort of new or existing meter with the company’s business applications. It is the fi rst ultra low power IPv6 wireless mesh network solution available on the market (6Low-PAN), conceived within the ‘Internet of Things’ vision to ensure the best levels of data availability, reliability and network fl exibility. Leveraging sub-GHz ISM band for higher penetration and noise immunity, PE.AMI also features ultralow power technology standing the harshest conditions (it’s IP68 and ATEX certifi ed). Each solution compo-nent is equipped with advanced diagnostic tools and auto-provisioning functions to simplify instal-lation and streamline maintenance, reducing the need for specialized personnel interventions.


HONEYWELL AND NAUTICAL CONTROL SOLUTIONS SIGN GLOBAL SERVICES AGREEMENT


COMPANY NEWS FROM AROUND THE WORLDFurthermore, it is also

seen as a forum for job creation.

“If you create a new indus-try by bolstering the clean energy sector, you can also create jobs,” says Mr Tandon.

Volatile marketApart from the Chinese

government investing in

green technology, money is also coming from outside the country.

Some investors are getting a bit nervous about where the global economy is going and whether or not recovery can be sustained.

There is the danger therefore, that investment

into green technology in Asia might not remain at current levels if the recovery is derailed.

Johanna Klein, who invests in private equity funds on behalf of the Asian Develop-ment Bank (ADB), says clean energy is probably past the point of being the “flavour of

the month” in terms of being the latest fad where inves-tors want to put their money.

“The trend is fairly robust and fairly long-term at this point,” she says.

She does not believe that clean energy is going to be any more volatile or any more affected by the

oscillations of the markets than any other assets, but neither does she think that it will be protected from those phenomena.

The governments of some Asian countries also provide subsidies and backing for some of the green technologies.

TRANSFORMERS ARE BACK - ELTEK VALERE PRESENTS NEW SOLAR INVERTERS FOR PHOTOVOLTAIC SYSTEMSEltek Valere, a leading provider of power supply systems for telecommunications, industrial applications and renewable energy projects (www.eltekvalere.com), is presenting its newest isolated string inverters, the THEIA HE-t product family, at the 26th EUPVSEC (Booth B7/B25) and EcoGen 2011 (Booth 29) exhibitions. Thanks to state-of-the-art high frequency transformer technology, the single phase THEIA HE-t inverters are the only devices on the inverter market that combine maximum efficiency (97.3 per cent) with the safety advantages of galvanic isolation. The THEIA HE-t series inverters can be used for crystalline and thin

BLACK & VEATCH PROJECT FINANCING

SERVICES IN ASIA PACIFICBLACK & VEATCH’S MANAGEMENT CONSULTING has appointed George Currie to lead and grow project financing and infrastructure management consulting services in the Asia-Pacific region.

The projected power, water and telecom infrastructure spending in Asia Pacific from 2011 through 2020 is expected to exceed US$4 trillion, US$1 trillion and US$400 billion respectively, according to an Asian Development Bank report. Joining as Managing Director in the Asia Pacific region, Currie will be focused primarily on developing and providing independent engineering and due diligence services to financial institutions in the region. Based in Singapore, Currie will be supported by engineers throughout Black & Veatch’s business to grow a team of management consultants in the region and build direct relationships with Asia Pacific’s banking and

infrastructure investment community. A civil engineer by training, he brings nearly 30

years of experience working outside his native UK across power, water and transport engineering projects. The last twelve years has seen Currie specializing as an independent consultant advising financial institutions investing in major infrastructure deals across Asia, the Middle East and Central America.

Prior to joining Black & Veatch, Currie helped devise a strategy and development plan to create a national rail system in Qatar (above) to be ready for the World Cup 2022. Prior to this, he has worked as an investor’s or lenders’ technical advisor on a variety of projects including the New Cairo Wastewater Treatment Plant PPP, Theun Hinboun Expansion hydropower project in Laos and CBK hydropower plants in the Philippines.


NEWS DESK


“Governments have their own programmes to offer incentives to people to invest in clean en-ergy,” says Ms Klein.

“China is prob-ably the most obvious example. They have an enormous programme

of giving subsidies at all different levels from the federal to the local, to help the nascent clean energy industry really take off.”

fi lm photovoltaic modules of all types. Eltek Valere offers the THEIA HE-t string inverters with an AC output of 2.0 to 4.4 kW. Even at low outputs, the inverters provide high effi ciency over a broad performance spectrum and can be used anywhere in the world. For operators of photovoltaic systems, this means maximum returns on investment (ROI). Photon Profi , a well-known German solar energy magazine tested and evaluated these performance parameters thoroughly. Eltek Valere’s THEIA 4.4 HE-t was awarded the magazine’s top rating, “very good” for performance at both medium and high solar irradiance.

“Essentially all results from the Photon test laboratory correspond with our own testing and also what the Austrian Institute of Technology has previously tested and verifi ed” says Ingvar Apeland, Executive Vice President of the Renewable Energy division at Eltek Valere. He adds: “Eltek has been setting the standards in the power conversion industry for years and is continuing this tradition with its high effi ciency policy and the THEIA HE-t line, and we feel the overwhelming interest from the market for our products confi rms the validity of our approach.” In addition to the high effi ciency ratio, the THEIA HE-t series inverters are compact, robust (IP65 and NEMA 4X protection class), guaranteed to be long lasting and virtually maintenance free. A fl exible connection set, multi-language functionality, backlit colour display and integrated web server enable quick confi guration and easy operation – under very different conditions and for any type of country-specifi c requirements. At locations where several THEIA HE-t inverters are in use, it is possible to install one unit as a central monitoring hub for single point access and to transmit its settings to all of the other inverters.


HONEYWELL CHOSEN BY KRAKATAU STEEL TO IMPROVE ENERGY EFFICIENCY AND REDUCE COSTSKrakatau Steel Adopts Honeywell’s Energy Management Service to Create an Effi cient Energy Consumption System

Honeywell recently announced that PT. Krakatau Daya Listrik (KDL), a subsidiary of PT. Krakatau Steel Group (PTKS Group), has selected Honeywell Process Solutions (HPS) to implement energy management and monitoring solutions which will help it get long-term cost savings through greater energy effi ciency. KDL will implement the selected HPS solutions at PTKS Group’s facilities.

KDL is the primary supplier of electrical power for the government-owned PTKS Group, which is the largest steel maker in Indonesia with a combined maximum steel capacity of 2.45 million tons per year and is Southeast Asia’s largest integrated steel producer.

PTKS consumes a significant amount of energy (including electrical power, natural gas and industrial gases) due to its large production capacity. Implementing HPS’ Energy Management Service allows KDL to effectively monitor, manage and control its energy consumption without affecting the levels of productivity at PTKS’ facilities. This meticulous monitoring helps KDL achieve the best possible energy use, so lowering its overall operational expenses.

“Providing energy for such a large-scale production is not an easy task, as we often run into high costs. By implementing HPS’ proven solutions, we will be able to control and monitor energy usage, which ultimately helps us reduce those costs signifi cantly in the long run,” said Wisnu Kuncoro, President Director, KDL. “We chose Honeywell Process Solutions because of their previous experience in handling energy management projects and their in-depth knowledge of the steel manufacturing industry.”

“Often, energy expenses are considered a fi xed cost due to their substantial share of operating expenditures,” said Tony Cosgrove, vice president sales, Asia Pacifi c, Honeywell Process Solutions. “With our Energy Management Service, KDL will now be able to gain a competitive edge as they are able to fully control their energy supply chain and achieve energy

savings. We look forward to strengthening our relationship with the Krakatau Steel Group and work on even

greater projects in the future.”

savings. We look forward to strengthening our relationship



Law was passed and in 1959 the O!ce of Atomic Energy was established by the government. "e #rst nuclear reactor to achieve criticality in South Korea was a small research unit in 1962. Ten years later construction began of the #rst nuclear power plant, Kori-1. It started up in 1977 and achieved commercial operation in 1978.

South Korean energy policy has been driven by considerations of energy security and the need to minimise dependence on current imports. Policy is to continue to have nuclear power as a major element of electricity production. After drawing on Westinghouse and Framatome (now Areva) technology for its #rst eight PWR units, and Combustion Engineering (which became part of Westinghouse) for two more, the Korean Standard Nuclear Power Plant (KSNP) became a recognised design, and evolved to the KSNP+. In 2005 the KSNP/KSNP+ was rebranded as OPR-1000 (Optimised Power Reactor) apparently for Asian markets, particularly Indonesia and Vietnam. Six operating units and four under construction are now

If we take the 65 reactors under construction around the world, over half are located in East

Asia, predominantly in South Korea and mainland China but also on Taiwan. "is region is also likely to become an important centre of exports of nuclear technology, following the Korean success in winning an order for four large rectors in the United Arab Emirates (UAE). "e nuclear programmes in each country can be examined before concluding with an attempt to draw some conclusions on why nuclear remains so important in this region.

South Korea is set to become a major nuclear energy country through exporting its technology. Today 21 reactors provide 31% of South Korea’s electricity from 18.7 GWe of plant. "e aim rea!rmed in mid-2011 is to provide 59% of electricity from 40 units by 2030. In terms of capacity, it is planned to increase by 56% to 27.3 GWe by 2020, and then to 43 GWe by 2030.

Nuclear activities were initiated when South Korea became a member of the International Atomic Energy Agency in 1957. In 1958 the Atomic Energy

NUCLEAR POWER IN EAST ASIA - THE HOTBED?IN THE AFTERMATH OF THE FUKUSHIMA NUCLEAR ACCIDENT, EXPECTATIONS OF THE EXPANSION OF NUCLEAR POWER OVER THE NEXT 20 OR SO YEARS HAVE UNDOUBTEDLY BEEN LOWERED. THE SITUATION IN JAPAN REMAINS FLUID, WITH SOME SENIOR POLITICIANS COMING OUT FOR THE FIRST TIME WITH THE VIEW THAT THE COUNTRY CAN AND MUST EVENTUALLY DO WITHOUT NUCLEAR. THESE HAVE THEN BEEN OPPOSED BY THOSE WHO ARGUE THAT NUCLEAR IS ESSENTIAL IN A DEVELOPED COUNTRY DEVOID OF MOST NATURAL ENERGY RESOURCES. ELSEWHERE, NUCLEAR PLANS ARE GOING AHEAD WITH A LARGELY UNCHANGED DEGREE OF CERTAINTY.

designated OPR-1000.Shortly following its sale of four modern nuclear

power reactors to the UAE, the South Korean Ministry of Knowledge Economy declared in January 2010 that it aims to achieve exports of 80 nuclear power reactors worth $400 billion by 2030, in the course of becoming the world’s third largest supplier of such technology, with a 20% share of the world market, behind the USA and France or Russia. "e Korean industry aims to be 100% self-su!cient by 2012, with no residual intellectual property constraints. Following the UAE sale, it is marketing to Turkey, Jordan, Romania and Ukraine, as well as South East Asian countries. In addition to exporting reactors, it also plans to enter the signi#cant market for the operation, maintenance and repair of reactors.

As Japan has few natural resources of its own, it depends on imports for some 84% of its primary energy needs. Initially it was dependent on fossil fuel imports, particularly oil from the Middle East (oil fuelled 66% of the electricity in 1973). "is geographical and commodity vulnerability became

EAST ASIA NUCLEAR POWER

PI_AugSep_South_Korea_Nuclear.indd 12 21/09/2011 20:55


NUCLEAR POWER IN EAST ASIA - THE HOTBED?

critical due to the oil shock in 1973. At this time, Japan already had a growing nuclear industry, with !ve operating reactors. Re-evaluation of domestic energy policy resulted in diversi!cation and in particular, a major nuclear construction programme. A high priority was given to reducing the country’s dependence on oil imports.

Despite being the only country to have su"ered the devastating e"ects of nuclear weapons in wartime, Japan has embraced the peaceful use of nuclear technology to provide a substantial portion of its electricity. Today, nuclear energy accounts for almost 30% of the country’s total electricity production from 47.5 GWe of capacity to March 2011, and 44.6 GWe following the Fukushima accident. #ere were plans to increase this to 41% by 2017 and 50% by 2030, but these are now very doubtful.

By mid May 2011, only 17 out of Japan’s 50 remaining nuclear power reactors were in operation. #is represents 15,493 MWe, or 35%, of the total remaining nuclear generating capacity of 44,396 MWe. Twenty units, with a combined capacity of 17,705 MWe (40% of total nuclear capacity) were not operating as they had been shut for periodic inspections, while another two units (1700 MWe) had been shut for unplanned inspections or equipment replacement. #e chairman of Japan’s Federation of Electric Power Companies (FEPC) warned that the organization expected the supply-demand balance in the remainder of 2011 to be very tight in the east coast areas served by Tokyo Electric Power Co (Tepco), Tohoku Electric Power Co and Chubu Electric Power Co (60 Hz). He said that all the utilities on the west coast of Japan need to cooperate to transfer electricity to the east coast, noting the signi!cant role of nuclear energy in ensuring a stable power supply.

POST-FUKUSHIMA JAPANConstruction of new reactors in Japan has ground to a halt post-Fukushima, but signi!cant plans remain to expand nuclear on several sites. Nuclear power’s reputation has taken a severe dent in Japan and the politicians have followed public opinion. Several further older reactors may have to close, but the country will most likely eventually return to a pro-nuclear strategy out of energy need.

Mainland China has 14 nuclear power reactors in operation, with 26 under construction, with even more about to start construction soon. Additional reactors are planned, including some of the world’s most advanced, to give a huge increase in nuclear generating capacity to perhaps 70 GWe by 2020 and as much as 200 GWe by 2030. China is also rapidly becoming self-su$cient in reactor design and construction as well as other aspects of the nuclear fuel cycle.

Most of mainland China’s electricity is produced from fossil fuels (79% from coal, 2% from oil, 2% from gas) and hydropower (15%). Two large hydro projects are recent additions - #ree Gorges of 18.2 GWe and Yellow River of 15.8 GWe. Rapid growth in demand has given rise to power shortages, and the reliance on fossil fuels has led to much air pollution. #e economic loss due to pollution is put by the World Bank at almost 6% of GDP.

Electricity consumption in 2010 increased 14.5% to 4190 billion kWh, according to the


EAST ASIA NUCLEAR POWER


China Electricity Council, corresponding with a 10% growth in GDP. Installed generating capacity increased 10% to 962 GWe. At the end of 2010, fossil fuelled capacity (mostly coal) reached 707 GWe, hydro capacity was 213 GWe (up 16.6 GWe in the year), nuclear capacity was 10.8 GWe and wind capacity reached 31 GWe. !ese capacity increase "gures are all the more remarkable considering the forced retirement of small ine#cient coal-"red plants: 26 GWe of these were closed in 2009 and 11 GWe in 2010, making 71 GWe closed since 2006.

While coal is the main energy source, most reserves are in the north or northwest and present an enormous logistical problem – up to half of the country’s rail capacity is used in transporting coal. Because of the heavy reliance on old coal-"red plant, electricity generation accounts for much of the country’s air pollution, which is a strong reason to increase nuclear share. China recently overtook the USA as the world’s largest contributor to carbon dioxide emissions.

Nuclear power has an important role, especially in the coastal areas remote from the coal"elds and where the economy is developing rapidly. Generally, nuclear plants can be built close to centres of demand, whereas suitable wind and hydro sites are remote from demand. Moves to build nuclear power

commenced in 1970 and by about 2005, the industry moved into a rapid development phase. Technology has been drawn from France, Canada and Russia, with local development based largely on the French element. !e latest technology acquisition has been from the USA (via Westinghouse, owned by Japan’s Toshiba) and France. !e Westinghouse AP1000 reactor is the main basis of technology development in the immediate future.

Following the Fukushima accident, the State Council announced that it would suspend approvals for new nuclear power stations and conduct comprehensive safety checks of all nuclear projects, including those under construction. About 34 reactors were already approved by the central government of which 26 were being built. After three months the inspections of operating plants had been completed and those on plants under construction are to be completed by October.

Taiwan imports 99% of its energy, which is vital to the rapidly industrialising economy. Electricity demand was growing at almost 5% per year, but this is now slowing to about 3% pa to 2013. Nuclear power has been a signi"cant part of the electricity supply for two decades and now provides one quarter of base-load power and 17% overall, though nuclear

comprises only 11% of 46 GWe installed capacity. Coal-"red plants comprise 26% of capacity and in 2008 delivered 38% of the power.

!e three nuclear plants comprise four General Electric boiling water reactors and two Westinghouse pressurised water reactors. Construction of the "rst unit began in 1972. !ey are all operated by the utility Taipower, under the Ministry of Economic A$airs and are expected to have 40-year lifetimes. Five of the six units had undergone minor power uprates by the end of 2008, resulting in small capacity increases.

!ere are two 1350 MWe Advanced Boiling

Water Reactors under construction at Lungmen, near Taipei. Contracts were awarded to GE for the nuclear reactors, Mitsubishi for the turbines and several other companies for the remainder, making it a particularly di#cult project to manage. Construction began in 1999 with intention of 2004 completion. When the two reactors were one third complete a new cabinet cancelled the project but work resumed the following year later after legal appeal and a government resolution in favour. !e project was thus signi"cantly delayed with completion of the "rst unit now expected to be late in 2012 or early 2013. .

Nuclear output on Taiwan is very cost competitive at US$ 1.9 cents/kWh in 2008 now that the six reactors have been depreciated. Average Taiwan generation cost was 7.0 c/kWh in 2008, with coal-"red generation US$ 5.8 cents/kWh, and LNG US$ 11.25 cents/kWh.

