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ASEAN’s energy transition on the right track

26 March 2019

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ASEAN

Yesterday, the World Economic Forum (WEF) launched the fifth edition of their Energy Transition Index (ETI), ranking 115 economies on how well they are able to balance energy security and access with environmental sustainability and affordability. The report considered both, the current state of the countries’ energy systems as well as their readiness to adapt to future energy needs.

Six ASEAN countries came into focus based on their performance in the ETI: Thailand, Singapore, Malaysia, Indonesia, Vietnam and the Philippines.

In the case of Thailand, the country improved on all three dimensions of the energy triangle which is made up of security and access, environmental stability, and economic development and growth. Thailand also improved on transition readiness.

Despite being a net energy importer, Thailand scored high in the energy access and security dimension due to well-diversified sources of energy. Its scores, however, are challenged by a combination of high wholesale gas prices and energy subsidies as a percentage of its gross domestic product (GDP).

Singapore – with an ETI ranking of 13 – is the highest-ranking country within the ASEAN region. It comes as no surprise that this is driven by high scores in ‘transition readiness’ which the WEF puts down to many years of stable policies, strong institutions, a strong governance framework and transparency along with a culture of innovation and modern infrastructure which enables the energy transition.

Unfortunately, on performance, Singapore scores lower due to the structural challenge of being a net energy importer with high concentration of fossil fuels (particularly gas) which impacts its performance across the energy access and security dimension. Dominance of fossil fuels have also impacted the dimension of environmental sustainability, where Singapore has high carbon dioxide (CO2) emissions on per capita basis and a very small share of renewables.

Malaysia brings home the prize for the highest-ranking country in the emerging and developing Asian region. Its energy access and security scores are also among the top 15 out of the 115 countries analysed in the ETI. This is the result of its high electrification rate, low usage of solid fuels, diversity of its fuel mix and high quality of electricity supply.

Source: WEF Energy Transition Index

However, on the environmental front, both its carbon intensity and per capita carbon emissions are over 20 percent above the global average giving the country a lower score on this dimension. Malaysia also scores high in transition readiness due to strong regulations and political commitments, a culture of innovation and high scores on the human capital front. Yet, its readiness for transition is challenged by the current energy system structure with high energy demand (on per capita bases) and the high share of coal in its electricity fuel mix.

Indonesia is heavily impacted by the presence of energy subsidies. On the environmental front, the country does relatively well with low energy intensity. Its energy access and security dimension, however, is reduced primarily due to relatively high solid fuel use by the population. As for readiness, the country’s key challenges are in coverage of energy efficiency policies, perception of rule of law, investment freedom and high share of coal in the power generation mix.

Vietnam scores low in the environmental sustainability dimension resulting from a high level of air pollutants, high energy intensity and a carbon-intensive energy system. On the energy access and security dimension, it is challenged due to the relatively high percentage of solid fuels used by the population. Vietnam’s energy transition challenges include relatively weaker institutions, a low level of investment freedom, and a low quality of transportation infrastructure.

In the Philippines, the WEF noted that the high prices of electricity there is driven by taxation and a Feed-in tariff structure that was used to incentivise renewables.

The good news is that the high penetration of renewables has balanced out the presence of large coal-based power generation and positively impacted the diversity of power supply in the country. Unfortunately, the country continues to face challenges in the energy access and security dimension due to the low quality of power supply, a relatively low electrification rate and high percentage of solid fuels usage.

On the transition readiness front, the Philippines has made ambitious nationally determined contributions (NDC) pledges despite having a low carbon footprint with 70 percent targeted reduction in CO2 by 2030. However, its readiness score is challenged by negative perceptions around institutions and governance, low scores in access to credit indicators, weak transportation infrastructure and a high share of coal in its power generation fleet.

As fossil fuels deplete and newer technologies emerge that cater to renewable energy sources, energy transition is an inevitability. The future of energy transition is an especially important topic for ASEAN because urbanisation, industrialisation, and rising living standards continue to drive increases in energy demand. ASEAN, though still very much fossil-dependent, sees the importance of transitioning and is making an effort to do so.

