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Oil & Gas

14 May 2019

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Vietnam

Publicly-listed Pilipinas Shell Petroleum Corporation has expanded its bitumen market to Vietnam, enabling it to fetch additional revenues from export of such commodity that started in the last quarter of last year, according to a high-ranking company executive.

“In fourth quarter of last year, we made our first export of finished bitumen within the ASEAN region,” Shell Vice President for Finance Jose Jerome Pascual III adding its bitumen export debuted in Vietnam.

Bitumen is a by-product of processes in oil refining, which in turn could be used as raw material in infrastructure development such as roofing or road surfacing, among others.

He noted that their new bitumen facility is “larger than the domestic market, which means that we can supply both the domestic market as well as the export market.”

Shoring up the company’s top and bottom lines may also happen further upon the completion of the installation of a new hydrogen unit that would then enable the company’s refinery to process different crude types – primarily the cheaper ones that are leaning more on the “sour” grade.

At the same time, the planned refining facility revamping will also give the company better bitumen yield that it can add up to both its domestic and offshore markets. “This gives us a lot of opportunity – with the hydrogen optimization we’re doing that will allow us to produce more residue for bitumen as well as diesel. It will enable the bitumen plant to produce the bitumen that’s required both domestically and the market that we see in the region,” Pascual emphasized.

The installation of a hydrogen unit at the company’s refinery in Tabangao, Batangas, according to Pilipinas Shell President and CEO Cesar G. Romero, will require cash outlay of P2.0 billion – and this shall form part of the P6.0 billion capital expenditure (capex) set by the company this year.

“We’re adding P2 billion to provide for the hydrogen project that we are going to do in our refinery,” he stressed, highlighting that the targeted completion of that venture will be end of next year and commercial stream by first quarter of 2021.

He explained, “This is to optimize our crude slate so we can process more advanced or exotic crudes which are therefore cheaper as well as enhance the products that we’re able to produce.” Crude slate would refer to the mix of various crude grades that a refinery can run or process.

“The key there is to be able to find the best match for the demand slate and also relative to the pricing, so we remain open to processing whatever is the best crude at some point in time,” he said; adding that even the option of processing the crude output from the Malampaya field is in their target.

On the capex, Romero emphasized, “In the past, out of the P4 billion capex that we have, P2 billion was for retail network expansion and our non-fuels retail expansion and then P1.0 billion will be for continued refinery enhancement and about a billion is for the rest of our supply chain – our 27 terminals around the country.”

Bioenergy

Vietnam struggling to decide how to treat solid waste

14 May 2019

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Vietnam

Some 25.5 million tons of waste are generated annually and five treatment methods are used — burning to generate electricity, turning it into micro-organic fertilizers, burial, gasification, and incineration – officials said at a recent conference held by the Ministry of Environment and Natural Resources.

More than 75 percent is buried, but only 30 percent of that volume is properly buried and benign.

But space for landfills is shrinking and many cities and provinces are gradually opting to burn waste to generate electricity.

Dang Huy Dong, a former Deputy Minister of Planning and Investment, said burning waste for electricity is akin to using coal, a method the world is trying to stop because of its serious health impacts.

“We are almost unable to sort solid waste at source and so burning trash will create dioxin, and only the most advanced technologies can prevent that from happening.”

Dioxin is highly toxic and can cause reproductive and developmental problems, damage the immune system, interfere with hormones, and even cause cancer.

Dong expressed doubts that Vietnam’s current burning methods can guarantee safety.

But Luong Duy Hanh of the environment ministry’s legal office said there is no need for concern on this count.

There are different varieties of plastic, and only polycarbonate, or PC, creates dioxin when burned, but the current technologies used in Vietnam completely take care of that, he said.

Other countries only sort trash at source to serve recycling purposes rather than for solid-waste treatment, he said.

“Our country is still poor and if we want to do exactly what developed nations are doing, it will cost a lot. We can only adapt new methods step by step and try our best not to cause pollution.”

Dong rejected the claim that since Vietnam is still poor burning trash to generate electricity is acceptable, and said scientists and experts’ opinions should be sought.

Vo Tuan Nhan, a deputy environment minister, said he had taken all ideas on board and would continue the ministry’s research to come up with a general set of guidelines for treating solid waste.

“The ministry will send delegations to 25 cities and provinces to study how they are treating their waste before choosing the most suitable methods.

“The objective is to choose methods that are affordable and at the same time ensure environmental safety.”