For Korea, Japan and Taiwan, the obvious common thread in their pro-nuclear strategies has been their lack of domestic energy resources. !ey fear the vulnerability of importing large quantities of fossil fuels from potentially politically volatile areas of the world and nuclear acts as a hedge against this. Nuclear fuel can be acquired from many countries around the world and can readily be stored in large quantities, unlike coal, oil or gas. !ey also have seen the price volatility in fossil fuel markets and wish to have some protection against this. Nuclear generating costs have historically been remarkably stable, despite some recent increases in the cost of uranium. !e environmental advantages of nuclear are also well-appreciated as carbon emissions are a signi"cant factor in very industrialised countries.

China is in a slightly di$erent position as it has abundant coal reserves and also some oil and gas. !e problem there is more one of environmental pollution rather than energy security, and policies have been set to clean up the air by installing more nuclear and renewables. Chinese uranium resources are far from extensive, but the world’s leading producer, Kazakhstan, is located nearby and can satisfy a good part of China’s rising requirements

In conclusion, East Asia needs nuclear. Vietnam is likely to join the others as a nuclear country before 2020, initially at least relying on Russian technology. How quickly China joins Korea as a signi"cant nuclear exporter remains to be seen, but once the domestic nuclear sector matures, thoughts will undoubtedly turn sharply to exports.


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True, when it came to the nuts and bolts of nuclear power generation the Japanese industry seems to have done as well as most in building plants that can operate with reasonable safety records. What few seemed to realize was the damage that could result from two serious cultural ! aws. One is the way Japan’s tight groups consciousness prevents the in! ow of needed ideas and advice from outside. Tokyo Electric Power Co. (the " rm holding the monopoly for electricity production and supply in the Kanto and neighboring areas) was, like quite a few other " rms and industry groups in Japan, proud to think of itself and its industry as a Mura (village) — self-contained, self-su# cient and able to " ght o$ any intrusion by outsiders.

% e result was the dangerous complacency that has been witnessed by many over several years on Various nuclear industry committees, and that Prime Minister Naoto Kan correctly described as the “myth of nuclear safety.”

% e other cultural ! aw is Japan’s ingrained aversion to contingency planning — thinking about

But the two other nuclear plants facing the Japan quake area — Fukushima No. 2 and Onagawa

— came though fairly unscathed even though the force of the quake well exceeded the level they had been built to withstand.

% e disaster at Fukushima No. 1 was due almost entirely to an act of unbelievable stupidity — placing a nuclear plant with its emergency power and pumping equipment on a coastline protected by a mere 5.7-meter sea wall in an area with a far-from-distant history of double-digit-size tsunamis.

Admittedly the plant had been designed mainly by the U.S. General Electric Co., which, one assumes, would not have been quite as tsunami-conscious as its Japanese partners. But why did the Japanese side say or do nothing then or later — despite frequent warnings of tsunami vulnerability, one reportedly only three years before the fatal accident?

Instead of looking at the mysterious dangers of nuclear power, we should be looking at the mysterious, and now it seems dangerous, workings of the Japanese mentality and bureaucracy.

THE FUKUSHIMA DISASTER AND JAPAN DISINCORPORATED

the worst that can happen and planning to avoid it.Writing in Japan’s leading economic newspaper,

Nihon Keizai, senior sta$ writer Yasuhiko Ota quotes a top METI o# cial as saying: “It is regarded as immoral for a company responsible for the safety of a facility to assume that the worst could happen. People tend to criticize such companies by questioning why they would contemplate such possibilities.”

% is is an extraordinary situation in a modern 21st-century society — a primitive, preternatural, bad joss fear that thinking about the worst will somehow creates the worst. Obviously it should have no place in the nuclear industry, even allowing for the industry fear that any admission of weaknesses would strengthen the anti-nuclear lobby.

Admittedly, the nuclear power industry has also had to contend with an environment lobby determined to keep the coastline free of concrete barriers.

% e Hamaoka nuclear plant in Shizuoka has had to be closed down mainly because it too lacks adequate tsunami barriers along its attractive beachfront.

% e anti-public works lobby, adds to the drumbeat with the slogan “welfare before concrete.” (What are they saying now when they discover that the lack of concrete to protect Japan’s " shing ports has done very severe damage to the welfare of the many good people in some of those ports?) In the case of Fukushima, they did not need much more concrete anyway. All the Tepco people had to do was move emergency equipment to higher land away from the oceanfront. % e refusal to do this, or even think about it, verges on the criminal.

% e Fukushima disaster should be forcing a lot more people in Japan to think a lot more deeply about the way their society operates.

When the crisis hit, those well-paid, elite-educated Tepco semi-bureaucrats (the company was notorious for its close links to the government) could do little more than make constant ritual bows of apology; they left everything to their dedicated subordinates to handle.

% e Tepco president, in e$ ect, went to bed for some weeks; he could not stand the strain. % e one thing they all seemed able to get right was the angle

THE FUKUSHIMA NO. 1 NUCLEAR PLANT DISASTER IS BEING USED TO CONVINCE THE WORLD THAT NUCLEAR ENERGY GENERATION IS INHERENTLY DANGEROUS,

ESPECIALLY IN EARTHQUAKE-PRONE JAPAN. BY MICHAEL VONSPEISS

POST!FUKUSHIMA

PI_AugSep_Fukushima.indd 16 21/09/2011 20:37


of their bows and the placement of hands along impeccable trouser creases. ! e government has now appointed a committee headed by a Japanese history professor to advise on cleanup and plans for the future.

I discovered what the professor knows about disaster relief as a member of his 1995 post-Kobe earthquake committee, where I was told that if helicopters had been used to drop water on the house " res threatening to engulf the entire city, the people trapped below might have been crushed by the weight of the water. ! e primitive logic seemed to be that it’s better to be burned alive by fate than be hurt by a deliberate act of o# cialdom.

Today, the government, big business and the history professor fret over the o# cial debt problem as an obstacle to funding disaster recovery e$ orts. Here, too, Japanese “village” thinking seems quite unable to cope with the " scal tsunami about to arrive. All they can propose is raising taxes — thus further cutting spending and slowing the economy — and slashing tax revenues, which will, as in the Koizumi years, add to the very debt that is supposed to be cut.

Meanwhile, the conservative, stuck-in-the-mud planners refuse even to consider the simple solution to the o# cial debt problem recommended by some competent outsiders, monetization, by which either the Bank of Japan buys noninterest-bearing government bonds or Tokyo issues its own currency, as Japan did so brilliantly in the past when it pulled itself out of the 1930s’ Great Depression well ahead of others.

Recently at a news conference a journalist had a chance to ask Economy and Fiscal Policy Minister Kaoru Yosano why Japan could not do this in an economy where in% ation — the usual problem with monetization — seemed unlikely. All he could do was recite the BOJ, bureaucratic and big business dogmas, namely that in% ation WAS likely and it would depreciate the currency. Yet most foreign

experts would agree that mild in% ation and some currency depreciation are just what Japan needs to get out of its chronic economic woes.

What has gone wrong? ! e critics used to talk about Japan Incorporated — an economic juggernaut powered by a nexus of well-trained, motivated bureaucrats and sharp businessmen keen to take over the world. At the time, Japan seemed to have the people and energy to do that. Postwar reconstruction e$ orts made them think more about the national rather than the group Mura interest.

Today’s Japan looks more like Japan Dis-incorporated. Or as they put it in Japanese, shoeki (ministry interest) has become more important than the kokueki (national interest). Attitudes have become more tribal, and not just in nuclear energy.

Whether it is political factions, pensions, public works, the economy in general, foreign policy (toward North Korea and Russia especially), the Okinawa base problem, the justice system, the education system or even public safety (Kan once had to " ght a lonely battle simply to get the bureaucrats to admit to the dangers of importing untreated AIDS-tainted blood), Japan today seems quite unable to " nd the will or the means to solve immediate national problems.

On almost every front it is being overtaken by the China it once used to ignore, patronize or look down upon. Decades of complacent “Japan as No. 1” self-satisfaction and a grossly distorted elitist education system have produced a leadership unable even to realize self-destruction when they see it.

Today’s global pity for Japan’s nuclear and tsunami woes could easily turn into global contempt.

‘THE DISASTER AT FUKUSHIMA NO. 1 WAS DUE ALMOST ENTIRELY TO AN ACT OF UNBELIEVABLE STUPIDITY - PLACING A NUCLEAR PLANT WITH ITS EMERGENCY POWER AND PUMPING EQUIPMENT ON A COASTLINE PROTECTED BY A MERE 5.7-METER SEA WALL IN AN AREA WITH A FAR-FROM-DISTANT HISTORY OF DOUBLE-DIGIT-SIZE TSUNAMIS.’

PI_AugSep_Fukushima.indd 17 21/09/2011 20:38


GREEN CONSCIOUSNESS EXERTS EMISSION CONTROL PRESSURE ON POWER PLANT OPERATORS

EMISSION CONTROL

PI_AugSep_Emission_Control.indd 18 21/09/2011 20:35


producers,” says Frost & Sullivan Program Manager Suchitra Sriram. “!e future of the power generation equipment manufacturers is not just limited to selling high-end technical equipment but include the provision of technologically competent, prompt, timely and cost-e"ective service.”

Regular power plant servicing serves the dual purpose of improving the energy e#ciency of the plant as well as deferring signi$cant capital investment in new plant constructions in the short term. Technological advancements in main power plant equipment, an ageing %eet, and plants’ rising concerns about emission all contribute to the need for plant servicing.

While servicing can help postpone the construction of new plants, it is not possible to entirely do away with the need to set up new ones, mainly due to the escalating demand for electricity, whichin turn, is a consequence of the population explosion and increasing rate of urbanization. Despite the market’s huge potential, there are limited operation and maintenance (O&M) outsourcing opportunities, as these tasks are normally undertaken by the in-house sta" of power plants.

Power plants continue to view power generation and operation as their core business and seldom

The rise in green consciousness all over the world has exerted pressure on power plant owners

to build new plants that emit fewer pollutants and adhere strictly to globally-approved standards of emission control. As most of the planned power plants in Southeast Asia and Australia and New Zealand (ANZ) regions are based on coal-$red technology, there is an urgent call to adopt advanced power generating techniques. !ese novel solutions not only aid compliance with emission standards but also increase energy e#ciency and plant availability rate.

New analysis from Frost & Sullivan (www.energy.frost.com), Asia Paci$c Power Plant Services Market, $nds that the Southeast Asian and ANZ markets together earned revenues of US$946.7 million in 2010.!is is likely to grow to US$1.54 billion in 2017 due to increasing investments in power plants, renovation and modernisation of existing power plants and growing presence of independent power producers that are more open to outsourcing power plant services.

“!e use of advanced technologies in power generation will provide more opportunities for power plant service providers to o"er highly skilled and prompt service to utilities and independent power

outsource these functions to service providers. Most power plant owners in the region perceive long-term service agreements with OEMs as very expensive, incommensurate with the value it o"ers. Hence, in many cases, power plant owners undertake maintenance and repair services through open tenders, on a transactional basis.

Although power plants are mostly reluctant to relinquish control over O&M, utilities do see some merit in outsourcing power plant servicing to its subsidiary service companies.

“!e expanding presence of independent powerproducers (IPPs) in the power market and the mounting pressure on utilitiesto decrease operating costs are likely to enhance outsourcing opportunitiesover the next six to seven years,” notes Sriram. “!e market is expected to expand once technically advanced power generating equipment gets deployed across green$eld, brown$eld and re-powering power plants.”

‘REGULAR POWER PLANT SERVICING SERVES THE

DUAL PURPOSE OF IMPROVING THE ENERGY

EFFICIENCY OF THE PLANT AS WELL AS DEFERRING

SIGNIFICANT CAPITAL INVESTMENT IN NEW

PLANT CONSTRUCTIONS IN THE SHORT TERM.’

PI_AugSep_Emission_Control.indd 19 21/09/2011 20:35


SOUTH KOREAPROFILEBy Charlie Fox

SOUTH KOREA PROFILE

PI_AugSep_South_Korea.indd 20 21/09/2011 20:51


• The Presidential Committee on Green Growth;

• The National Basic Energy Plan and Green Energy Industry Development Strategy;

• The New Green Deal; and • The Basic Act on Low Carbon Green Growth.

! is report also identi" es the clean and renewable energy technologies and products that have been noted as priority technologies under the Korean Government’s Green Growth policy framework, namely:• Photovoltaic• Wind • Fuel cell • Clean Fuel • IGCC• CCS • Electric power IT

For a decade the South Korean Government has enforced various policies in order to ease the

country’s domestic dependence from overseas energy resources. In 2008 the government announced “Low-carbon, Green growth” (Green Growth) as the new sixty-year national vision for South Korea. Under the policy the South Korean Government will invest 50 trillion KRW (approximately US$50 billion), over the next four years to catalyze a shift from manufacturing and export based growth to green industry, providing a present need for overseas partnerships and investment in these projects.

Green Growth is being heavily promoted as the new paradigm to revitalize the Korean economy and a means to position Korea as a world leader in green energy industries. ! e primary operational mechanisms for the development of clean and renewable industries are:

• High Temperature Superconductivity • Energy Storage • Green Car

! is article also provides an overview of current and upcoming clean energy projects being undertaken at the central, provincial and municipal level.

! e South Korean Smart Grid strategy is a major government and private industry investment in priority technologies with an objective to support new growth engines and di# use renewable energy. ! e government aims to build the world’s " rst nationwide smart grid system. South Korea is considered a world leader in technology innovation and the Smart Grid strategy is an example of how the country plans to leverage its technology assets to take a leadership role in renewable and clean energy technologies, both within Korea and on a global level.



OVERVIEW OF SOUTH KOREA’SGOVERNMENT AND LEGAL SYSTEMSouth Korea is a constitutional democracy. !e republic’s constitution creates a tripartite system of government, with an independent executive and judiciary, and a directly elected legislature.

!e peninsular country, with a population of approximately "fty million, is located in Northeast Asia and is divided into nine provinces. !e nation contains seven metropolitan cities, including Seoul, the capital city, which is located in Gyeonggi Province, and a number of cities, county and autonomous district governments (NYU 2009).

A civil law legal system, containing aspects of Anglo-American law, continental European civil law and Chinese classical thought, operates in the country. !e judiciary is comprised of a three-tiered hierarchy of courts, with the Supreme Court at the top, followed by the Appellate Courts then District Courts. !e Chief Justice of the Supreme Court is appointed by the President and approved by the National Assembly for a six year term and the Chief Justice appoints the other Justices for a ten year term (NYU 2009).

!e executive level of government consists of :1. The President (currently Lee Myung-bak,

elected December 2007), separately elected for a single five-year term;

2. The Prime Minister (currently Chung Un-chan), appointed by the President with consent of the legislature;

3. The State Council, appointed by the President upon recommendation of the Prime Minister, consisting of the other two executive leaders and between 15 to 30 other members; and

4. Local governments, consisting of regional (provincial) governments, Special Metropolitan City and Metropolitan City governments, and a large number of smaller municipalities. Local elections for provincial governors and city mayors began in 1991. Previously, representatives were appointed by the central government (IRC 2009).!e legislature, or National Assembly, has 299

members, the majority of whom are elected by popular vote and the others selected in proportional representation amongst political parties that win "ve or more seats in the direct election. All members have a four-year term. Currently the Grand National Party (GNP) holds the government, led by Prime Minister Chung Un- chan (NYU 2009).

!e executive is governed by the Government Organization Act, which sets out the organisation and functions of eighteen ministries; the responsibilities of these ministries, however, have been known to shift frequently (IRC 2009). Ministers are appointed by the President and approved by the National Assembly. !ose Ministries with powers currently related to renewable and clean energy include:• Ministry of the Knowledge Economy (MKE) ; • Ministry for Food, Agriculture, Forestry and

Fisheries (MIFAFF) ; • Ministry for Land, Transportation and

Maritime Affairs (MLTM) ; • Ministry of Strategy and Finance ;• Ministry of Public Administration and

Security ; • Ministry of Education, Science and

Technology ; • Ministry of Foreign Affairs and Trade ; and • Ministry of Environment (MoE) (IRC 2009).

LOW CARBON, GREEN GROWTH POLICYRegional Development ParadigmIn March 2005, Environmentally Sustainable Economic Growth, or ‘Green Growth’, was adopted by member countries of the United Nations Economic and Social Commission for Asia and the Paci"c (UN ESCAP), as the new policy focus for the region. Emphasizing “environmentally sustainable economic progress to foster low-carbon, socially inclusive development” (UN ESCAP 2009), the regional policy is divided into "ve development paths :1. Promotion of sustainable consumption

and production; 2. Greening the market and green business; 3. Development of sustainable infrastructure; 4. Green tax and budget reform; and5. Monitoring eco-efficiency indicators

(KOICA 2009).

!e rationale for Green Growth is to create a coordinated response to progress the Millennium Development Goals of environmental sustainability and poverty reduction. Green industry is a key driver of the success of the policy, and is de"ned as “activities which produce goods and services to measure, prevent, limit, minimize or correct environmental damage to water, air and soil, as well as problems related to waste, noise and eco-systems”

With the launch of the East Asia Climate Partnership in July 2008, South Korea has displayed its commitment and leadership in the regional development of clean energy projects in Asia. !e partnership aims to develop and advance a regional strategy to explore the sustainable economy-climate paradigm underlying the Green Growth policy, to create an “East Asian Low Carbon Development Path”. South Korea has committed approximately AU$220 million to developing countries in East Asia and there are currently 17 projects being advanced in seven di#erent countries, which include technology transfer, pilot clean and renewable energy projects and policy consultations on low carbon development.

DOMESTIC POLICY IMPLEMENTATIONOn 15 August 2008, South Korean President Lee’s government declared “Low-carbon, Green growth” (Green Growth) as the new 60-year national vision for South Korea, replacing the incumbent manufacturing-based, export-oriented growth paradigm and implementing Green Growth as the country’s top national policy priority (Gwen). !e key policy targets are:• Reducing greenhouse gas (GHG) emissions;

and • Fostering green technologies and industries.