Others

Thailand rises three places in WEF energy transition index

26 March 2019

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Thailand

Siri said that this year, Thailand was preparing to push legal amendments and get rid of obstacles to attain a higher WEF rank. Thailand was ranked 54th last year.

The improvement in ranking is a result of the WEF view that Thailand has energy stability without emitting too much greenhouse gas, he said, pointing out that Thailand has earned compliments for more use of renewable energy as the country’s main energy.

Thailand has a plan to increase the use of renewable energy to 35 per cent of total energy used in the next 20 years from the current 14 per cent, Siri said. Besides, the country is moving towards power production from solar rooftops on residential units, the so-called people-sector solar power for the first time.

Meanwhile, Thailand needs more development of energy human resources, particularly the 10,000-watt people-sector solar policy in the next 20 years and the future use of electric vehicles (EVs).

“Such ranking is based on Thailand’s Power Development Plan [PDP]. If PDP 2018 is included, it is believed the ranking would be higher, with its drive for clean energy, particularly people-sector solar,” Siri said.

Siri expressed confidence that the new government would continue the new round of petroleum (concessions) for more petroleum production capacity that can offer lower prices compared to imports.

Given the increase in gas production with cheaper prices, the country has energy stability. The Energy Ministry is preparing a new round of auctions of exploration and production of petroleum in the Gulf of Thailand within this June under production sharing contract (PSC), he said.

Panata Sangsriroujana, deputy governor of Electricity Generating Authority of Thailand (Egat), said the authority is awaiting the current or new Cabinet’s approval of the draft amendment to the Electricity Generating Authority of Thailand Act, which will allow Egat to proceed with fuel procurement. Earlier, Egat played a role in production and transmission system management.

Chaiwat Kovavisarach, chief executive officer of Bangchak Corporation, expressed no concerns about the energy policy as Thailand imports most of is energy whose prices follow global markets and that could affect consumers, while expecting the energy policy to follow the liberal-market mechanism.

Poonpat Leesombatpiboon, chief of the Energy Ministry’s International Energy Cooperation Division, said the higher rank came from the country’s energy stability and people’s access to energy, energy in response to the country’s economic expansion and development, and the energy system’s responsibility for the environment or reduction in greenhouse gas emissions and system initiative on shaping the future of energy.

After this, Thailand will require amendments of rules and regulations that hinder the country’s energy development, and preparation of energy human resources for more modern technologies, he said.

Wuttikorn Stithit, the vice president of PTT, said the company is joining hands to enhance the country’s energy stability through procurement of liquefied natural gas (LNG) and infrastructure development for LNG imports.

PTT is awaiting improvement of the ministry’s gas plan, which will revise the amount of LNG to be procured to match demand, set to rise to 53 per cent in the new PDP, he said.

Besides, an Asean study cooperation will be conducted for LNG terminals in the future and now Thailand, Singapore, Malaysia and Indonesia have already constructed LNG terminals.

Electricity/Power Grid

Price plea as generator costs soar

26 March 2019

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Cambodia

The government has urged vendors of electricity generators to ensure reasonable prices after public complaints flooded social media over soaring costs amidst a shortage of power in the Kingdom.

Government spokesman Phay Siphan said Cambodian people should help each other during a crisis.

Mr Siphan urged vendors to remain honest with the price of the generators, adding that the country was facing an electricity shortage as a result of extremely hot and dry weather as hydropower dams in the country are unable to produce energy.

“Please contribute and keep faithful behaviour toward each other with a culture of solidarity for Cambodian people, especially when it comes to hard times with electricity shortages,” he said. “I hope that in the recent difficult times of electricity shortages, we should understand each other and unite.”

Tann Huy Keang, owner of a generator shop in Russian market, yesterday said she would sell the generators at a similar price for which she bought them.