Renewables

Jaks Resources plans to buy solar power project in Vietnam

14 May 2019

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Vietnam

PETALING JAYA: Jaks Resources Bhd proposes to acquire the Lig-Quang Tri solar power project in Vietnam from LICOGI 13.

The group told Bursa Malaysia that it had entered into a memorandum of understanding (MoU) with LICOGI 13, a joint stock company incorporated in Vietnam for the purchase.

It also allows both parties to enter into joint venture arrangements or sale and purchase transactions for future solar and wind energy projects in Vietnam.

LQT Solar Power Plant, invested by LICOGI 13 will come into operation at the end of June 2019 in the central province of Quang Tri, Vietnam. The plant has a total capacity of 49.5 megawatts and average generation of 67.960 megawatts per year.

The power purchase agreement for the LQT Solar Power Plant was executed on Oct 23, 2018 and this project has a life time of 50 years. Presently the plant is completed and awaiting connection to the national grid.

Jaks said the execution of the MoU is to allow both parties to negotiate the terms of the sale and purchase agreement of the LQT solar power project.

In the event that the sale and purchase agreement is not entered into between both parties on or before the June 30, 2019, the MoU will lapse.

Jaks will have the right within 14 days of signing the MoU to appoint advisors and agents to conduct such review of the assets, liabilities, operations and affairs of the project.

At the midday break, its shares gained 1 sen or 1.4% to 75 sen on 4.19 million shares done.

Renewables

TNB continues to play active role in renewable energy

14 May 2019

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Malaysia

PETALING JAYA: Underscored by Tenaga Nasional Bhd’s (TNB) aspiration to be the Asean leader in renewables, the group is actively diversifying into energy sources that are able to meet the needs of the future in a sustainable, reliable and affordable manner.“We are looking to expand our domestic generation capacity to fuel the nation’s economic trajectory, while continuously building our international generation capacity in selected strategic markets,” TNB said in its Integrated Annual Report 2018.

TNB explained that its priorities for future generation sources were focused on growing its renewable capacity, expansion of capacity into selected international strategic markets with strong growth prospects and improving the performance of the existing generation fleet, with the aim to position TNB as a renewables leader in the Asean region.

The government has also set a target to grow renewables’ proportion of the total generation capacity mix from 2% currently to 20% by 2025.

In January 2018, TNB established TNB Renewables Energy Sdn Bhd (TRe) to spearhead and accelerate its renewable energy (RE) business growth in Malaysia.

“Under TRe, we intensified efforts in progressing our three-pronged RE strategy by capturing growth opportunities in utility-scale RE assets, small-scale RE assets, and expanding our retail self-generation platform.

“We also reviewed our international RE strategy, resulting in a decision to focus on growing our assets in five selected locations, namely, Turkey, India, the United Kingdom, Australia and the Asean region,” TNB said.

To step up its international presence, TNB is currently exploring collaboration opportunities with several experienced partners with established footprints in these key markets.

For the financial year ended Dec 31, 2018, TNB’s total installed RE capacity increased by 70.88MW to a total of 332MW, boosted by its acquisitions in the UK and the commissioning of a 50MW large-scale solar in Sepang.

It acquired an 80% equity interest in two RE companies in the UK, namely, GVO Wind Ltd and Bluemerang Capital Ltd, providing the group with a generation equity of 20.88MW.

While TNB sees conventional assets as being relatively more economical in the short term, it recognises the need to invest in renewables to help address climate change issues, as well as to prepare for gradual depletion of carbon-based fuels.

“TNB’s target is to grow our renewable capacity to 1,700MW – domestically and internationally by 2025,” it said.

GSPARX Sdn Bhd, a fully owned subsidiary of TRe, provides solar PV system for residential customers, through cash and leasing options.

To date, some 1.3MWp worth of RE contracts have been confirmed under GSPARX.

“We partnered with the Malaysian Green Technology Corp with a target to install up to 10,000 charging stations nationwide.

“We also adopted the green energy programme to drive RE utilisation and energy efficiency for the Senai-Desaru Expressway, together with the Malaysian Industry-Government Group for High Technology and concessionaire Senai-Desaru Expressway Bhd,” TNB said.

In addition, TNB is expected to complete the 30MW LSS in Bukit Selambau, Kedah in late 2020.

All these efforts are part of TNB’s plan to become one of the world’s top ten utilities by market capitalisation by 2025.