Green technology, as de"ned by the President, “combines information and communications technology, biotechnology, nanotechnology and culture technology and transcends the boundaries between individual technologies to achieve a

convergence e#ect”.!e nation’s commitment to low carbon growth

has again been con"rmed by the government, with their announcement just before the Copenhagen COP in late 2009 of a 30% emissions reduction target from usual levels by 2020.

PRESIDENTIAL COMMITTEE ON GREEN GROWTHWhile the central and local governments are responsible for establishing policy, the management of policy implementation, supervision of administrative bodies and coordination of green projects is undertaken by the Presidential Committee on Green Growth (PCGG), which was established in February 2009. Co-chaired by the Prime Minister and distinguished scholar, Dr. KIM Hyung Kook, the PCGG is made up of 47 members and is supported by a sixty-person secretariat, both consisting of individuals from the government and private sectors. A goal of the policy is for Green Growth to be integrated into all aspects of society. To further this goal, every central and local government organization has a designated Chief Green O$cer (CGO) to encourage Green Growth in all public policies and meet with the PCGG on a monthly basis. !e PCGG also consults with "ve councils that have been established to “promote expert advice and private sector involvement in green growth policies” and is comprised of leaders from civil society and the industry, science, "nance/business and information technology sectors.

NATIONAL BASIC ENERGY PLAN AND GREEN ENERGY INDUSTRY DEVELOPMENT STRATEGYEarly Green Growth policy initiatives included the development of the Comprehensive Plan on Combating Climate Change, (which has now been replaced by the "ve-year Implementation Plans, discussed below) and the National Basic Energy Plan, which has a long-term goal of increasing

SOUTH KOREA PROFILE



green technology so that South Korea becomes a world market leader with an energy mix that considers energy security, economic feasibility and the environment (Gwan). ! e plan also establishes speci" c measures to increase energy e# ciency, decrease energy intensity and achieve the recently announced target to increase South Korea’s renewable energy portfolio to 11 per cent by 2030.

! e country aims to lead green energy technology in the future through two main pathways: 1. Selecting and concentrating on key green

technologies and ‘bridging the technology gap’; and

2. Establishing an assistance program for green technology R&D (MKE 2009b).

! e MKE has stated the following four strategies will be undertaken to establish and implement the plan:• Mapping out potential sectors: This strategy

has largely been carried out and considered the technical feasibility and

• marketability of each sector, classifying sectors as either early or next generation growth engines;

• Market-oriented technology development: This strategy involves setting up objectives and ‘road maps’ for technology development, diversifying technology acquisition methods and linking research and development to demand;

• Create new demand and enhance exports: The government will diffuse technologies through take up by the public sector and will assist with entry into foreign markets; and

• Construct infrastructure: This strategy includes training experts, securing fi nancing and establishing a joint private-public sector implementation system (MKE 2009b).

To assist in implementing the National Basic Energy Plan, on 11 September 2008, South Korea announced the development of its Green Energy Industry Development Strategy, with the aim of transforming established industries by integrating them with clean technologies. It focuses on both early growth engine technologies such as photovoltaic energy, wind, smart grids and LEDS and next-generation growth engines, which include Carbon Capture and Storage, fuel cells and integrated gasi" cation and combined cycle technologies.

Known as a leader in industries such as shipbuilding, petrochemicals, appliances and semi-conductors, the strategy aims to redesign South

Korea’s existing industrial structures,

transforming them into low carbon industries at all levels of the value chain. Part of the strategy includes ‘green partnerships’, which consists of using the entire supply chain of the parent company and its vendors to transfer green knowledge though consulting and technology transfer in order to ‘green’ the entire value chain. ! e strategy also includes innovating and adapting incumbent technical expertise to develop clean and renewable energy workforces in sub-sectors such as wind and solar power generation and related technologies. A successful example of this transition is illustrated by the strength of the nation in the next generation battery market, an increasingly important technology for distributed energy storage.

! e " ve-year Implementation Plans have been successfully used in South Korea since the nation’s early economic development e$ orts,



and provide a systematic action plan to implement Green Growth initiatives. !e National Strategy and current "ve-year Implementation Plan include the following policy agendas related to investment in clean and renewable energy:• Two per cent of annual GDP allocated to

green investment; • Generation of approximately US$775 billion

in green financing (Park 2009);• Development of a national GHG inventory

reporting system based on mandatory GHG emissions reporting by businesses, which will be the basis for the future trading scheme;

• Public credit guarantees to green technology and industry sectors, with assistance increasing from 2.5 trillion KRW (US$2.2 billion) in 2009 to 7 trillion KRW (US$6.7 billion) by 2013 and 8 trillion KRW (US$7 billion) in 2020;US

• Tax benefits to producers and investors in green goods;

• Development of information systems for green jobs; and

• Support for multilateral organizations to showcase green growth technologies and industry.

Finally, the plan also includes a number of initiatives to increase awareness and uptake of GHG emissions reduction and other environmentally friendly practices by individuals and within communities. !ese include voluntary carbon footprint labeling on consumer goods (KEITI 2009), the Green Start Green Life community participation campaign (ROK 2009) and the Korea Green Foundation, a public foundation developed to protect the environment through a suite of charitable, educational and cultural programs (KGF 2009).

ANTICIPATED BENEFITS OF GREENGROWTH POLICY!e Government expects bene"ts from the implementation of the Green Growth policy to include an increase in production of between 182 to 206 trillion KRW (US$162-183 billion) over the next "ve-years, which is between 3.5 and 4 per cent of the nation’s annual GDP. It also expects to create nearly 160,000 jobs in the green sector, which will provide opportunities for both skilled and unskilled labor, at a forecasted rate of approximately 35,000 additional jobs per year between 2009 and 2013.

!e above discussion is not exhaustive and there

are multiple Green Growth initiatives that stem from the overarching policy, legislative framework and implementation plan. !e following sections discuss many of these initiatives, with a focus on those that may provide the greatest opportunity for business development and investment in clean and renewable energy.

NATIONAL STRATEGY INITIATIVESUnder the National Strategy, the country aims to increase its global market share of clean and renewable energy to eight per cent by 2014, through focused development in silicon-based solar cells, bio-energy, advanced light water reactors, high- e#ciency fuel cells, integrated coal gasi"cation combined cycle technology, recycling technologies and smart grids. To assist in reaching this goal, on 13 January 2009, a Comprehensive R&D Plan on Green Technology was announced, which aims to double spending by 2012 on research and development in green technologies and provides a list of clean and renewable energy products and technologies that are noted to be priorities for Korean businesses.

Technology Category Strategic Projects Key TechnologiesPHOTOVOLTAIC 1.Crystalline Solar a. High E#ciency Solar Cell Manufacture Technology

b. Equipment Technology for Solar Cell

2. Silicon !in Film a. Large-area cell technology for mass productionb. High e#ciency Technology

3. CIGS Copper Induim Gallium Diselenide Solar Cell

a. CIGS Solar cell manufacture technology using glass substrate manufactureb. CIGS solar cell manufacture technology using $exible substratec. Mass production technology

4. Dye sensitized solar cell a. Original & material technology for dye sensitized solar cellb. Equipment & quality evaluation technology for dye sensitized solar cellc. Module & electric power system technology

5.organic solar cell a. Organic semiconductors technologyb. Transparent electrod and barrier "lm technologyc. Roll to roll process technology

WIND ENERGY 1. Next generation large size wind turbine a. 5MW wind turbineb. Foundation/installation of technology of o%shore wind turbine

FUEL CELL 1.MCFC molten carbonate fuel cell for electric power generation2. High e#ciency SOFC solid oxide fuel cell for buildings

a. MCFC system technology

a. SOFC technology for Buildingsb. Development of new technology substitute material etc

3. High e#ciency SOFC solid oxide fuel cell for electric power

a. SOFC technology for distributed power generationb. Development of new technology substitute material

4. Localization of IGFC integrated gasi"cation fuel cell technology

a. Core technology for IGFCb. Balance of Plant technology

CLEAN FUEL 1. Coal to liquid & synthetic natural gas plant technology using low rank coal

a. Gasi"er technology using low rank coal

2. compact gas to liquid plant technology a. Process integration & plant design technology for compact gas to liquid processb. Module development for compact plantc. Floating production storage and o&oading design technology

INTEGRATED GASIFICATION COMBINED CYCLE

1. IGCC equipment and process a. Indigenous gasi"er

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2. IGCC linked technology a. Clean synfuelb. Next generation technology

CCS 1. Post-combustion C02 capture demonstration plant a. Amine absorption technologyb. Ammonia absorption technologyc. Solid absorption dry technology regenerative absorption technology

2. Assessment of potential for storage a. Geology assessment technologyb. Storage site assessment technology

3. C02 capture & separation plant using coal gas a. Integrated gasi!cation with C02 captureb. Gasi!cation connected process using hydrogen separation membrane

4. Innovative Capture Technology a. MOF Metal Organic FrameworksELECTRIC POWER IT 1. Smart Power distribution system a. Smart power distribution operating system

b. Smart power distribution equipment2. Power Management System a. Battery management system (BMS)

b. Energy conversion & management (ECM)c. Power Management system (PMS)

3. Advanced Metering Infrastructure system a. Smart meterb. Network integrationc. Home demand responsed. Meter data management system (MDMS)

4. Flexible Power system a. Electric power system monitoring and managementb. Technologies for "exible electric power system

HIGH TEMPERATURE SUPERCONDUCTIVITY

1. Electric power delivery equipment a. HTS transformerb. HTS low speed rotary machine

2. Electric power storage equipment a. Superconducting magnetic energy storage

3. Common core component technology a. Cryocooling technology 77Kb. Electric insulating technology 77K

ENERGY STORAGE 1.Redox "ow battery a. High energy density materialsb. High power density materialsc. Low cost system

GREEN CAR 1. High e#cient power train common com-ponent for green car

a. High density power module

2.Plugin system linkage to infrastructures and base of operation

a. Design & Development of omn board chargerb. Development of intelligent quick charging system with high e#ciency

3. Base of hydrogen fuel cell vehicle for commercial use

a. Core technologies materials & components of hydrogen fuel cellb. Infrastructure technologies of hydrogen as a transportation fuelc. Validation & evaluation of the fuel cell electric vehicle and hydrogen station

BUILDING Operation/management solution of building energy a. MMIe-MMI building energy integrated management, energy-man machine interface

SMALL COGENERATION 1. 5MW gas turbine cogeneration a. Gas turbine gen-set package technology2. S-mall Stirling engine cogeneration system a. Engine technology

FIVE-YEAR PLAN INITIATIVES$e !ve-year Implementation Plan states that the government will spend 107 trillion KRW (US$95 billion) between 2009- 2013, with the focus mainly on R&D in green technologies such as solar energy, fuel cells, restoring rivers and green transportation. $e MKE will also lead a development plan for carbon captures and storage (CCS) technology, investing AU$110 million between 2010-2015, initially focused on scoping potential sequestration sites.

GREEN TECHNOLOGY INFORMATIONSYSTEMS$e PCGG will create a mechanism to link the research, academic and industrial sectors that are undertaking green technology research and

development, with the goal of increasing technology transfer, commercialization and e#ciency and developing a testing and certi!cation system that together create a leading green technology information structure.

GREENING OF TRADITIONAL INDUSTRIESAND LINKS TO INTERNATIONAL MARKETS$e government aims to increase the export of green goods in major industries such as shipbuilding semiconductors, steel and cars from 10 per cent in 2009 to 15 per cent in 2013 and 22 per cent in 2020, by encouraging those industries to increase the amount of R&D in green technologies and investing in more e#cient plant equipment.

EMISSION REDUCTION TARGETIn November 2009, South Korea became the !rst non-annex I country to set a voluntary GHG emissions target. $is mid- term goal aims to reduce GHG emissions by 30% from the business-as-usual forecasted level in 2020, which is a 4% reduction below 2005 levels.

South Korea is not obliged to set a binding target under the United Nations Framework Convention on Climate Change (UNFCCC) and is one of the !rst non-Annex I countries to do so, indicating a strong commitment towards cutting emissions.

$e PCGG has proposed the following strategies to achieve the overall reduction:• 31 per cent cut below 2020 for the building

SOUTH KOREA PROFILE



sector; • 33 to 37 per cent cut below BAU 2020 for the

transportation sector; and • an increase in nuclear generation capacity

from 25 to 41 per cent by 2030.

!e PCGG has also suggested that Negotiated Agreements (NA) regulated by the MKE be completed for energy-intensive installations and

buildings. !is would require "rms and commercial and public buildings that are over a set energy consumption threshold to negotiate, set and comply with a future energy consumption target, with penalties for non- compliance. Figure 2 details current design elements of the proposed NA:

Figure 2: Proposed Design Elements of Negotiated Agreements

Participant Compliance 2011 2012 2010Installations Mandatory >50,000TOE >20,000TOE >500,000TOE

Public Buildings Mandatory All Public buildings

Central & Local Govt buildings

Commercial Buildings Voluntary >10,000TOE

Logistics Companies Voluntary >100 cargo trucks

One of the policy actions under the National Strategy related to emissions reductions is to increase energy e#ciency to 28 per cent by 2020 and 46 per cent by 2030 compared to business-as-usual levels forecasted in 2007. Figure 3 shows the estimated decrease from these levels in millions of tons of oil equivalent (toe)/US$,000 :

Year Energy E!ciency (million toe/US$,000) % Improvement2012 299.3 – 265.1 11.3%2017 368.8 – 282.0 23.5%2020 398.4 – 228.0 27.8%2030 544.0 – 300.4 46%

!e government also plans to reduce energy intensity from 0.317 (toe/US$,000) in 2009 to 0.290 in 2013 and 0.233 by 2020 (PCGG 2009b, p.13).

A number of sectorial strategies are also being adopted by the government to reach its energy e#ciency target, including:• Transportation: increasing the development

and deployment of green cars, increasing public transportation use and strengthening vehicle efficiency standards;

• Residential and commercial: improving home appliance and building energy efficiency standards through building and appliance labeling programs, insulation standards and energy price mechanisms; and

• Public: offsetting CO2 emissions by providing energy diagnosis to 10,000 small and medium enterprises (SMEs), supporting the development of knowledge-based services and low energy consuming industries and increasing the tax benefit and providing funds to investments that improve energy efficiency (MKE 2009).

FORESTS!e Korea Forest Service’s climate change

strategies also pursue the goal of reducing GHG emissions and provide opportunities for investment and partnership through the following stated objectives:

• The expansion and maintenance of forest carbon sinks through improved management of forests as a sole sink, approved under an international climate change agreement;

• Designing a carbon cycle system and committing to the reduction of GHG by replacing fossil fuels with forest biomass energy and expanding the use of wooden products;

• Capability building to adapt to climate change by improving forest functions of GHG sequestration and minimizing climate change impacts by monitoring forest ecosystems and preventing forest disasters;



• Establishment of carbon cycle system, carbon credits and emissions trading, through implementation of model projects at home and abroad in order to ensure carbon credits;

• Building up the East Asia Green Hub by optimizing the forest rehabilitation technology of Korea;

• Establishment of green governance for response to climate change by cooperating with local governments and conducting a

pan-national campaign for achieving goals; and

• Infrastructure establishment for GHG statistics and inventory systems in the forest (KFS 2009).

EMISSION TRADINGA credit-based market system, implemented by the Korea Energy Management Corp (KEMCO), a public agency of Korea and a UNFCCC accredited

Designated Operational Entity (DOE)1, is currently in operation within the country (IETA 2009). However, the system has su!ered from a lack of demand for these Korean Certi"ed Emissions Reduction units (K-CERs).

Recently, the MoE has announced that a three-year, voluntary scheme will commence in April of 2010, with the following design features:

Design Element Description NotesRegulatory Body Regulator: MOE Operator: EMC Carbon Exchange:KRXParticipant Expecting approximately 640 participants, consisting

of environmentally friendly manufacturing companies, 6 Metropolitan cities, 8 provincial governments & large commercial buildings

Local governments shall control public buildings in its jurisdiction

Incentive Early action to be recognizedSubsidy to local government

Future mandatory ETS 2010 subsidy: US$122,000 no o!sets by CER allowed

GHG’s Included CO2, CH4, N20 direct & indirect, emissions (scope1 & 2)

Emission Cap 1% reduction per yearBaseline year Average of 2005-2007Veri"cation 3rd party veri"cationfor companies & commercial

buildingsPublic buildings excluded and veri"ed by local government

#e scheme will have approximately 640 participants from the private and public sectors and the target will be to reduce emissions to between one to two per cent below the annual average from 2005-2007 (Carbon Positive 2009).

#e Basic Act on Green Growth allows the government to adopt a national, mandatory cap-and-trade scheme to e$ciently reduce GHG emissions and respond to growing ETS markets, but cautions that international negotiations and global competition of the industrial sector should be considered. Details of scheme design, including distribution of allowances, reporting and management of credits and the establishment and management of a carbon exchange are not described in the Act, but are to be developed in subsequent legislation. #e PCGG has formed an experts group to draft a Basic

Plan for Korean-ETS, which will be the blueprint for scheme legislation. #e "ve-year Implementation Plan states the scheme will commence in 2013 and the PCGG estimates a trading volume of 500 billion KRW (AU$4.4 million) in 2013 and 2 trillion KRW (US$1.8 billion) by 2020 (IETA 2009).

It is expected that a national, mandatory cap-and-trade scheme in Korea would be phased in after 2012 at the conclusion of the three year, voluntary scheme being developed and administered by MoE. Most observers expect that MKE would take the lead on the design and implementation of a national, mandatory cap-and-trade scheme. It is expected that the most energy-intensive industries, including power, steel and iron, cement, re"nery, pulp and paper and petrochemicals will likely be included in such a future scheme. Noting potential methodologies for

allocation, according to IETA, the South Korean government prefers grandfathering. #is is receiving strong resistance from domestic industries, primarily due to the strong industrial growth that has occurred in the past few years. Instead, the industrial sector is suggesting benchmarking or updating as the methodology that should be applied in terms of allocations under any future scheme (IETA 2009).

