Asia power market trends: mid 2014 update
- Jun 10, 2014 6:00 am GMT
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As everyone knows, Asia has been rapidly industrializing since at least the year 2000. One of the limiting factors on this growth has been the availability of energy generation capability as the electrical power market has struggled to keep pace. To supplement the traditional energy sources from nuclear and coal, Asia Pacific countries are now increasingly adding renewable sources such as solar and wind.
As China goes, so goes Asia
The picture of the power generation market in Asia begins and ends with China. Lately, that picture has frequently been cloudy as seen in the many TV news stories portraying the state of air quality in China with people wearing surgical masks as they are barely visible a block away, nearly obscured by thick, choking smog. “As coal power has been blamed as the major cause of the serious smog and haze problem in China, the environmental protection policies have exerted the most pressure ever upon the coal power generation companies,” says Dr. Neil Wang, global partner and China managing director for Frost & Sullivan. Unfortunately, polluting sources of electrical power led by coal-fired power plants will continue to have the lion’s share of the market in 2014, as according to Dr. Wang coal power will remain the most important power source in China with 78 percent of total power generation coming from coal-fired power plants.
And considering how large the needs of the market are for power, it is very difficult to move the needle from traditional forms of energy generation such as coal-fired plants within the People’s Republic of China (PRC). “With economic growth automatically comes growth in electricity demand,” says Clive Turton, managing director, Asia Pacific, APR Energy. “If economic growth in the PRC, for example, is 8 percent per year, the growth in electricity demand could be as much as nine or 10 percent per year. PRC total electricity generation sources are around 1,200 gigawatts, meaning that every year the PRC needs to add as much as 120 gigawatts to keep up with demand growth.” He goes on to say it is not practical to count on alternative sources of power like solar or wind to make up the difference in the capacity growth needs of China.
This is not to say that China has given up on alternative power. “Despite the overall dominant position of coal-fired electricity, the development of alternative power has continued to increase in significance,” says Gavin Chui, PwC China Power & Utilities partner. “The Chinese government has committed to the global community that the country is on target to achieve 15 percent of its electricity from non-fossil sources by 2020.” Outside of China, power producers also have targets for alternative energy that they are committed to achieving.
Alternative power in the rest of Asia outside China
Outside of China, a lot of other Asian countries also have specific requirements for renewable, or alternative, power, according to Turton. “Power producers are more and more building alternative power as part of their generation mix,” he says. However, alternative power faces scalability and reliability issues, according to Turton. “On reliability, the simple problem is that if the sun is not shining or the wind is not blowing, solar and wind will not generate.” Therefore, there needs to be a backup source of power. Scalability is another issue altogether.
For example, in India, only solar power has experienced a decline in the cost of production, according to Amol Kotwal, associate director, Energy & Power Systems, South Asia, Frost & Sullivan. “We feel it is a long way to go for alternative power sources before it really catches up with traditional power sources,” says Kotwal.
China (and India) syndrome
That brings us to the question of how does nuclear power fit into the overall power generation market going forward in 2014 and beyond? With 21 operational reactors located at seven stations generating around 5 gigawatts, India is currently getting approximately 3 percent of its total electrical capacity from nuclear, according to Kotwal. In addition, the Indian government intends to add another 4 gigawatts of capacity from reactors under construction, which are expected to come online between 2014 and 2016. It only goes up from there. “The central government is targeting 27 gigawatts by 2023, which is a huge leap,” says Kotwal. However, in spite of its nuclear power programs, India will struggle to meet its generation growth targets due to social and political unrest, according to Kotwal, citing the recent protests that occurred at the commissioning of the Kudankulam Nuclear Power Plant.
And as ambitious as India’s nuclear plans sound, China has even more aggressive goals in mind. By the end of 2015, China’s current five-year plan for energy development calls for total nuclear generating capacity of 40 gigawatts, according to Wang. “And the government also means to develop China into a major exporter of nuclear technology,” he says.