Electricity/Power Grid

New electricity tariff depends on EC review

14 May 2019

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Malaysia

KUALA LUMPUR: New electricity tariff will depend on the next review by the Energy Commission while coal and gas prices through the imbalance cost pass through (ICPT) mechanism will likely be maintained, says TNB CEO Amir Hamzah.

“We understand the electricity tariff is affected by fuel prices. Ultimately, the movement of the tariff will depend on where the coal and gas prices are. Some trending of coal prices are seen but gas prices are still adjusting towards market price.

“So, there are two opposing forces moving at this point of time and hopefully in the next review, the EC will take both into account and we will see what happens then.

“We believe that we will still maintain the ICPT as we see it as a fair mechanism that can induce investments back into the business,” he said.

Amir said the sustainable ecosystem afforded by the Incentive-Based Regulation (IBR) framework and the Imbalance Cost Pass-Through (ICPT) mechanism implemented for the last four years have resulted in Malaysia having one of the most reliable energy networks in the region, in par with other advanced countries.

Further, the national utilities company noted that preparatory works are already underway to gear the company for the Third Regulatory Period (RP3) (2021-2023) and upon receiving the endorsement from the management team and approval from the Board.

The company expects IBR RP3 proposal to be submitted to the EC by December 2019.

In December last year, the government has given approval for TNB to continue implementing the ICPT mechanism by first half of this year.

However, the average base tariff would remain unchanged for the period from until June 30, 2019 despite the higher fuel and generation cost incurred for the period of July 1 until Dec 31, 2018.

Renewables

Malaysia can generate more electricity if all roofs use solar panels, says Yeo – Nation

14 May 2019

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Malaysia

PUTRAJAYA: Malaysia can generate 1.4 times more electricity if all the roofs in Peninsular Malaysia are fitted with solar panels, compared with the conventional electricity generation of fossil fuel burning.

Energy, Science, Technology, Environment and Climate Change Minister Yeo Bee Yin said there are over 4.12 million buildings with solar rooftop potential in the peninsula.

If all these buildings are fitted with solar photovoltaic (PV) systems, it can generate a whopping 34,194 megawatt (MW) of electricity at any one time, she said.

In comparison, the current total electricity production in Malaysia is an average of 24,000 MW at any one time.

“If we equip our roofs with solar, we can potentially produce more than the total electricity generated in Malaysia,” Yeo said at the Sustainable Energy Development Authority (SEDA) office here on Tuesday (May 14).

Currently, only 2% of Malaysia’s electricity is generated by renewable energy sources, as the nation’s energy generation is still highly dependent on limited fossil fuel resources such as oil, coal or natural gas.

In the race to increase the nation’s renewable energy mix from 2% to 20% by 2030, the Ministry is targeting commercial and industrial buildings to go solar and be early adopters of the revised Net Energy Metering (NEM) scheme.

Yeo said the NEM offers those who opt for solar energy lower tariffs, tax incentives, solar leasing programmes, and reduced electricity bills through the one-on-one offset, where every 1kWh exported to the grid will be offset against 1kWh consumed from the grid.

Yeo said the Ministry has allocated a 2019 NEM quota of 500 MW, with 450 MW allocated for commercial and industrial buildings, and the remaining 50 MW for residential buildings.

She said the revised NEM scheme has seen a positive response as there was an increase in NEM take-up rate this year.

“As of May 2019, a total of 16.6 MW of NEM has been approved in the first four months of 2019, compared with approved capacity of 18.24 MW in 2018,” she said.

Yeo made the comments during the launch of the NEM calculator available on the SEDA website.

With the calculator, SMEs and residents can calculate the potential monthly savings from generating solar energy, the upfront cost needed, the simple payback period, and the environmental impact.

The SEDA website also has a directory of 110 registered solar PV service providers and 27 solar PV investors who will carry out the solar leasing programmes.

Those who wish to purchase solar PV systems can contact PV service providers for a quotation while those who prefer to lease it, or pay only for the electricity generated by the systems through the power purchase agreement, can contact solar PV investors.

Yeo said the government, through the Malaysian Investment Development Authority, is also offering SMEs a green investment tax allowance and income tax exemption for the purchase of solar PV systems.

Others

Electric cars will help cut smog in Thailand

13 May 2019

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Thailand

Increasing air pollution in Thailand caused by hazardous particulate matter known as PM2.5 has led many people to ask where this threat is coming from.

According to several respected scholars and a study by the Pollution Control Department, diesel vehicle fuel exhaust emissions is one of the main causes. (Another is the burning of forest under-growth and agricultural clearing).