RENEWABLE ENERGY TARGET#e National Basic Energy Plan sets a renewable energy generation target of 11 per cent by 2030, increasing from 2.7 per cent in 2009 to 3.78 percent in 2013 and 6.08 per cent by 2020. #e government plans on reaching this target by implementing programs such as the Smart Grid (discussed in the following section), the Two Million Homes strategy (which aims to have two million homes run on a mix of renewable energy resources by the end of 2018 (Kim 2009) and an 11-year renewable energy portfolio standard (RPS), which will replace the Renewable Portfolio Agreement (RPA) and feed-in tari!s (FITs) currently in operation, by 2012 (Park 2009).

In 2005, the MKE’s predecessor, the Ministry of Commerce, Industry and Energy, established the RPA, signing an agreement with the nine largest energy suppliers to provide "nancial support of 1.2 trillion KRW (US$1.1 billion) between 2006-2008 and administrative support for clean and renewable energy projects. #e aim was to increase the use of clean and renewable energy in the industrial sector and reduce 170,000 tons of GHG (Hyeon-ji 2008). FIT regulations mandate electricity utilities to buy electricity generated by clean and renewable energy at a price "xed by the government, who then compensates the utility to o!set the di!erence in price from conventional energy supplies. It has been noted that the FIT market-based instrument has been

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the driver behind the increased supply of clean and renewable in the nation but has also been criticized as being anti-competitive and causing di!culty in forecasting electricity generation. Because of this, the government plans to replace the FIT in 2012 with the RPS that will mandate utilities to generate a speci"c amount of clean and renewable energy.

#e RPS will be operated by the MKE and will mandate utilities with generation capacity over 2000MW to obtain certain amount of renewable energy. #e amount of renewable generation mandated will be two per cent in 2012, increasing to 10 per cent in 2122. Participants will be able to meet their quotas by either buying renewable energy certi"cates (RECs) from independent power providers, or earning RECs through their own generation (Park 2009).

SMART GRIDAs an initiative to reduce emissions, support new growth engines and di$use renewable energy, South Korea is developing an over AU$27 billion Smart Grid system for the entire nation, beginning with a Smart Grid test-bed on the island of Jeju. #e 64.5

Feature DetailsSmart Power Grid a. Real time power grid monitoring

b. Digital Power transmissionc. Operation of an optimal distribution systemd. 10% more compact than incumbent substatione. 50% reduction in equipment failure

Smart Consumer f. Power management of intelligent homes via integrated management of electric power through demand response (two way information exchange between consumers and suppliers)

Smart Transportation g. Electric vehicle charging facilitiesh. Operation of electric vehicle pilot project

Smart Renewable i. Operation of micro grids by connecting distributed generation, power storage devices & electric vehicles

Smart Electricity service j. Consumer sales of renewable energyk. Consumer’s choice amongst various rates

After completion of the test-bed project, the second stage is to expand into metropolitan areas and then the "nal stage is to integrate the Smart Grid nationally, making renewable energy universal throughout the nation by 2030. #e expected outcomes of the "nal two stages are as follows:

Feature Stage 2 – Metropolitan expansion Stage 3 – National Power gridSmart Power Grid l. Prediction of possible failures in power grid

m. Connection of power system to other countriesn. Connect power delivery system with distributed generation &

power shortage devices

o. Self recovery of power gridsp. Operation of integrated energy smart grid

Smart Consumer q. Smart power management of buildings and factoriesr. Encouragement of consumer power production

s. Zero energy homes and buildings

Smart Transportation t. Expansion of electric vehicle charging facilities across the country

u. E$ective maintenance and management of electric vehicles

v. Electric Vehicle charging facilities commonly available

w. Diversi"cation of charging methodsx. Utilization of portable storage devices

Smart Renewable y. Optimal operation of power system with micro gridsz. Expansion of application of power storage devices

aa. National availability of renewable energy

Smart Electricity Service ab. Promotion of electrical power derivatives transactionsac. Implementation of nationwide real time pricing systemad. Emergence of voluntary market participants

ae. Promotion of various types of electrical power transactions

af. Promotion of convergence for market of electricity-based sectors

ag. Leading power market in North East Asia

billion KRW (US$62 million) project, which aims to be the world’s largest Smart Grid community, is being undertaken to showcase the potential to commercialize and di$use Smart Grid technologies. #e project is a joint venture between the Korea Smart Grid Institute (KSGI), Korea Electric Power Institute and the Korean and Jeju Special Autonomous Province governments.

A Smart Grid involves making fundamental reforms to the existing power infrastructure, by integrating automated processing and information technologies into the existing electrical grid (KSGI 2009). It optimizes energy e!ciency via an interactive exchange of real-time information between suppliers and consumers, ultimately shifting power generation from a central to a distributed system, based on renewable energy and two-way grid and information networks that include consumer participation (MKE 2009b).

THE THREE MAIN OBJECTIVES OF THESMART GRID TEST-BED ARE:1. National objective: to increase energy

efficiency and implement green-energy

infrastructure by building eco-friendly infrastructure that reduces CO2 emissions;

2. Industrial objective: to secure a new growth engine that will drive Korea in the age of green growth; and

3. Individual objective: to enhance quality of life through experiences of and participation in a low carbon, green life

#e test-bed project broke ground on August 2009. #e project consists of an infrastructure building phase (2010-2011), which includes constructing a monitoring and control system and failure prediction and automatic recovery system for the power grid and then linking the grid networks to consumers via smart meters and to electric vehicles. It is followed by an integrated operation phase (2012-2013), which will include the provision of new power services and the connection of renewable energy sources to the grid (KSGI 2009).

By completion of the test-bed, there will be two substations and "ve distribution lines providing service to 6,000 households. #e following features of the test Smart Grid will be operational:

SOUTH KOREA PROFILE



!e MKE has stated that once the Smart Grid is fully functional at a national level, the following bene"ts are expected:• A reduction in plant construction and

investment costs; • The creation of over 50,000 related jobs; • A reduction in duration of power outages

from 16 to 9 minutes;• Overseas sales revenue; • A reduction in energy consumption by three

per cent; and • A reduction of GHG emissions by six per cent

or 75 million tons (MKE 2009b).

CLEAN AND RENEWABLE TECHNOLOGIESStrong government support for research and development in clean and renewable energy technologies will assist in growing the various subsectors. A general discussion of key technologies follows below but further details of these and other green technology initiatives may be located on the Ministry of Environment website: http://eng.me.go.kr

WASTE-TO-ENERGY• The government plans on reducing GHG

emissions through a number of waste to energy initiatives:

• Raising power generation rate from combustible wastes to 37 per cent (1,760,000 tons/year) and organic wastes to 26 per cent (2,040,000 ton/year) by 2013;

• Utilizing 77 per cent of waste heat from incinerators (410,000 Gcal/yr) and 91 per cent of landfill gas (194m3/minute);

• Expanding waste-to-energy facilities including 20 Refuse Derived Fuel (RDF) manufacturing facilities, 6 exclusive boilers, 1 construction waste to energy facility;

• Raising the domestic technology levels to that of advanced countries in the near future;

• Developing the foundation for research and development for waste-to-energy, by conducting feasibility studies and putting research into practice starting in 2011 (MoE 2010).

NUCLEAR POWER!e Korean Government sees nuclear power as the most realistic means of maintaining national competitiveness and at the same time contributing to the global e#ort to cut greenhouse gases.

For this reason, the Korean government’s "rst “National Energy Master Plan”, which was unveiled in 2008 and covers the 2008-2030 period, calls for reducing fossil fuel reliance and increasing the share of nuclear to 41 per cent of total generating capacity and to 60 per cent of power supply.

According to the master plan, 11 additional nuclear power plants will be constructed by 2030, in addition to the eight under construction. !e big boost given to nuclear power - which is not unique to Korea in recent years - suggests the nuclear renaissance is picking up speed. Nuclear power is emerging as the main energy source in the era of “low carbon, green growth”.

In terms of nuclear power generation capacity, Korea ranks "fth in the world. But when it comes to nuclear power plant operation and maintenance technology, Korea is the global leader. Korea’s capacity factor - the actual power output as a percentage of maximum possible power output - was 93.4 per cent in 2008, the highest ratio in the world. !is high ratio owes a lot to the excellent operation and maintenance technology of Korea Hydro and Nuclear Power and the excellent quality of nuclear fuel produced by Korea Nuclear Fuel (KNF).

!e Korean government announced its ambitious plan to export 80 nuclear power plants by 2030 and take up 20 per cent of the world commercial nuclear market. It shows the government’s will to develop the domestic nuclear power industry into a new export

industry (Korea Herald 17.3.2010).

WINDWind power is seen as a "nancially viable option because of the nation’s mountainous topography, particularly in the northeast and on Jeju Island in the southwest of the nation. At the start of 2009, South Korea’s wind generation was 199MW, but Hyundai Heavy Industries (HHI) and Korea Southern Power are planning to invest 500 billion KRW (approximately US$480 million) to build a 200MW wind farm in the nation, which will be operational by 2012. HHI already has a solar cell factory in Eumseong and a turbine factory in Gunsan and wants to focus on wind as its core business in the future as the market for its traditional focus, shipbuilding, continues to decline. Samsung Heavy has also announced that it will be making 500 wind turbines a year by 2015, possibly raising production to 1,600 if the Indian and Chinese wind markets continue to expand.

!e nation also aims to develop wind maps at 10m of resolution by 2013 (MoE 2010).

FUEL CELLSHydrogen fuel cells convert hydrogen into electricity and heat through electro chemical processes. !e nation currently has three hydrogen fuel cell plants that provide electricity to approximately 2,000 households. !ese are the largest plants of their kind in the world and the fuel cell industry is expected to continue to grow rapidly in the country, as fuel cells are extremely versatile and can be used as fuel for vehicles, as a source of energy in households and in portable batteries for telephones and laptop computers. !e city of Seoul has approved the development of two additional plants with a combined capacity of 5.2MW.

LITHIUM ION BATTERYKorean battery manufacturers like LG and Samsung



SDI are leading the world in this technology and the lithium ion batteries are expected to be mainly used for electrical vehicles (EV). Even though great strides have been made in increasing battery power and energy density, the life of vehicle durability and cost continue to be the major challenges. Further improvements should be demonstrated before commercial production in high and low temperature operation, durability, life cycle and safety.

PHOTOVOLTAIC (PV)By 2008, South Korea was the world’s largest PV market, largely buttressed by the nation’s solar FITs. In October 2008, the FIT was decreased from 30 to 8 per cent and the country had over 800 solar power plants with a combined capacity of over 292MW. !in-"lm solar cells have recently increased in market share, catching up with crystalline solar cells. Work is also being done to commercialize organic solar batteries and compounds.

The government expects solar resource maps at 1km of resolution will be available by 2013 (MoE 2010).

MARINE POWER!e world’s largest tidal current power plant is located in Uldolmok, in the Korea’s southwest. It is undergoing a "rst-phase, test-bed project that will generate 1MW of electricity and a combined capacity of 50MW by completion of the project. An even larger plant is being built at Sihwa, on the west coast, which is expected to generate 254MW of electricity. Being a peninsular nation, there is great potential for the commercialization of this lower-cost renewable power source.

INTEGRATED GASIFICATION & COMBINEDCYCLE (IGCC) TECHNOLOGY!e government is planning to adopt IGCC technology for all new coal "red power plants, providing attractive opportunities in this subsector of the market.

MARKET PARTICIPATIONSUPPLY:!e current participants in South Korea’s new and renewable energy supply market include private, public and government owned entities.

!e government owned Korea Electric Power Company (KEPCO) is the primary supplier (and distributor) of electricity in the nation. Private Korean generators such as GS Electric Power Services and Hanwha Energy dominate the private sector, but a number of foreign companies, particularly from the US and Japan, are beginning to in"ltrate the domestic supply market.

!e government controls the price of electricity and suppliers must sell power via a one-way bidding system, through a centralized pool market operated by the Korea Power Exchange. Historically, prices have been set below KEPCO’s pro"t margins and are a main driver for its current proposal to privatize the market.

DEMAND!e South Korean government dominates the energy demand market and the major participants in the industry include the following government owned entities:

• Korea National Oil Corporation (KNOC); • Korea Gas Corporation (KOGAS) • KEPCO; which has been broken into six

separate power generation companies, five coal fired companies and one hydro/nuclear: - Korea Hydro and Nuclear Power Company (KHNP); - Korea South-East Power Company (KOSEP); - Korea Midland Power Company Ltd. (KOMIPO); - Korea Western Power Company Ltd. (KOWEPO); - Korea Southern Power Company Ltd. (KOSPO); and - Korea East-West Power Company Ltd. (KEWESPO).

Since 2006, all companies except for KHNP have been poised to be auctioned o# to private companies, but this process has slowed down in the recent economic downturn. It is expected that minority stakes will be o#ered through public stock issues but it has been stated that foreign ownership will be limited to 30 per cent of any single division.

!e current monopoly by government owned entities in the energy sector provides them large discretion in which components and suppliers to source for renewable energy projects. !e usual format of participation in the construction of renewable energy plants has been a consortium of power generation companies, engineering and construction companies (often subsidiaries of Korean conglomerates), "nancial service "rms and private equity. Foreign investors have identi"ed the market potential for renewable energy products in South Korea and foreign investment in the form of partnerships related to technology transfer, distribution, agency and licensing agreements and joint ventures have been created. Market entry has also occurred via foreign companies establishing branch o$ces or subsidiaries in South Korea, acquiring existing South Korean renewable energy "rms or creating their own companies within the South Korean jurisdiction.

SOUTH KOREA PROFILE



EXAMPLES INCLUDE : • The Australian company Dyesol Limited

(www.dyesol.com) has established a joint venture with the Korean company Timo Technology to develop Dyesol’s Dye Solar Cell (DSC) Technology for the Consumer Electronics Market in Korea.

• Goldman Sachs buying a stake in CS Wind Corp worth 47.2 billion won in 2008, and buying a 62.4 billion won share of Pyeong San in 2007. Both companies are manufacturers of wind energy related products such as wind turbines and towers.

• EPURON establishing a South Korean subsidiary, EPURON South Korea.

• SunTechnics, a subsidiary of Conergy AG, establishing a subsidiary in South Korea.

• SunPower, a US solar panel maker and power project developer, establishing a joint venture in South Korea called Woongjin Energy Co., which makes silicon ingots for manufacturing solar cells.

In theory, plans for clean energy projects are carried out independently at each government level. However, underfunding at provincial and municipal government levels often requires them to seek central government support, project review and approval. Alternatively, the various levels of the government work with private industry to implement green energy projects (IRC 2009).

!e Clean Energy in Korea report notes the following four general routes to market for those private companies who desire to work on green projects in collaboration with government bodies:

1. TENDER BIDSPrivate companies may participate as bidders for local government tenders if they meet the following criteria: • Main office located in the province or city of

the development authority; • Certified by the New and Renewable Energy

Center (KNREC) of the MKE (this requires foreign companies to have a presence in Korea); and

• Registration and bidding via the Public Procurement Service website (www.pps.gov.kr/english/).

!e government seeks information from private companies while developing tenders because of its limited knowledge of timelines, costs and technologies. !is provides a commercial advantage to those private companies who are therefore able to establish a relationship with the government early on and who are able to gain insight into the particulars of the project.

Information on tenders is located on the KNREC website.

2. SPECIAL PURPOSE COMPANIES!ese are usually created as a vehicle for foreign companies to participate in tender projects and are usually dissolved after project completion.

3. PRIVATE CONTRACTSPrivate investments in new clean energy projects by private companies do not require satisfaction of tender criteria.

4. SUPPLY CONTRACTSForeign companies may participate by acting as suppliers to winning bidders.

FOREIGN INVESTMENT INCENTIVESIn 2008, President Lee Myung-bak implemented a comprehensive program of regulatory reforms to improve South Korea’s investment environment and increase economic growth in the nation. !ese reforms are documented in a report entitled Korea:

O"ering Opportunities. !e table below summarizes some of the key regulatory changes that directly impact foreign investment.

• Offering foreign investors cash grants for massive-scale investment projects creating substantial employment;

• Increasing number of Foreign Investment Zones, areas where eligible investors receive tax exemptions for between five to seven years, reduced tax and rental fees;

• Granting local governments’ autonomy to designate industrial complexes and streamlining procedures to cut development approvals from two to four years to six months;

• Streamlining environmental regulations and cutting the time to build small factories from 150 to 45 days;

• Applying infrastructure charges only to projects in areas with scarce infrastructure;

• Reducing processing time of business certificates and abolishing mandatory purchase of national housing and railway bonds for company registration;

• Removing requirements to submit a capital deposit certificate, notarise articles of association and appoint auditors for small start-ups with capital under KRW 1 billion;

• Rolling out StartBIZ in 2010, an online system containing all procedures to apply to start up a business. StartBIZ is connected to a network of banks, administrative bodies, the supreme court, tax office and major insurance companies.

• Establishing Start-Up Support Centers in Small and Medium Business Administration regional centers to provide ‘one- stop’ incorporation centers;

• Creating Factory Site Selection Supporting Groups in local governments to assist the private sector in site selection, authorizations and environmental considerations;

• Easing and/or removing development regulations in Seoul Capital Region and other restricted development areas (comprising over 13 million km2) to allow greater development and expansion of factories and industrial complexes;

• Removing congestion charges on financial service and R&D facilities within industrial complexes;

• Providing small and medium businesses with secure land between 2008-2017, by offering 33 million m2 of industrial sites for long-term leases, at a lease rate of approximately three per cent of annual building costs, for a term of up to 50 years; and

• Providing South Korean legislation in English

Finally, it is important for foreign investors to understand that South Korea’s business culture emphasizes personal relationships and trust over the more westernized convention of formal contractual agreements. Foreign investors unfamiliar with this culture may underestimate the importance of persistent communication and patience when doing business in South Korea, while balancing this with



su!cient due diligence to evaluate the risks and viability of prospective business relationships."e Clean Energy in Korea report provides

an overview of current and upcoming clean and renewable energy projects of which Korean entities, both government and private, may seek overseas partners. Speci#c details of these projects are contained in the report. "e following section provides a high level discussion of these projects being carried out in both the government and private sector.

CENTRAL GOVERNMENT PROJECTSAll green projects being undertaken at the central government level are being consolidated into the Green New Deal stimulus plan, which currently includes 9 core and 27 related projects. However, the Clean Energy in Korea report cautions that some of these projects are merely construction or renovation projects, using the illustration of the Four Rivers Project, that consists of dredging, straightening, pouring concrete and landscaping the banks of four Korean rivers. Investors looking to participate in clean energy projects should therefore carry out appropriate due diligence to ensure the projects they are considering satisfy any “green” requirements. Details of those projects considered “clean” energy are included in the Clean Energy in Korea report.

PROVINCIAL GOVERNMENT PROJECTSEach provincial government is focusing on projects that are most appropriate to their region, as follows:

• Gyeonggi : bioenergy generated from regional pig waste.

• Gangwon : wind power due to its mountainous topography.

• Chungcheongbuk : with 60 per cent of the supply market for solar batteries and modules, is continuing to focus on solar parts production.

• Chungcheognam : its weather and vicinity to the coast make it particularly suitable for solar and tidal projects.

• Gyeongsangbuk : being a high wind area, it is particularly suited to wind projects.

• Gyeongsangnam : wind turbines, supported by its existing infrastructure in heavy industry.

• Jeollabuk : tidal projects.• Jeollanam : known to have the best quality

‘green’ resources in the nation, particularly for solar and tidal projects.

• Jeju : being a high wind area, it is particularly suited to wind farming

MUNICIPAL GOVERNMENT PROJECTSSimilar to the provincial governments, the municipalities are each focusing on speci#c technologies, industries or applications to attract investment, as follows:• Seoul : ‘green lifestyle’ projects such as

building bicycle roads.• Busan : offshore wind farms.• Incheon : several new and renewable energy

projects including : • A 50 MW landfill gas power plant,that

commenced operation in 2006 and was built by a private enterprise, Eco Energy.

• A photovoltaic plant with capacity of 1 MW, developed by Conergy in 2006.

• Proposed tidal power plant for operation in 2017, to be built by GS Engineering and Construction and operated by Korea Hydro

& Nuclear Power Co.• Daejeon : known as the country’s center for

science and research and development, it will focus on R&D for clean and renewable energy projects.

• Daegu : re-development of a large ex-industrial plot into a ‘green zone’.

• Gwangju : located in the sunniest region of the nation, it will focus on solar energy.

• Ulsan : bio energy, supported by its highly developed automotive, heavy industry and chemical centers (IRC 2009)

PRIVATE PROJECTS"ere are numerous private projects being planned and currently under development in South Korea, which include projects related to bio energy, solar, wind, tidal and green infrastructure technologies.

As with all investments, the clean and renewable energy projects being undertaken via South Korea’s green growth policy will have their own unique set of opportunities and risks. "ese are discussed in the following section.

MARKET OPPORTUNITIESAs with any new market, those considering investment in clean and renewable energy should consider sovereign, regulatory and economic risks and carry out the appropriate due diligence before entering into any transaction.

POLITICAL STABILITYSouth Korea is a stable democracy and has nurtured a sixty-year alliance with the United States, who provide strategic defense. It provides one of the most secure jurisdictions for investment in Asia, with a professional and reliable banking and investment sector.

SOUTH KOREA PROFILE



POLICY TRACK RECORD & ECONOMICDEVELOPMENTOver the past 60 years, South Korea’s overarching policy has focused on economic growth via the manufacturing and export sectors. South Korea has been extremely successful in meeting this policy objective, exempli!ed by being the fourth largest economy in Asia and having a strong market position in the high tech manufacturing and exports markets. "is track record may provide investor con!dence in the ability of the country to undertake and achieve ambitious policy objectives, including their new 60-year ‘low carbon green growth’ policy vision.

"e nation has strengthened its corporate governance standards and is currently completing Free Trade Agreement negotiations with Australia and other Asian nations, which will facilitate an ease of #ow of goods and services between the various nations. In February of 2009, the South Korean government enacted the Financial Investment Services and Capital Market Act. "e Act expands the range of !nancial products and services regulated and provides greater access to market entry, with the goal of enhancing South Korea’s competitiveness in capital markets and investment banking.

LOCATION & TRANSPORTNortheast Asia contributes 20 per cent of global GDP and South Korea is within a three and a half hour #ight to over 50 cities with a population of over one million, including Beijing, Shanghai, Hong Kong, Guangzhou, Manila, Taipei and Tokyo. "e nation is connected by strong transportation links including the port of Busan, which is the !fth largest cargo volume port in the world and Incheon Airport, which has won the accolades of world’s best airport and cargo airport and boasts the lowest airport user

charge rates in the region. "e country also has extensive train networks, with substantial links to key markets throughout Eurasia.

DUTIES, CUSTOM & TAXES"e majority of products imported to South Korea are charged a duty of 8 per cent on cost-including-freight (CIF), with discounts and exemptions available on certain items.

Recent regulatory reforms have had a number of positive impacts on tax, including:• Lowering the corporate tax rate from 25 to

20 per cent and expanding the base to which lower tax rates are applied;

• Three year exemption of corporate and income tax to foreign investors in logistics complexes; 50 per cent exemption for the following two years and 100 per cent exemption of local taxes for between seven and 15 years;

• Introducing a research and development fund and tax credits for R&D facilities investment;

• Introducing consolidated tax returns; • Reducing rate of preferential income taxes

on foreign workers; • Lowering other income tax rates by two per

cent for each tax base; and• Lowering rates of capital gains tax.

Streamlined processes for customs clearance have also been implemented in the past year, including the Authorized Economic Operator program, which simplifies procedures in tariff declaration and payment and the introduction of simplified origin certification for preferential tariff treatment under free trade agreements.

LABOURIn the past 15 years, South Korea’s labour productivity (growth in GDP per hour worked) has surpassed that of developed countries, including all the nations in the G7 and OECD and over 80 per cent of students that attend high school continue on to university.

In addition, over the past decade, the number of labour disputes in the nation has signi!cantly decreased as a result of improved labour relations laws in accordance with international standards. "is has been supplemented by the provision by the Korea Trade-Investment Promotion Agency (KOTRA), o$ering labour a$airs counseling services over Internet and by telephone hotline, which has been set up speci!cally to assist foreign !rms in dealing with labour issues.

"e government has relaxed immigration regulations for foreign investors, including easing the requirements for foreign investors to obtain permanent residence, establishing a job-seeker visa, easing entry and extension requirements and developing Contact Korea, a program to assist domestic companies with overseas human resource needs.

"ere are many opportunities that exist for foreign business in Korea, especially those who have the fore sight to move into this attractive and potentially lucrative market. Challenges and tribulation will face most, but with the correct local contact and an element of perseverance, rewards will come. We hope that this article has shown a good insight in to the market.

References:Australian Trade Commission, US Foreign Investment, UKTi, Baker Mackensie.



the southern peninsula, subsequent detachment from neighbouring Asian countries and almost a century of tension with continent gateway and counterparts in the Democrats People’s Republic of Korea.

Russia’s Gazprom and KOGAS signed a memorandum of understanding to study the possibilities of supplying Russian natural gas directly to South Korea by extending the Sakhalin-Khabarovsk-Vladivostok (SKV) gas pipeline. KOGAS already receives 1.6 million tonnes/year of LNG from the Sakhalin-2 project following its launch in 2009, if completed the pipeline is expected to supply volumes of up to 10 billion cubic metres per year, but much negotiation is required for implementation of such a trilateral project because of the diplomatic isolation of North Korea.

Almost all natural gas in South Korea is currently imported in the form of LNG, with KOGAS completely dominating operations. It maintains an e! ective monopoly over the purchasing, import, and wholesale distribution of natural gas, operating three LNG terminals and a nationwide pipeline network spanning over 2,739km in ensuring a stable supply for the nation.

South Korea has long been heavily reliant on fossil fuel imports with a distinct lack of natural

resources, in 2009 it provided approximately 18 Bcf of natural gas (about 1.5 percent of national consumption) from the only domestic gas " eld in production, Donghae-1 in the Ulleung Basin, operated by the Korean National Oil Company. # e " eld’s recoverable reserves are estimated to be 186 billion cubic feet of natural gas and 3.2 mmbbl of condensate. Although not gigantic, the gas " eld is the " rst commercial hydrocarbon development in Korea.

# is signi" cant area of gently sloping submerged shelves has remained largely unexplored including two additional o! shore sedimentary basins in the Yellow and Jeju Basin, but despite this, much time, e! ort and money has been invested into exploration around Korean seas with no prevail. To ensure security in supply and the countries continued growth, state owned gas company - Korea Gas Corporation (KOGAS) has been at the forefront of operations, aggressively negotiating purchase agreements globally, following its incorporation by the Korean government in 1983.

South Korea currently has no international oil and gas pipelines mainly due to the countries position on

KOGAS GLOBAL OVERVIEW

SOUTH EAST ASIAInvestment and purchase agreements globally have led South Korea to become currently, the world’s second largest importer of lique" ed natural gas, whilst KOGAS is the biggest corporate buyer. Imports come from developments reaching across every major hub for exploration and production. Over recent years a large proportion of KOGAS LNG imports have come from South East Asia, but declining output from ageing " elds and rising demand from domestic power plants have eroded exports, seeing state owned oil and gas companies invest in projects overseas with plans for the construction of regasi" cation terminals.

KOGAS has a signi" cant purchase agreement with Brunei LNG and Malaysian PETRONAS LNG Complex which is one of the world’s largest integrated LNG facilities located in Bintulu, Sarawak. Both are expected to expire between 2013 and 2015. Contracts are also in place with Indonesian state owned oil and gas company PT. Pertamina for the Arun and Bontang gas " elds, due for expiry in 2014 and 2017 respectively. Discussion

SINCE THE END OF THE 1953 AND THE SIGNING OF AN ARMISTICE AGREEMENT FOR THE KOREAN WAR, SOUTH KOREA HAS SEEN ITSELF PROPEL INTO ONE OF WORLD’S FASTEST GROWING ECONOMIES. RAPID DEVELOPMENT AND GROWTH IN EXPORTS AND POPULATION HAS LED TO A SURGE IN ENERGY DEMAND WHICH IS FORECASTED TO CONTINUE FOR SOME TIME. BY ROBIN SAMUELS


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has taken place to extend the agreements but there is uncertainty surrounding concerns for the Indonesian domestic need.

In comparison to other growth markets, activity in this part of the world for KOGAS is waning, but a recent negotiation took place at the beginning of year in Indonesia, representing a bold statement. A deal was put in place for a joint venture with Mitsubishi Corporation, where the two companies have agreed to set up a PT Sulawesi LNG Development joint venture, which would hold a 59.9 percent stake in the PT Donggi-Senoro LNG project.

Donggi-Senoro, which is also partly owned by PT Pertamina Energy Services and PT Medco LNG Indonesia has faced many hurdles as government insisted last year that gas from the project be allocated entirely to the domestic market to relieve persistent shortages, in turn this threatened bankability, as Mitsubushi questioned their involvement and subsequent arrangement of funding from the Japan Bank for International Cooperation.

! e US$2.8 billion (Rp 25.4 trillion) LNG plant is expected to begin operation and delivery by 2014. Funds will be allocated for, among other things, " nancing land acquisition and infrastructure development. ! e DSLNG project between Indonesia, Japan and Korea and opened up a new era of cooperation in the energy sector for these three nations, and represents a signi" cant milestone in KOGAS’s development as a full service provider to the energy sector by gaining experience in LNG liquefaction for the " rst time. As the company has acquired know-how in the independent operation of

LNG development and the liquefaction plants, there are now " rm strategies for stability and minimized operational risks through this joint operation with Mitsubishi. ! is has achieved vertical integration in terms of upstream and downstream and is expected to make a great contribution to furthering competence in future overseas projects.

MIDDLE EAST! e resource rich continent of the Middle East has also been an area of dependence for KOGAS purchase agreements in the LNG sector. ! e world’s biggest exporter of LNG, Qatar has strong ties with Korea. ! e nations have fostered close amicable, cooperative relations since the establishment of diplomatic ties in 1974.

! e collaborative relationship of Qatar and South Korea is based on economic foresight, planning and commercial synergies, and cooperation as valuable economic partners. ! e two countries’ economic growth and development have many common features: they have developed under the guidance of strong, visionary leaders with many shared goals, including a commitment to excellence in everything they do. Qatar and South Korea have established global reputations for their respective

commercial achievements, most notably in LNG and shipbuilding.

! e signing of RasGas’ " rst long-term sales and purchase agreement in 1995 signi" ed the start of an important relationship. RasGas delivered its " rst LNG cargo to KOGAS in 1999 on a KOGAS chartered tanker, the SK Summit. Since then more than 1000 cargoes have been delivered including deliveries sold under the " rst long-term SPA and a short term SPA signed in 2004, as well as numerous spot agreements. ! e relationship has continued to # ourish and in March 2007 RasGas and KOGAS signed another long-term SPA for 2.1 million tonnes per annum (Mtpa), to be delivered on an ex-ship basis from 2007 until the end of 2026. KOGAS is currently the largest long term purchaser of LNG from RasGas, importing just over 7mtpa.

Not con" ned to Qatar, KOGAS also has signi" cant purchase agreements with the 9.15tcf Yemen LNG project, and is currently importing 2mtpa as a 6% shareholder. In addition to this, contracts are in place



with the Oman LNG development in Qalhat, near Sur. KOGAS imports the majority of LNG from the facility with around 4.1 mtpa being transported to terminals in South Korea, an agreement running up until April 2024.

AUSTRALIA! e most recently signed long term purchase agreements, have been located in projects across thriving Australia, a country on course to become the globes largest exporter of LNG with insatiable demand from Korea, Japan, China and Taiwan.

! e company has been importing 500,000 tons of LNG from Australia every year since 2003 under a mid-term contract with the country, but on December 17th 2010, history was made as KOGAS signed a long-term contract with Australian Gladstone LNG to import a total of 3.5 million tons of LNG annually for 20 years from 2015. In addition, the company concluded an agreement to purchase 15% stakes in the gas " elds and liquefaction plants of the GLNG Project.

! e Australian GLNG Project is one of the world’s " rst unconventional gas LNG projects. KOGAS bought a 15% stake in the GLNG Project from Santos and Petronas, each deducting 7.5% in their equity shares. ! is purchase means that Santos has a 30% stake of the GLNG project, followed by Petronas and Total each with 27.5%, and KOGAS with a 15% share. Traditionally, buyers are obliged to import 100% of the contracted volume; however, KOGAS has ensured the right to adjust the volume and the resale rights of the contracted volume to other countries. ! is advantageous condition will allow the company to promptly respond to abrupt changes in the supply of LNG.

! e new agreement is highly expected to help stabilize and diversify supply lines from the Middle East and Southeast Asian countries and represented a catalyst in ambitious plans to receive 30% of the company’s requirements by 2020, from phenomenal resources located o# shore in Western Australia and innovative coal seam methane projects in Queensland.

Last July, KOGAS signed a heads of agreement with the Australian subsidiary of oil and gas major Chevron, which holds a majority interest in the Wheatstone project, to purchase 1.5-million tons a year of LNG for up to 20 years. Kogas also signed an

equity heads of agreement to acquire a 5% interest in each of Chevron’s Wheatstone " eld licences, and in the Wheatstone project LNG and domestic gas processing facilities. ! is is in addition to the contract for delivery of 1.5 million tonnes per annum of LNG for 15 years from the Gorgon Project.

! e most signi" cant KOGAS investment in Australia came in August, as it announced long-term agreements worth $84 billion with energy giants Royal Dutch Shell and Total$ to buy gas from the Prelude and Ichthys projects.

! e deals are equivalent to nearly a " fth of annual gas demand in South Korea as last year over 32 million tonnes were imported. ! e deals were critical in replacing supply from Indonesia, Malaysia and Brunei. KOGAS will import a combined 5.64 million tonnes per annum (mtpa) of LNG from 2013 to 2035 under the deals. Worth 90 trillion won ($84.1 billion) over their lifetime, the deals are the nation’s largest ever long-term gas supply agreements.

! e company will also acquire a 10 percent stake with an additional investment of $1.5 billion in

Shell’s fully-owned % oating LNG Prelude project in Australia. A purchase agreement was inevitable, as the world’s " rst vessel to process gas and produce LNG is being built at the Geoje shipyard by Samsung Heavy Industries in South Korea.

EXPLORATION + PRODUCTIONOPERATIONSTo be certain of Korea’s own energy security in future years, where LNG prices are forecasted to continue climbing, KOGAS’s expansion of the exploration and production business has seen a sharp increase in e# orts for upstream operations.

KOGAS is conducting its exploration business in various countries including East Timor, Mozambique, Indonesia and Uzbekistan. KOGAS is proactively conducting drilling in four maritime blocks in East Timor. As the Mozambique Area 4 is a gas " eld highly likely to have massive natural gas reserves, the company has acquired data on three-dimensional elasticity wave exploration in 2010. ! is carries signi" cance in that a bridgehead can be secured to advance into the African energy market by successfully pushing for business in Mozambique.