PM2.5 is a mixture of liquid droplets and solid particles that can include dust, soot and smoke. It is one of the main pollutants included in the Air Quality Index measure of threats to health. A reading of below 30 is safe; above 150 is considered unhealthy.

A number of proposals have been made for long-term solutions to the problem of pollution caused by vehicle emissions. They include the raising of taxes on vehicles responsible for greater levels of pollution and the promotion of policies to support the development of clean energy vehicles, including electric vehicles as an “alternative” to the internal combustion engine.

Government has made policy moves in this direction in the past, but implementation has been piecemeal. There has been no proper cooperation or coordination among state agencies. Clearly, while air pollution remains a threat to the health and wellbeing of Thais, the status of electric vehicles is still just one “option”.

The Finance Ministry’s Excise Tax Department has introduced excise tax relief on new vehicles based on carbon emissions, but there are still significant weaknesses in the policy. In practice, however, it seems different vehicle technologies are being treated differently. For example, the excise tax structure still favours onetonne pick-up trucks, Thailand’s industrial product champion, responsible for high emissions. In contrast, taxes are imposed on new technology hybrid vehicles separately, increasing in line with their pollution emission levels. If the government really wants to use excise tax to control carbon emissions and pollution, it needs to be technologically neutral. In other words, the tax should increase with emission regardless of the vehicle’s technology.

But even restructuring the current excise tax system for vehicles would not be enough to address the problem. The government should charge higher annual taxes for used cars. This would encourage consumers to steer away from driving old vehicles with high emissions (partly because they become more and more inefficient and therefore more polluting the older they get) towards cars with better technology.

But in reality, annual taxes for used cars decline with the age and value of the vehicle, discouraging consumers from switching to new cars with better technology. The effect is the opposite of what is needed to control carbon emissions and pollution. This can be clearly seen from the fact that the average life expectancy of personal pick-up trucks, more than 90% of which use diesel fuel, has increased from 6.9 years in 2007 to 9.3 years over the past decade.

If the government really wants to promote low-emissions vehicles, in particular electric cars, all policies, including industrial promotion and environmental policies should be pushing in the same direction. Excise tax for new vehicles and annual taxes for used vehicles should be technologically neutral and increase with the emission levels. A successful policy to drive up demand for environmentally friendly vehicles would in turn make the price of clean energy vehicles more competitive. As the virtuous cycle continues, the rise in demand would attract more foreign investment into the clean auto industry into Thailand.

To prepare Thailand’s automotive industry for a cleaner, alternative path, manufacturers and policy makers should engage in several action items. In the early stages of policy adjustment, auto parts manufacturing in Thailand needs to focus more on the needs of the electric vehicle segment, such as batteries and motors. In addition, the government should temporarily waive import tariffs on batteries and motors to make the product price more competitive to the conventional car, and stimulate the overall local market for electric vehicles. Previously, this measure worked very well when the government tried to promote hybrid vehicles, lowering the price in the market and expanding the user base.

Moreover, auto and auto parts manufacturers need to improve their competitiveness, developing materials that reduce the weight of the cars those parts go into. Research by McKinsey, the global consultancy, found that it is likely that vehicles in the future will make more use of aluminium and carbon fibre thanks to trends in environmental and conservation policies. On the infrastructure front, i.e. EV charging stations, policy should proceed on a trial basis to accommodate batteryonly vehicles. The government should seek private sector involvement to reduce risk and minimise any subsidies that might be involved.

If Thailand were to seriously address all these factors, clean energy vehicles would no longer be considered “alternative”. The final result would be cleaner air. And the harzadous dust or PM2.5 would not be the “inevitable” for people as it is now.

Electricity/Power Grid ,
Renewables

Smart grid policy advised for renewable energy progress

13 May 2019

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Thailand

At ADB’s annual seminar, Ms Preeyanart discussed the evolving approaches to renewable energy projects in developing countries.

Regulatory support for a smart grid should be the next government’s top priority for renewable energy policy, as finding funding sources for environmentally friendly projects is becoming easier in Thailand, says B.Grimm Power’s president.

“I do not believe financing is our problem, as everyone wants to invest in renewables now,” Preeyanart Soontornwata, president of the SET-listed private power producer and a subsidiary of Thailand’s oldest industrial conglomerate, B.Grimm Group, told Bangkok Post.