KOGAS joined gas " eld development projects on the A-1/A-3 blocks in Myanmar in November 2001. ! e consortium signed a sales agreement with the China National United Oil Corporation (CNUOC) in 2008 and completed the front-end engineering and design (FEED) for the gas " eld and submarine pipeline construction in May 2009. In November 2009, the company announced Commercial Discovery and initiated construction to enter the development stage in earnest. It established an overland pipeline company to transport gas produced in Myanmar A-1/A-3 in Hong Kong in June 2010, and if the construction of submarine pipes and overland pipes is completed, the gas produced in the maritime gas " eld in Myanmar will be exported to China through submarine pipes and overland pipes from May 2013.

Another noteworthy movement has taken place in

*Major supply ! gures introduction 2010



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Iraq, with a deal being signed to develop the Akkas natural-gas !eld ending seven months of delays in progress at one of the country’s biggest deposits of the fuel. KOGAS will now have a 75% stake in one of Iraq’s largest gas projects, up from 37.5%. Iraq’s state-run North Oil Company will hold the other 25%. KazMunaiGas Exploration Production (RDGZ) of Kazakhstan unexpectedly withdrew from the project, after signing of the contract had been delayed twice because of disputes with provincial authorities in the Anbar province, where the !eld is located.

Iraq has the !fth-biggest gas reserves in the Middle East and the world’s !fth-largest crude oil reserves, production has su"ered from decades of war and sanctions, and Iraq will be utilizing foreign investment and KOGAS’s expertise to boost output. In addition, the company formed a consortium along with TPAO and the Kuwait Energy Company in Mansuriyah Gas Field to acquire gas !eld development rights

Possibly the most momentous agreement in relation to the company’s exploration and production operations was made in securing a bridgehead into the Arctic Gas Field Development Project. #e deal was signed with the MGM Energy Corp to buy a 20% share of Umiak SDL 131 and acquiring one third of MGM Energy’s 60-percent stake in the Umiak gas reserve.

#e project is to develop and produce gas products at the Umiak gas !eld, located in the Mackenzie Delta area of the Arctic, 115 km Northwest from Inuvik City, in the Northwest State of Canada. Upon the signing of the purchase agreement in February, KOGAS plans to assess additional resource reserve volume and develop these with the aim of beginning

production in 2020.#e transaction is signi!cant as it is the !rst

resource development deal in the Arctic by a Korean company, laying the foundation to push forward in this exciting frontier. #e estimated reserve of the Arctic Circle, the land and ocean basin above 66.33° north latitude, is projected to be 90 billion barrels of petroleum, 1,670tcf of natural gas and 44.0 billion barrels of NGL. Home to a vast amount of undiscovered natural resources, the Arctic Circle is estimated to have approximately 13% of the world’s oil and 30% of the natural gas reserves.

Fractured into !ve large districts in Russia, the US, Canada, Norway and Greenland, resource development in the Arctic Circle is mostly led by the major oil drillers of these !ve countries. KOGAS is the !rst company excluding the above countries, to participate in the project.

Taking advantage of this, KOGAS aims to strive in expanding its presence across the region for the future. While absorbing the advanced knowledge and technology in operation of mining blocks and pipelines in the frozen lands, the company will also pursue business expansion in other areas of the polar region. In the longer term, the company plans to establish an LNG business infrastructure in preparation of the Arctic skies being opened up to air tra$c.

DOMESTIC SUPPLYWith KOGAS continuing to strengthen its feed network globally, through short + long term purchase agreements, spot purchasing and exploration + production investments, maintaining su$cient capacity and service capability domestically, has

become paramount.Domestic demand for natural gas is concentrated

on heating during the winter time, and leads to a pattern of high-demand-in-winter-and-low demand- in-summer. On the other hand, natural gas producing countries make e"orts to equalize production be!tting facility limitations for the purpose of maximizing production e$ciency, this brings a con%ict of interest between producing countries and consuming countries, an imbalance between demand and supply exists in the natural gas market. In an e"ort to resolve the structural di$culties in the market, KOGAS has continuously acquired storage facilities to adjust an imbalance between supply and demand.

At the end of 2009, the rate of LNG storage of KOGAS was only 10%. #is is very low, even compared to Japan (16~18%) as one of the major LNG importing countries. KOGAS has !lled the shortage in low storage capacity by conducting spots and swaps. However, it plans to increase the rate of storage to 21% by 2024 taking fundamental measures to achieve stable supply and demand in the future. #e company will reduce gas import costs by decreasing high priced spot purchases in the winter time through expanded storage facilities while acquiring a reliable mid-to-long-term supply.

KOGAS currently operates three of the countries four LNG receiving terminals at Incheon, Pyeongtaek, and Tongyeong, with more than 2.8 million tonnes of storage capacity (46 tanks). In 2008, a !nal decision was made for the !fth LNG terminal site to be situated at Samcheok city, a strategic position to strengthen supplies in the North East of South Korea. #e company is also reviewing a new method of storage facility construction based on underground bedrock storage technology aimed to turn East Sea gas !elds into storage facilities in addition to extensions at the Pyeongtaek and Tongyeong terminals.

#e Samcheok terminal is to be constructed as twelve 200,000m3 LNG storage tanks, a total capacity reaching 2,400,000m3. Although In March of this year it was also announced that the new terminal could see implementation of the world’s largest lique!ed natural gas (LNG) tank with a storage capacity of 270,000 kiloliters. A total of KRW 70.5 billion in construction costs and an additional 210,000 KL in storage capacity is expected to be saved over other alternative tanks because of this design.

#e new technology has achieved economic e$ciency in the construction costs as well as improved safety and global competencies in the !eld of design technology. Measuring 94.8 meters in diameter and 60.66 meters in height, the new tank is undisputedly the largest in the world.

With an initial investment of KRW 1,046.5 billion by 2013, the !rst stage of the Samcheok project entails four LNG storage tanks, vaporized gas transmission facilities with an hourly capacity of 780 tons, a 270,000m3 class berth and a 1.8Km pier. Given that the average capacity size of LNG storage tanks in construction is 140,000 kiloliters, this new terminal is a real demonstration of KOGAS’s advanced technologies and prominence within the global LNG stage.



PI_Issue_5_Asia_Smartgrid.indd 41 21/09/2011 21:04


Change (NAPCC)2 consisting of eight missions launched in 2008. One of these eight missions is the National Mission for Enhanced Energy E! ciency (NMEEE). India’s o! cial stand however is that the modalities for integration into international mechanisms of the Missions is under deliberation and that India is working out the costs of speci" c policy options3.

# e Perform Achieve and Trade (PAT) scheme - announced as part of NMEEE, is a market based mechanism which aims at enhancing energy e! ciency in selected industrial sectors. As per the emerging blueprint of the scheme, speci" c energy consumption (SEC) targets are to be " xed for large energy-guzzling installations around the country and credits called Energy Saving Certi" cates or ESCerts issued for those exceeding their energy saving goals. # e credits can then be sold to installations which fail to meet their required cuts, thereby, over a period of time, enabling the formation of a new market-based mechanism.

# e PAT Scheme is divided into various phases which may be described diagrammatically as follows:

2 NAPPC available online at: india.gov.in/allimpfrms/alldocs/15651.doc 3 Mr. R.R.Rashmi, Joint Seretary, MoEF

INTRODUCTIONBali Action Plan (BAP) was adopted in the 13th COP in Indonesia, 2007. BAP called for a comprehensive process to enable the full, e$ ective and sustained implementation of the Convention through long-term cooperative action up to and beyond 2012. BAP called upon all developed and developing countries to consider Nationally Appropriate Mitigation Actions, the developing countries being supported and enabled by technology transfer, " nancing and capacity-building. BAP was formulated in response to the " ndings of the Fourth Assessment Report of the Intergovernmental Panel on Climate Change which warned that delay in reducing emissions increases the risk of more severe climate change impacts. # e 15th and 16th COPs at Copenhagen and Cancun respectively led to the developing countries including India declare their NAMAs. # e 17th Conference of Parties at Durban is expected to see a substantial amount of developments in Nationally Appropriate Mitigation Actions (NAMAs). # e linked issue of Monitoring Reporting and Veri" cation will also take center stage. India announced the reduction of carbon intensity of GDP by 20% to 25% of 2005 levels by 2020 in Copenhagen1. It claimed to do so, armed with its National Action Plan of Climate

1 Available at: http://unfccc.int/fi les/meetings/cop_15/copenhagen_accord/application/pdf/indiacphaccord_app2.pdf

INDIA’S ENERGY SAVING CERTIFICATE SCHEME FOR ENERGY EFFICIENCY

INDIA ENERGY EFFICIENCY

PI_AugSep_India.indd 42 21/09/2011 20:40


INDIA’S ENERGY SAVING CERTIFICATE SCHEME FOR ENERGY EFFICIENCY

However, it needs to be borne in mind that a number of deadlines mentioned in the diagram above have been postponed to a later date by the nodal agency due to unavoidable delays. E.g. the monitoring and veri!cation phase of the PAT Scheme was to start in April 2011 but is now slated to begin only in second half of 2011 at the latest. Most recent reports state that the noti!cation for the PAT scheme will be announced by the 30th of September 2011.

"e coordinating body Bureau of Energy E#ciency, with the assistance from German agency GTZ ( now GIZ), plans to cover 560 odd installations in eight sectors – thermal power stations, cement, iron and steel, fertilizers, aluminum, chlor-alkali, paper and textiles. Together they account for 40 per cent of India’s primary energy consumption (please see table below).

Sector

Million tons oil equivalent

(mtoe)Share of

energy use (%)Power 160.30 69.5Iron and steel 36.08 15.7Cement 14.47 6.3Fertilizers 11.95 5.2Textile 3.50 1.5Aluminium 2.42 1.0Paper 1.38 0.6Chlor Alkali 0.43 0.2Total 230.53 100

"e Bureau expects that around 5% energy savings or 10 million tons of oil equivalent by 2015. Besides, it claims the scheme would aid in energy security, technology up gradation and lowering environmental

impacts. BEE has identi!ed various sectors and industrial units within them which are major energy consumers. "ese units are referred to as Designated Consumers (DCs).

A large numbers of DCs are located in Tamil Nadu followed by Rajasthan and Chhatisgarh. Originally the eight entities belonging to the India Railways were also listed, which were later removed considering the public value of the railways for the masses. Original !gure of 714 DCs is likely to be revised to 4774.

For the purpose of setting the baseline previous !ve years data was used and the arithmetic average was taken. Speci!c Energy Consumption (SEC) was computed using the following formula following the principle of gate to gate accounting for a facility:

SEC= Total energy input to the plant boundary/Quantity of the Product

Assessment of absolute energy saving at the end of 3 years (2011-2014) will be based on the following formula:

Energy Saving = P base year (SEC base year – SEC target year)

Energy Saving Certi!cates (ESCerts) will be issued by a Central Registry in case a facility exceeds reductions from baseline in target year (2014). "e ESCerts will be traded among the designated 4 Graphic Source: Climate Connect based on data provided by BEE

industrial facilities on the following two exchanges: Indian Energy Exchange (IEX) and Power Exchange India Limited (PXIL).

LOWER TARGETS FOR GOOD PERFORMERSBest performers will have to improve e#ciency by 1.5 per cent. "e target goes up to seven per cent as ine#ciency increases. "e Bureau states that good performing industries will get low targets and poor performing industries will get high targets. So, the targets will not result in uniform energy intensity within the sector.

THE LEGAL UPDATEIn August 2010, Parliament passed the amendment to incorporate PAT in the Energy Conservation Act 2001. "e power ministry announced on January 2011 that electricity regulators in each state will ensure that defaulters are penalized. Industrial units will be penalized Rs 10, 00,000 (approx US$22,000) for non-compliance and an additional !ne of Rs 10,000 (US$220) for each day of default. "is penalty will be over and above the monetary value of oil equivalent for energy target missed, the price for which is yet to to be announced.

"e state electricity regulatory commissions (SERCs) that came into existence after power sector reforms were brought about through



the Electricity Act of 2003, have been entrusted as acting for adjudication. In May 2011, the Bureau communicated that they have !nalized the e"ciency norms and sent to the Ministry of Law for noti!cation under the Act.

BENEFITS OF THE SCHEME According to a recent report by HSBC5 the scheme to boost demand for energy e"ciency products and services across the eight a#ected sectors. $e BEE estimates that capital investments of INR208bn (cUSD4.6bn) will be needed in the !rst phase between 2011 and 2014. $is will deliver annual energy savings of 6.7mtoe, worth around USD2bn per annum. It is estimated that India’s total industrial e"ciency market stood at USD 5.5bn in FY2009-10. Including PAT, we forecast that this segment will grow at a CAGR of 15% over the current decade6.

As stated earlier companies that exceed their energy saving targets will be able to trade the surplus. Estimates suggest the size of this energy saving (ESCert) trading market could be around USD200m by the end of Phase I. It is expected that trading will start in late 2012 once ESCerts (1 ESCert = 1 mtoe of energy savings) are issued to Designated Consumers (DC), which overachieve their targets based on a review of their !rst year’s performance. BEE is still !nalizing the details of the trading system, including whether an ESCert %oor price is needed and the document is expected sometime in September, 2011.

Over 70% of the targeted savings are expected to come from just two sectors: thermal power as well as iron and steel. Analysts believe that energy-e"cient solutions for these sectors will o#er the maximum investment opportunity, including process control and automation technology, e"cient motors, pumps, boilers, waste heat recovery, insulation material, variable frequency drives, blade fans, condensers, as well as capacitor banks.

$e BEE estimates that the implementation plan of NMEEE in !ve years will lead to savings of about 23 million tons of oil equivalent (MTOE) of fuel, avoid capacity addition of over 19,000 MW, and reduce emissions of carbon dioxide reduced by 98.55 million tons annually7. PAT Scheme aims saving 6.6 MTOE by the end of !rst PAT cycle (2014).

$e graph given alongside, estimates cost savings to various sectors under PAT till 2014. It is notable that the potential for cost saving is highest for thermal power sector.

TRADING DETAILS$e validity of Energy Saving Certi!cates will be for 2 PAT cycles. Mr.Saurabh Diddi, Economist, BEE also stated that the %oor price for ESCerts will be near to 1/3 of market value of equivalent oil.

BUT WHERE’S THE HITCH$e concept of unit-level benchmarking per se has attracted quite a lot of unease among policy makers worldwide. For example, SEC could vary widely across two units making the same product but with di#erent manufacturing processes; among vintage 5 HSBC Global Research, Climate Investment Update, 20116 Investing in India’s climate economy, 28 January 20117 PAT Consultation Document, BEE, 2011

of plants (old and new); the plant size, its capacity utilization levels, on grade of raw-materials used and even the extent of system boundaries selected. A typical case could be in $ermal Power Plants which accounts for a major share of energy used and where the output depends on multiple factors like the calori!c value of coal used, the design of plant, the plant load factor (demand) and its rated capacity.

However, considering India’s circumstances and a longer view, will the scheme help shift towards the cleanest process and plant size is a question to be clearly examined.

To compound to the issue, a number of out-dated public sector factories are to be clubbed with their private competitors. During the course of time, it could so emerge that due to wide performance variations, the public-sector units predominantly end-up buying credits generated from the private entities. Counter attempts by the BEE to soften targets for public-sector units would only create doubts about fair-play, lower the price of the certi!cate, or even upset the scheme altogether.

Second, as the scheme is devised on energy

consumption alone, the bene!ts gained from CO2 emissions due to type of fuels is ignored. $us units may not be able to claim their due for using a low-carbon but expensive fuel like natural gas. It may be argued that use of such fuels depends on its availability and the necessary infrastructure, but discounting the higher environmental bene!t may only harm the long-term promotion towards low-carbon fuels.

$ird, an upfront indicative price-band and mechanisms for price stability is still not announced so as to generate early market interest and build-up of resources. Financial returns on such investments would be calculated according to ESCert prices. $e !nancial models will require long term price forecasting and hence both short term and long term prices. However, there is no mention of ascertaining its price range in PAT yet for the !rst and subsequent target periods.

$ere is also no information on whether the regulations will allow EScerts to be traded in the secondary market that may enable !nancing from !nancial intermediaries.

Fourth, the potential issue of double counting with

INDIA ENERGY EFFICIENCY



international carbon credits is to be clari!ed. BEE states that through PAT, it is only concerned about the resulting energy savings attribute for the country. "e issue of carbon credits is for the UNFCCC to decide.

Hence, while the PAT scheme will de!nitely add to increased monitoring and veri!cation of energy use in Indian industries - which is welcome, its in#uence on generating industry or market interest and the required energy savings is still uncertain.

INDIA AT DURBANIndia along with the other emerging economies of Brazil, South Africa and China (BASIC group) has called for an extension of the Kyoto Protocol. Ministers of the four nations completed their talks to !nalize a stand for the Durban conference in Inhotim, Brazil and released a joint statement.$ "e ministers “rea%rmed that the Kyoto Protocol is a cornerstone of the climate change regime” in the statement on the 27th of August 2011. Earlier, at the second Petersberg Dialogue on climate change that was held in Berlin on 3-4th of July 2011, to evolve political consensus on key deliverables for

success at Durban and the outcomes of the Cancun climate conference India had proposed a !ve pronged strategy:• ensure actual disbursement of fast start

finance that was promised at Cancun; • preserve the structure of the Kyoto Protocol

and its second commitment period; • work on content before deciding legal form

of NAMAs; • agree on the modalities of the Review

(of a global goal) based on the process of monitoring reporting and verification; and

• resolve pending issues from Cancun such as equity, IPRs and trade

India is expected to be under increased pressure from other parties at COP17 in general and the developed countries in particular. "ese countries would like India and other advanced developing countries such as China to take up emission reduction targets. India has already stated that it would take up binding targets only when projects are !nancially and technologically supported by the developed countries. "ere exists a deadlock as the

developed countries would prefer to see the arenas where their funding might be utilized. "e energy e%ciency scheme o&ers an avenue for the Indian government to showcase at the Durban Conference.

India has entered into a MoU with Japan to conduct Feasibility Studies for energy e%ciency in steel and lighting sector. "ese feasibility studies are being conducted under the Bilateral Mechanism Carbon O&set scheme that Japan is developing as a likely Post 2012 market mechanism. "e feasibility studies are being carried out to identify scope of Japanese technologies in helping reduce emissions in developing countries and to develop an understanding of the Monitoring Reporting Veri!cation mechanism.

Apart from developments in the PAT Scheme, India has made signi!cant advances in terms of establishing the Renewable Energy Certi!cates trading mechanism. Apart from this under the National Solar Mission Indi has called for batch 2 of phase 1 and bids for 350 MW PV capacity under solar mission have been invited.$

‘INDIA IS EXPECTED TO BE UNDER INCREASED PRESSURE FROM OTHER PARTIES AT COP17 IN

GENERAL AND THE DEVELOPED COUNTRIES IN PARTICULAR. THESE COUNTRIES WOULD LIKE INDIA

AND OTHER ADVANCED DEVELOPING COUNTRIES SUCH AS CHINA TO TAKE UP EMISSION REDUCTION

TARGETS. INDIA HAS ALREADY STATED THAT IT WOULD TAKE UP BINDING TARGETS ONLY WHEN

PROJECTS ARE FINANCIALLY AND TECHNOLOGICALLY SUPPORTED BY THE DEVELOPED COUNTRIES.’



RISING AWARENESS BOOSTS APAC INVERTER MARKET FOR RENEWABLE ENERGY SYSTEMS

RENEWABLE ENERGY

GOVERNMENTS IN THE REGION UNLEASH STRATEGIES TO PROPEL THE MARKET FORWARD

PI_AugSep_Malaysia_Awareness.indd 46 21/09/2011 20:47


RISING AWARENESS BOOSTS APAC INVERTER MARKET FOR RENEWABLE ENERGY SYSTEMS

Government initiatives have fuelled growth in the Asia Paci! c inverter market for renewable

energy systems, and the market is poised to grow at a compound annual growth rate (CAGR) of 14.5 per cent from 2010 to 2017. Rising awareness of climate change and Kyoto Protocol commitments have pushed policy makers and governments across the world to explore viable alternatives.

As the reserves of conventional fossil fuels diminish steadily, the attraction quotient of renewable energy has been enhanced considerably. Countries in the region are taking measures to cope with the high oil prices and developing clean energy, such as photovoltaic and wind energy, to reduce reliance on imported oil as well as curb greenhouse gas emissions.

Currently, incentives and government policies indirectly control the demand for inverter products used in renewable energy systems. Although inverters form a critical function in these systems, the expansion of the installation base of renewable energy systems directlydrives their uptake.

New analysis from Frost & Sullivan (www.powersupplies.frost.com), Asia Paci! c Inverter

Market for Renewable Energy Systems, ! nds that the market earned revenues of US$886.0 million in 2010 and estimates this to reach US$2,292.1 million in 2017.

“Participants in the renewable inverter market are unable to directly in" uence overall demand as no amount of technology development or price reduction can translate into increased demand,” says Frost & Sullivan Research Analyst Merilyn Eng. “However, it helps in building competitive advantage.”

Although the market has been progressing steadily, there are some aspects clouding its landscape. # e lack of credits has delayed solar power plant completion. Credit plays an important role in the installation of solar power plant projects. Confronted with the fund crunch, some developing countries are unable to build solar power plants and those under construction are facing completion delays.

“# ough the impact of the recent global economic crisis is still lingering in the region, this challenge is expected to ease as ! nancial institutions such as the Asian Development Bank (ADB) step in to provide loans, grants, and technical assistance,” says Eng. “# us, a spike in demand for renewable energy system

inverter products is anticipated in the near future.”Another impediment is the absence of a holistic

policy of renewable energy that bene! ts all parties. For instance, the policy issued in # ailand in 2005 set a target to replace 8.0 per cent of total energy with renewable energy by 2011. In the Fifteen Year Renewable Energy Development Plan issued in 2008, the target was adjusted to replacing 20.0 per cent of energy by 2022. # e government in Vietnam should work on the general Renewable Energy Law to provide a clear legal framework and incentives on the renewable energy sector.

Trends in this market indicate polarized preferences for inverter products. For products used on photovoltaic farms that are under government funding or are being funded by international organizations or other institutional investors, quality is a primary issue.For products used on distributed systems sold through individual sales to solve remote power shortage issues, price is the foremost concern. # is divergence is expected to decrease eventually when the share of low-end products gradually reduces and the more organized uptake of photovoltaic and wind energy systems gathers momentum.

PI_AugSep_Malaysia_Awareness.indd 47 21/09/2011 20:47


JET TRENCHINGJet trenching is suitable for fine to loose sands and some clay conditions. CTC currently has five jet trenching ROV’s available for offshore wind farm work (UT-1, PT-1, CMROV1, CMROV3 and CMROV4).

Jet trenching ROV’s provide an ideal tool for use on offshore wind farms because their manoeuvrability enables them to follow any cable route and jet up to 6 metres from the cable touchdown point, reducing the need for alternative cable protection.

However, jet trenching ROVs are considered to disrupt the seabed more than other burial tools and developers often limit the use of such tools at wind farm sites. In contrast, CTC’s jet trenching ROVs are precision tools that are environmentally friendly and won’t leave a mass of disruption after operation. CTC believes the lack of understanding in how these tools operate is often the reason behind restricting their use on Offshore Wind Farms.

PLOUGHINGPloughing is suitable for a large range of seabed

As o!shore wind farm construction moves to a new level globally, challenges are being raised

against the current methods of O!shore Wind Farm array and export cable installation. Factored within this installation process is the selection of the correct cable burial tool.

Ensuring the burial tool is correctly aligned to the projects’ seabed conditions and other environmental factors is crucial in the productivity and success of a project. "e problems faced when the wrong burial tool is used can include operation at a slower rate than predicted, di#culty in achieving the required burial depth and potential damage to the cable. All of these issues result in risk and associated costs to the developer, cable installer and/ or cable manufacturer.

CTC Marine Projects (CTC), headquartered in Darlington, is home to the world’s largest $eet of high technology marine trenching and burial equipment, including mechanical trenchers, ploughs and jet trenching ROVs.

Every project that CTC undertakes is evaluated on an individual basis, but as a general perspective each type of burial tool carries its own pros and cons when considered in an o!shore wind farm.

SELECTING THE RIGHT CABLE BURIAL TOOL FOR AN OFFSHORE WIND FARM PROJECT

conditions depending on the design and burial depths. CTC currently has %ve cable ploughs suitable for o!shore wind farm work (PCP-1, PCP-2, MD3, MPS and ACP).

Ploughing is used in a variety of soil types and particularly for burial depths of greater than 1.5 metres. "ere are advantages to ploughing, which include achieving greater cable burial depths, the ability to simultaneously lay and bury the cable and the simplicity of the tooling. However, the deeper the trench depth required, the more power needed to do this, resulting in need for more specialist vessels. "e Burial Protection Index provides a speci%c operational risk assessment to assess how deep the trench needs to be to avoid damage to the cable through shipping movements and other environmental factors. "is in itself is the basis for an industry discussion and shared learning from other sectors.

Despite needing a high bollard pull vessel to tow the equipment, ploughs have the capability to trench at speed in a straight line and are e!ective for export cables. Several of CTC’s ploughs have jetting capability, which reduces tow forces, increases ploughing performance and minimises the need for such a high bollard pull vessel.

However, there is a downside when ploughing inter-array cables. With limited direction change on the approach to the turbine foundations this means cable ends can be left exposed, requiring another protection solution.

MECHANICAL TRENCHINGWhen providing mechanical trenching the tools can operate in jetting and cutting modes and are capable of working in sands, clays and rock conditions. CTC currently has three mechanical cutting vehicles suitable for wind farm work (SWT-1, T1 and T2), which can operate from a barge as a cheaper alternative to a DP2 vessel.

Trenching is the ideal tool for the more onerous soils condition wind farms where a Burial Protection Index recommends 0.5 to 1.5 metre burial. Mechanical trenching vehicles can provide close approach to the turbine structure but require that the cable route is managed to avoid sharp changes in direction. "e cable is safely managed away from the cutting tools path and placed at the

OFFSHORE WIND PROJECTS

PI_AugSep_CTCMarine.indd 48 21/09/2011 20:32

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PI_Issue_5_Ercam.indd 49 21/09/2011 21:03

OFFSHORE WIND PROJECTS


bottom resulting trench slot. Mechanical trenching is the slowest of the three

methods, both operationally and in the speed of program, but this technique has been successful for many projects where other tools have failed to reach the target depth.

Another area to consider is the maintenance required when using the cutting technique. Since mechanical trenchers are used in harder soil conditions, they undergo more wear and tear than ROVs that are free-!ying or ploughs which are towed through the seabed. "ey will require more maintenance, possibly at some time throughout the duration of the project.

FUTURE INSTALLATION IMPROVEMENTSAs a project size increases, it is also imperative that O#shore Wind Farms are designed for installation, as well as the operational and maintenance phase.

CTC can o#er multiple installation solutions based on 20 years of practical experience in cable installation. It performs the initiation pull-in at the transformer platform or a wind turbine, followed by laying the power cables, trenching these and a termination pull-in to a wind turbine. "is o#shore experience is fundamental in being able to

understand what tools are best suited to di#erent seabed conditions and other environmental considerations.

It is important to engage with this experience early on in a project development to take into account the correlation between site soil conditions and the capabilities of the tools that will be used. Array cable planning and costing has been underestimated in early projects causing unnecessary problems for developers.

CTC owns all of its assets, has long term charter arrangements for its vessels and has a dedicated o#shore mobilisation base with a heavy lift quay. "is ensures CTC is both !exible to change and delivers on time by controlling all the key elements of the project.

Health and Safety is also a fundamental priority for the O#shore Renewables sector. Having noted the reduced health and safety regulations in comparison to the oil and gas industry, it is imperative that this is addressed for future installations. CTC ensures the highest level of health and safety performance is delivered in all sectors it operates in, but particular attention is being paid to this rapidly growing sector where it is enforcing its higher standards.

‘ENSURING THE BURIAL TOOL IS CORRECTLY ALIGNED TO THE PROJECTS’ SEABED CONDITIONS AND OTHER ENVIRONMENTAL FACTORS IS CRUCIAL IN THE PRODUCTIVITY AND SUCCESS OF A PROJECT.’

PI_AugSep_CTCMarine.indd 50 21/09/2011 20:32

CTC Marine Projects brings 20 years of expertise in submarine power cableinstallation to the Offshore Renewable sector. With an owned vessel fleetand the world's largest suite of high technology marine trenching vehicles,it has the versatility to deliver innovative 'right first time' solutions for subseacable installation and burial.

There’s a new forcemaking wavesin the offshore renewable industry.

+65 6329 9642 [email protected] www.ctcmarine.com

PI_Issue_6_CTC_Marine_ad.indd 51 22/09/2011 08:18

‘APR ENERGY SPECIALIZES IN THE SALE OF RELIABLE AND EFFICIENT ELECTRICITY THROUGH THE RAPID DEPLOYMENT OF CUSTOMIZED TURNKEY POWER SOLUTIONS.’


country) will have doubled by 2030, while the world’s energy consumption will increase by 1.5 times over the same period. As a result, developing Asia’s share of global energy consumption will increase from 27.5% to 36.3% in 2030. In conjunction with the massive growth of Asia’s global energy consumption, the temporary power market is expected to experience substantial growth in the near future.

FAST-TRACK POWEREmerging countries throughout Asia have seen tremendous activity within the temporary power business over the past few years. !e growth patterns cannot always be properly forecasted and can be driven by the failure of a power plant, natural disaster, weather phenomenon or some other unforeseen event. In these circumstances, there is often a need for fast-track power to ensure an adequate power supply of electricity to industries, governments, and households. Temporary power is the most e"cient solution for a fast-track capacity application because of the modular design that is custom engineered for rapid mobilization and startup. Typically, consumers need additional power quickly either for base load, continuous operation or for emergency standby in the event they are able to control the electricity requirements through load management.

INDUSTRIAL POWER GENERATIONIndustrial companies operating independently from the grid often require a dedicated source of electricity. An unreliable supply from a local grid

Asia has been one of the fastest growing economic regions in the world and continues

to outpace other regions in terms of growth within the electricity sector. As Asia develops and expands so will the demand for additional infrastructure and reliable power. To experience continuous high growth patterns and economic development, signi#cant infrastructure improvements and expansions are necessary. Based on the time frame and costs associated with the construction and implementation of permanent power plants, the global temporary power industry has been increasing at a rapid rate, particularly in Asia. Temporary power throughout this region is growing due to the rapid increase in demand for electricity, ine"cient grids contributing to power losses, massive population growth within countries such as India and China, expanded urban business activities throughout many of the smaller regional economies, unforeseen natural disasters damaging large-scale permanent power structures, and the increased industrialization in most countries throughout Asia.

ELECTRICITY GROWTH Rapid and accelerating growth in electricity consumption is occurring in the developing countries of Asia at a higher rate than the world average and is likely to continue due to fact that the electricity consumption per capita is still far below that of the world average. !e International Energy Agency has forecasted that the energy consumption of developing Asia (excluding South Korea, which is an OECD

TEMPORARY POWER GROWTH THROUGHOUT ASIA

or limited access to the main transmission network may prohibit the delivery of electricity required for the customer to sustain production and operations. Industrial companies are dependent upon constant power to ensure that maximum operational capacity is achieved to avoid costly plant outages and maintain competitive e$ectiveness throughout world markets. Again, temporary power applications can be the most e$ective short to medium term solution as temporary power providers o$er not only power generation equipment but also the engineering, installation, operation and maintenance expertise necessary to turnkey the entire operation. !is allows industrial operators to focus on the core of their operation driven by a reliable and e"cient power solution.

ASIA POWER GROWTH

PI_AugSep_APR.indd 52 21/09/2011 20:28


TEMPORARY POWER GROWTH THROUGHOUT ASIA

MOVING FORWARDAccording to the International Monetary Fund, Asian countries face a major challenge as they seek to upgrade their infrastructures while their economies are growing rapidly. Given the various constraints on government, primarily !nancial ones within the region, private participation in infrastructure is likely to increase sharply. Most Asian governments have recognized the importance of changing their policies and creating an environment conducive to sustainable private sector involvement in their infrastructure sectors. But the reform of these sectors needs to be accelerated, and private developers should develop more "exible, innovative, and realistic project designs and concepts. Until this time, there will remain a constant requirement for temporary power throughout the region and the globe.

ABOUT APR ENERGYAPR Energy specializes in the sale of reliable and e#cient electricity through the rapid deployment of Customized Turnkey Power Solutions. APR Energy’s power generation solutions coupled with comprehensive operation and maintenance services and "exible commercial terms have established APR Energy as a leader in the power industry. APR is principally focused on emerging markets where demand for temporary power solutions is strong. APR currently has experience providing power generation solutions to customers and communities around the world, with an emphasis in Asia, the Middle East, Africa, and the Americas.

EXPERIENCEFollowing the tragic Tohoku-Chihou-Taiheiyo-Oki Earthquake and associated tsunami on March 11, 2011 that caused damage to Japan’s energy grid, APR Energy was awarded a 203MW contract by Tokyo Electric Power Company, Inc. (TEPCO), to provide the utility with a fast-track power solution. $is emergency power solution is currently providing additional electricity to two cities, Yokosuka and Hitachinaka, both located on Japan’s eastern shore. $ese power generation sites are utilizing both Mobile Gas Turbines and Diesel Power Modules, delivered on a fast-track basis, with APR Energy providing

operation and maintenance support services. In order to ensure the fastest possible delivery and installation, APR Energy air freighted shipments of Mobile Gas Turbines and additional equipment into the country. APR Energy also supplied an emergency industrial solution to one of the largest ammonia processing plants in the world after the plant in Borneo experienced an onsite generator failure and as such required emergency power generation in order to re-start their facility. $e equipment was air-freighted to the site, assembled and ready to run within 4 days of arrival. In Emergency Power Generation situations, speedy mobilization is of the utmost importance.

PI_AugSep_APR.indd 53 21/09/2011 20:28


sources.

As countries develop a strategic response to climate change, fuel cells are proving

to be an intelligent alternative energy source for large-scale utility power generation and distributed heat and power for large-scale building applications. Fuel cells such as the PureCell system from UTC Power are a particularly well-suited and proven choice due to their small environmental footprint relative to other clean energy technologies, unmatched 90 percent overall system e!ciency, greater than 95 percent availability, 10-year cell stack life (20-year product life), load following capabilities and ability to conserve water. With decades of proven "eld experience, and their high capacity and small footprint advantage, fuel cells have quietly become a natural complementary choice for utilities to increase the capacity of clean power generation within their networks. In most cases fuel cells have been deployed within existing real estate portfolios.

HIGH CAPACITY FACTOR & CO2

REDUCTION:Because fuel cells o#er “always on” power generation, fuel cells are able to produce more than 3.5 times and 7 times the annual AC energy output of similar sized wind and solar technologies, respectively.

Data based on product life and simple payback and assumes zero incentive funding

With this high capacity factor, fuel cells are able to o#er the highest annual CO2 savings over wind and solar when compared to typical central generation sources.

HIGH POWER DENSITY, SMALLFOOTPRINT:Fuel cell’s high capacity factor combined

with high power density, deliver signi"cant value where space and land acquisition are a challenge due to limited availability, permitting issues, or high price of real estate near the customer’s site.

FUEL CELLS: DECADES OFCOMMERCIAL SERVICE:Last year, UTC Power and Samsung Everland completed the installation of a 4.8MW fuel cell powerplant.