The president was invited by the Asian Development Bank (ADB) to discuss “Renewable Energy Investing in Asia and the Pacific” at lender’s 52nd annual meeting in Fiji last week. In December 2018, the ADB invested 5 billion baht in B.Grimm Power’s maiden five- and seven-year green bonds, the first certified climate bonds to be issued in Thailand.

“The costs for grids and raw materials are also becoming cheaper, but the problem is not everyone can build a solar farm or a wind farm,” Ms Preeyanart said. “They require a concession from the government, and Thailand has already limited these.”

Thailand has the highest solar and wind power output in Asean, thanks to adder and feed-in tariff (FIT) policies that provide incentives for renewable energy projects. In June 2018, the Energy Ministry announced that private buildings and households which were “accepted” by the programme would be able to sell surplus solar power to the state’s utilities. The condition is that the FIT was set at up to 2.44 baht per kilowatt-hour.

In 2013, the rooftop programme was launched with a total quota of 200 megawatts. The goal is to increase the country’s total renewable energy power generation from 10% to 27% by 2037. To support the initiative, the Electricity Generating Authority of Thailand (Egat) in March said it would float 16 solar farms with a combined capacity of more than 2.7 gigawatts at nine of its hydroelectric dam reservoirs by 2037 — what Egat claims will be the world’s largest hybrid power scheme.

“For Thailand and its neighbours, finding financing is not a problem because of the concessions that we win from governments,” Ms Preeyanart said. “In Vietnam, we had to use credit first because we had to construct too fast for the project to be financed, but once there were construction rigs, the banks were already waiting to provide the loans because there we have a concession.”

Ms Preeyanart praised Thai regulators for maintaining a “good balance”, because if the government did not limit incentives for solar there would be an avalanche of subsidies. This was the case in Spain and Germany, she said.

Ms Preeyanart says red tape is an obstacle to developing a smart grid and harnessing renewable energy.

“That happened in Spain, and once the Spanish government pulled the plug on subsidies it could no longer afford, all the private companies collapsed and no one wants to invest there anymore,” she said. “In Germany, the supports were set up too fast, to the point that everyone rushed towards it, and as a result, electricity prices have skyrocketed.”

Ms Preeyanart said that for each megawatt of solar power, conventional energy such as gas, nuclear and coal should be built up to support it because the energy storage system for solar has yet to emerge here due to exorbitant costs.

“As long as this is the situation, moving too fast wouldn’t be good for us and our electricity prices would also become expensive, which is why the government has imposed limits,” she said. “The good news is that we can develop an energy storage system ourselves, but in my opinion, for Thailand, it has to be the smart grid.”

A smart grid is an electric network that uses the Internet of Things to let devices communicate between suppliers and consumers, allowing energy producers to manage demand and protect the distribution network. Experts believe that this would save energy and reduce costs at the same time.

Ms Preeyanart said that while a smart grid could be developed in designated areas, building a system for the whole country is impossible. In these designated areas, there should be mixed energy production including renewables and conventional in combined cycle, such as solar rooftops and wind farms coupled with gas and coal.

“If we have combined-cycle power, energy storage will be easier to build and the government should support it because if there is a smart grid, the number of blowouts will drop because the main grid will have support,” Ms Preeyanart said.

B.Grimm Power is developing a smart grid for Amata City in Chon Buri, while the industrial city was also selected by China and Japan to be the first-ever joint project between the two nations to build a pilot smart city.

Yet obstacles persist.

“We still find it difficult to build a smart grid there with the five power plants that we have,” Ms Preeyanart said. “Almost the entire industrial city is relying on us for electricity of around 750MW that we have, demand is at 800MW, which means that this is already a micro-grid that we can develop into a smart grid, but the regulations do not support us.”

She suggested that consumers should be able to buy power directly from the source, and all the regulators should sit down together to streamline regulations and make it easier to build a smart grid.

“For example, if B.Grimm Power sells 90MW to Egat, Egat will in turn sell the power to the Provincial Electricity Authority, and then the PEA will sell it to the customers, that means that the consumers are not buying it directly from us,” she said. “Because of this situation, once we try to develop a smart grid, there are just too many regulations to be dealt with once we follow both PEA and Egat regulations.”

In an effort to avoid red tape, the company is bidding for a space in the Eastern Economic Corridor from the Royal Thai Navy to build a smart grid. Starting there from scratch would make it easier to develop an energy storage system, Ms Preeyanart said.

“We could become a pioneer in this area,” she said.

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