According to UTC Power the 4.8MW powerplant provides 5 percent of Anyang’s power needs as well as usable heat to the district heat plant onsite and has achieved over 95% availability. $is availability level and performance is also consistent with UTC Power’s worldwide fuel cell %eet. UTC Power has deployed over 300 Phosphoric Acid Fuel Cell (PAFC) systems across 19 countries and six continents with over 9.7 million hours of operation and 1.6 billion kW hours of electricity generation to date.

UTC Power’s previous generation fuel cell %eet leader recently reached over 80,000 operating hours, nearly 10 years and twice its design life. Our next-generation fuel cell, the PureCell System Model 400, builds o# the Model 200’s proven "eld experience, incorporates several new technological advancements and o#ers a cell stack life of 10 years before overhaul with a product life of 20 years.

CLEAN ENERGY WITH A SMALLFOOTPRINT, HIGH AVAILABILITYAND PROVEN DURABILITY – WHAT’S NEXT?It’s expected that fuel cell adoption will continue to grow as a choice for utilities and

building applications as more users learn about the proven and demonstrated bene"ts of fuel cells. $is adoption growth can also be accelerated as policy changes move to strengthen the adoption through tax incentives and regulated fuel pricing in line with other power generation

FUEL CELLS PROVE TO BE INTELLIGENT ALTERNATIVE ENERGY SOURCE FOR LARGE-SCALE UTILITY POWER GENERATION

FUEL CELL ENERGY

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Over 400 MW400throughout AsiaMalaysiaIndonesiaPhilippines

IndiaJapanPakistanSri Lanka

FAST!TRACK EMERGENCY POWER

LOGISTICS INSTALLATIONENGINEERING OPERATIONS

Delivering Customized Turnkey Solutions

In emergency situations that cause power plant or transmission line outages, fast-track temporary power generation is o!en required to support the electrical system and avoid costly out-ages. Rapid mobilization of equipment and resources is crucial to guarantee that businesses, industries, and households receive a consistent supply of electricity. APR Energy o"ers an immedi-ate solution to our customers by providing customized fast-track power generation solutions utilizing a variety of technologies and comprehensive services.

APR Energy’s power generation technologies are all based on rapidly deployable modular designs and are engineered for fast-track instal-lation. All components of the mobilization, installation, operation, and maintenance services are provided by APR Energy to ensure our customers receive a reliable and e#cient supply of power.

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TURBINE POWERED COGENERATION


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!e OP16 turbines are operating on well-head gas and are providing 1.8 MWe each which covers the baseload electricity demand on-site. Both turbines are connected to hot water boilers which provide approximately 3 MW each in thermal energy. !e hot water generated is used for general facilities on-site as well as heat tracing for oil pipelines during winter to enable e"ective pumping of oil. !e electrical e#ciency of the installation is approximately

26% and, in cogeneration mode, the total e#ciency is above 75%.

!e OP16 was selected due to its ability to burn o"-speci$cation gas (in this case, well-head gas) as well as its robustness, reliability and high e#ciency. As ambient temperatures

can be as low as –40ºC with frequent snow storms and high winds, OPRA developed a ‘Nordic’ package,

Small scale, reliable, e#cient, decentralised, cogeneration using OPRA Turbines’ radial gas

turbine technologyGas turbines in the 2 MW range have numerous

applications for cogeneration and continuous duty as well as for stand by and temporary power.

OPRA Turbines has proven patented gas turbine technology for just these applications in the 1 MW – 10 MW power range. !e founder of OPRA Turbines is one of the fathers of modern radial gas turbine technology. Jan Mowill designed and commercialized the $rst radial gas turbine for industrial use in the 1960s. Many units are still operating 40 years later. !e OP16 is a 2MW class gas turbine engine and entered the market in 2005. It is a particularly robust and reliable engine with multi-fuel capabilities and as a result; increasing commercial success.

CASE STUDY: USE OF COMBINED HEATAND POWER TECHNOLOGY AT A LANDBASED OILFIELD.Two OP16 gas turbines installed at an oil$eld, located in a remote part of Northern Russia, are burning well-head gas to provide both baseload electricity and heating at the site. Some of the heat produced is used to supply trace heating for oil pipelines.

!e Tedinskoe oil$eld in the Nenetsk Autonomous Region of northern Russia typi$es small, remote oil$elds that require on-site power and heat generation to enable oil and gas production. With high oil prices, these applications are increasingly attractive for oil companies worldwide. As some large oil $elds become depleted, interest in $nding and commercially exploiting smaller $nds continues to be strong. !ese untapped oil resources are based in increasingly remote locations with extreme weather, frozen seas or earthquakes. High cost involved in remote locations, are often times high enough to deter production. !e conditions in parts of Russia are an example of how oil exploration can be challenged by hazardous conditions: A challenge for reliable power.

In May 2005, OPRA Gas Turbines installed two OP16 gas turbines at the Tedinskoe oil$eld operated by Lukoil Sever. !e OP16 gas turbine provides both power and heat to these sites as part of a compact OP16 generator package.

TURBINE POWERED COGENERATION: SOPHISTICATED SIMPLICITY

to cope with these weather conditions. !e generator packages need to be low weight and compact because the site is only accessible by ‘winter roads’ and helicopter. !e two OP16 engines (see Figure 1) are operating 24 hours per day, seven days per week. As the well-head gas used to fuel the turbines would otherwise be %ared, the project represents a signi$cant CO2 saving. !e two turbine generators at the Tedinskoe oil$eld can run on a range of fuels. !e site design for the turnkey installation was performed by PermNIPIneft Institute, a general designer of oil$eld equipment. Construction and installation were carried out by Globastro I Engineering Co. Project realization, commissioning and start-up was completed by OPRA Turbines in co-operation with its Russian distributor. !e power generation group Lukoil Sever supervised the entire project.



CONTINOUS DUTY (6 YEARS) SINCECOMMISSIONING!e gas turbines have been in operation for six years, building up an impressive performance record. !ey have each achieved over 50 000 hours’ running time, running constantly, although 40 000 hours is the standard recommended period between overhauls for the OPRA turbines. One of the reasons OPRA turbines were selected was their ability to burn wellhead gas (associated gas) — raw natural gas from the oil well. !is sour gas, revealed sulphur content of between 2 and 3%, very high, as the norm is usually around 1%.

Achieving 50 000 hours running on clean natural gas would be very good but to achieve it burning such a high sulphur content fuel is very impressive. OPRA Turbines can achieve this because of the all radial design — radial turbines will keep on running even if, some corrosion has taken place. !e OP16s have proved to be very good at running on di"erent types of associated gas, whether they have high or low calori#c values, or high sulphur content. !e turbines have a planned overhaul in the second half of this year, but the customer is happy with the way they are currently running. In remote oil #eld locations such as this one and in the many other similar #elds in Russia, reliability and the ability to carry out maintenance quickly and e$ciently is key.

Low maintenance can be achieved because radial turbines will keep on running despite extreme operational wear. Other gas turbines operating in that power range have a multistage axial con#guration with combinations of stator and rotor blades, unlike the OP16, which has a turbine wheel of single-stage radial con#guration and is consequently simple and robust with few parts. Further bene#ts are the fact that the rotor is very compact and robust, and no lubricating oil is needed in the hot section of the turbine, which means oil consumption is “negligible.”

WHY OPRA TURBINES WERE CHOSEN– Salavat Khusnutdinov,Chief Energy Officer, Lukoil-Sever

• The turbine units have a high reliability, with a total service life of 140,000 hours. This is at least 40% more than the common service lives provided by not only Russian but also foreign companies.

• The exhaust gases have an extremely low content of harmful components, which complies with Russian standards.

• The OP16 turbine is a radial gas turbine working at 26,000 rpm and is extremely robust. It is also compact, which ensures a small ‘footprint’ and low weight.

• The turbines can burn a wide range of fuels, including ‘off-specification’ gases as well as liquid fuels. The fuel and combustion system can be easily adjusted to accommodate changes in fuel specification.

• The high degree of prefabrication enables easy delivery and installation. This also benefits connection to electricity and fuel lines as well as heat pipes.

• Quick start-up and commissioning.• The absence of oil loss.

THE OP16 GAS TURBINE!e OP16 is rated between 1.5 and 2.0 MW and can e"ectively cover applications with an electrical requirement of up to 10 MW, when multiple units are deployed. !e turbine has been designed as a simple, robust industrial turbine with low maintenance requirements and high e$ciency.

!e OP16 gas turbine is characterized by its all-radial design with a single-stage centrifugal compressor and a single-stage radial in%ow turbine mounted back-to-back in a cantilevered bearing suspension system. !is enables both bearings to

be located in the ‘cold’ end, providing low operating temperatures and long bearing life. !e combustion system has a four can con#guration with dual-fuel and low emissions options. !e combustion system also has the capability to operate on a wide range of both gaseous and liquid fuels.

Radial gas turbines are industrial gas turbines that are e"ective in the power range of 2 MW and below where larger aero derivative turbine engines are less feasible due to design constraints that makes it di$cult to scale the technology down to this power range.

GROWING RANGE OF COGENERATIONAPPLICATIONS!e Tedinskoe installation represents the #rst turbine-based, small-scale CHP application for a remote oil#eld. Since May 2005, OPRA Gas Turbines has received many additional orders for other CHP projects. One of these projects is a CHP installation based on six OP16 turbines for a new skiing resort that will be utilized for Sochi 2014 Winter Olympics in the Black Sea area. Turbine units will provide heat and power to buildings in the resort and associated infrastructure including ski lifts. !e absence of a local power grid has dictated the use of on-site CHP solutions which also provide the lowest energy costs. Local heat demand will be covered by waste heat and hot water boilers connected to the turbines. A natural gas pipeline provides the main fuel supply for the turbines. !e turbines have dual-fuel capability in case of natural gas supply disruptions. !e resort is a green#eld development and turbines were installed as the resort expands and more energy is required. A clean and environmental image was important and in the addition to overall e$ciency, the OP16’s low emissions and low vibrations/noise supported this.

In the Netherlands one OP16 generator set has recently been commissioned for combined cycle solvent destruction for Fuji#lm, !e Netherlands.



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FujiFilms’ aim was to reach a high level of sustainability by using the solvents in the blast o! air for energy supply instead of destruction in an incinerator. "e heat content of the solvents will be used for producing steam and/or electricity, reducing waste and saving energy.

"e OP16 having multi fuel capabilities is attracting a growing range of applications where the OP16 will run on pyrolysis oil from waste wood, bio fuels and other unconventional fuels.

Around two-thirds of the CHP projects OPRA is involved with are oil and gas related, with approximately 45 units for both onshore and o!shore use, and mostly running on associated gas. Running an OP16 on #are gas eliminates wasteful #ares. "e hot exhaust gases of the OP16 gas turbine sets can be used for process and heating in oil and gas applications. For shale gas, a specially designed mobile unit is a solution for temporary power and a need to move power between locations. "e OP16 has proven to be a reliable power source onshore and o!shore, from the extreme colds of Siberia to the hot and dusty environments in the Middle East, where a package for hot and dusty climates is available.

OP16 GENERATOR SETS FORCOGENERATIONOPRA Turbines can o!er the right solution for both industrial and commercial combined heat and power needs. Applications where reliability, space, high

availability and environmental criteria are essential match well with the OP16. "e OP16 has emissions levels substantially below EU/global regulations.

"e hot exhaust gases can be used for process and heating applications. Depending on the application an OP16 turbine based co-generation plant can reach an overall fuel utilisation of 90%. At full load approximately 5MW of heat is available in the clean exhaust gases. At full load typically 6 tons per hour of high pressure steam can be generated. "e low emissions and high exhaust temperature allows for direct use of the exhaust heat.

Possible applications for use of the exhaust heat include:• Absorption cooling • Hot water for district heating• Steam generation for process industry• Direct drying using the clean exhaust heat

Typical industries include: data centres, food processing, brick /ceramic manufacturers, hotels, hospitals, textile producers, paper mills, chemicals and pharmaceutical industries.

For highly populated urban areas low emissions and low noise/vibrations are important. If there is a possibility of utilizing the hot exhaust for district heating to nearby buildings / industry, you cannot beat a gas turbine in terms of overall fuel utilization. It will be overall more efficient, and provide a much more pleasant and clean environment. Emissions regulations are getting

stricter around the world, so it is a worthwhile investment. The governments of Annex 1 countries are increasingly offering incentives to industries if they use gas turbine engines for cogeneration due to the high fuel utilisation and overall efficiency.

COGENERATION USING OPRA TURBINES’RADIAL GAS TURBINE TECHNOLOGY INTHE ASIA PACIFIC REGIONThe Asia Pacific region is diverse, but has enormous cogeneration potential using smaller gas turbines. Industrial growth in many countries, indicate that new process industries and commercial buildings will be built within a short timeframe. In addition there are natural resources such as oil, gas and minerals. Remote areas will need power to extract and refine natural resources or provide power for onsite production and urban areas. Islands have smaller power needs and need clean power to maintain touristic beauty spots. If cogeneration is effectively implemented by developers and investors, large savings can be achieved and the end users will have more choice. In addition, the power utilities can have access to excess low cost and reliable energy. The Asia Pacific region is also an area that is exposed to earthquakes and other natural disasters where reliable continuous power and emergency power is important.






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Delta and also is expected to create a number of local jobs during the construction phase.

“!is will be the "rst large-scale industrial/energy project in Bac Lieu province, which has huge potential in wind energy, along with agriculture and seafood farming,” said Mr. To Hoai Dan, Chairman of Cong Ly Company Ltd. “We expect that the project will help to improve the social and economic conditions of the province by creating new jobs requiring technical and industrial skills, while producing much-needed power. We also hope this "rst large-scale wind farm project will help to attract more investments into the Bac Lieu province in the future.”

Located about 200 kilometers southwest of Ho Chi Minh City, the Bac Lieu project will be the

Local Developer Selects GE’s 1.6-82.5 Wind Turbines Because they O#er a Good Fit for

the Region’s Wind Conditions Phase Two Planned; Could Add 120 MW of Wind

Power to Help Vietnam Avoid Energy Shortages GE has signed a contract with local developer

Cong Ly Company Ltd. to provide 10 of its 1.6-82.5 wind turbines and operations and maintenance services for phase one of the Bac Lieu Wind Farm, totaling 16 megawatts of power generation capacity.

Cong Ly Company Ltd. also has plans for a second phase of the project, which would add up to 120 megawatts of power to help resolve the country’s chronic power shortages. !e project will bring clean power generation to Vietnam’s Mekong

MEKONG DELTA’S FIRST WIND FARM

"rst wind farm in the Mekong Delta. It will be designed to protect the environment of the region, which is known as the “rice basket” of the country and accounts for the largest amount of Vietnam’s seafood exports.

!e GE wind turbines chosen for this project feature an 82.5 meter rotor for class III wind conditions, making it a good match for the Bac Lieu site. !e 1.6-82.5 builds on the success and the global experience of GE’s 1.5MW wind turbine, the industry’s most widely deployed megawatt-class machine with more than 16,000 installed worldwide.

“!e Bac Lieu project illustrates our commitment to o#er our customers the best technology to meet their speci"c project requirements,” said Nguyen Xuan !ang, Country Executive for GE Energy in Vietnam. “We are focused on helping Cong Ly achieve success with this project, which is a signi"cant milestone for the Bac Lieu province.”

!e Bac Lieu wind project further expands GE’s role in Vietnam, where the company has been active since the 1960s, providing technological support for a variety of power generation projects throughout the country. With an installed base of more than 2,000 megawatts, GE equipment today supplies approximately 18% of the country’s power generation capacity.

In 2009, GE increased its investment in the future of Vietnam by establishing a new manufacturing plant near the seaport city of Hai Phong. !e facility produces wind turbine components, and the "rst wind turbine generators built there were shipped in May of 2010.

THE FIRST WIND FARM IN VIETNAM’S MEKONG DELTA WILL BE POWERED BY GE TECHNOLOGY. PHASE ONE OF BAC LIEU WIND FARM TO PRODUCE 16 MEGAWATTS OF CLEAN ENERGY

VIETNAM WIND PROJECT

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Wind Energy! International 2011/2012, which has now been released. " e book is a culmination of reports from experts around the world. It! includes updated and complete information on the worldwide status of wind! energy by 76 country reports describing the wind energy situation in!almost 100 countries on all continents. Authors from these countries have! provided # rst-hand information in a comprehensive format. In addition, the yearbook also incorporates 32 special reports!detailing policies, industrial trends, # nancing, grid integration,!o$ shore, small wind systems, community power, education,

WWEA’s Yearbook Wind Energy International 2011/2012 examines the status! of wind

energy in almost 100 countries as well as emerging trends around!the world

" e number of countries using wind energy for electricity! generation increased in the # rst half of 2011 to 86. All wind turbines! installed worldwide have crossed 200 Gigawatt and can generate 430 TWh per! annum, equalling 2.5 % of the global electricity consumption. " ese and many other # gures of the wind energy market are published in!the 4th edition of WWEA’s international yearbook,

NUMBER OF COUNTRIES USING WIND ENERGY INCREASES TO 86 COUNTRIES

training &!capacity building. With the accelerating switch of the worldwide energy system towards!more renewable energy, in particular wind power, Wind Energy International!2011/2012 is indispensable for all decision-makers in the industry,!amongst policy-makers and everybody involved in the energy and environment! sector. Best practices from around the world have been carefully analysed! and presented in the yearbook. " ese include successful feed-in tari$ ,! community power, # nancing developments that support the widespread!di$ usion of wind energy. More information is available at www.wwindea.org

WIND POWER

PI_AugSep_WWEA.indd 64 22/09/2011 13:38

PI_Issue_5_Tempress_ad_rev.indd 65 21/09/2011 21:00

Kaefer Page 2

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