“I bought them at a high price so I must sell at a slightly higher one to get some income,” she said. “I allow buyers to bargain the price, so I will decide how much I could sell to them.”

Prime Minister Hun Sen last week called on the public and businesspeople to use generators as back-ups as the Electricity Authority of Cambodia could not generate enough electricity to meet needs.

From January to the end of February, power consumption increased to 31 million kWh per day due to a host of new investment projects in the capital.

Chhum Davith, a dental clinic owner, said he bought a 3.5-kilowatt electricity generator for $430 last week due to need for power in his business, noting that it was sold for just $200 last month.

“The price has doubled and I had no choice but to buy it to run my business,” he said. “Using a generator is not as convenient as the state electricity. So I hope the government would figure out way to solve the current problem.”

Last week, EDC said it had cut the supply of electricity in the Kingdom during the day to ensure supply at night.

Oil & Gas

Energy minister pledges Round 21 licences by mid-year

26 March 2019

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Thailand

Energy Minister Siri Jirapongphan (left) awards contracts to Mr Phongsthorn Thavisin for PTTEP’s E&P bids for the Erawan and Bongkot fields.

Round 21 of new licence issuance for offshore exploration and production (E&P) of petroleum resources is expected to open in June.

This new petroleum round will open for offshore resources only in the Gulf of Thailand, following the signing of contracts for the offshore Erawan and Bongkot gas fields yesterday, said Energy Minister Siri Jirapongphan.

Onshore locations, mainly covering northern, northeastern and central provinces have yet to be concluded due to legal obstacles for many public lands that have petroleum underground.

The Mineral Fuels Department was told to prepare a Round 21 plan to invite interested investors, said Mr Siri.

Round 21 has been delayed since October 2014 due to political instability and an economic slowdown.

Many advocates called for a delay and revision of the country’s petroleum laws from an E&P concession to a production-sharing contract.

In June 2017, two revised laws — the Petroleum Act and Petroleum Income Tax Act — were enacted. The government then opened bidding for the Erawan and Bongkot gas fields in 2018.

He said tentative conditions for Round 21 will be similar to the latest Erawan and Bongkot bids. More importantly, the round will include production-sharing contracts and 25% ownership for Thai state enterprises.

This move is also set to expand oil and gas reserves in the country as there have been no new E&P activities for over a decade.

There are many E&P offshore petroleum operators such as PTT Exploration and Production Plc (PTTEP), Chevron Thailand Exploration and Production Limited and Mubadala Petroleum among others.

In a related development, the Mineral Fuels Department on Monday awarded the production-sharing contract for Erawan gas field to PTTEP and MP G2 Thailand.

For the Erawan (G1/61), PTTEP has 60% ownership, while MP G2, Mubadala Petroleum’s subsidiary, owns the remainder.

The department awarded the contract of Bongkot (G2/61) for PTTEP, the sole bidder for this gas field.

Both offshore Erawan and Bongkot gas fields each have 10-year contracts, selling to the state at 116 baht per million British thermal unit, compared with almost 200 baht for the latest contracts.

“After two existing concessions expire in 2022 and 2023, the new prices will positively impact gas users for 10 years, with a combined net worth of 550 billion baht,” said Mr Siri.

The gas cost for power generation will be cut by 200 billion baht, reducing the fuel tariff by 15-20 satang per kilowatt-hour.

Many gas products from the Erawan and Bongkot fields will decrease in price for 10 years such as cooking gas (150 billion baht), natural gas (100 billion baht) and petrochemical (100 billion baht).

Phongsthorn Thavisin, PTTEP’s president and chief executive, said PTTEP is ready to begin the takeover transition for Erawan field from US-based Chevron.

PTTEP runs the Bongkot concession.

“PTTEP will set up a team to smooth synchronisation during 2021-22 as the Erawan concession approaches expiry in order to avoid gas production interruption,” said Mr Phongsthorn.

PTTEP allocated a massive budget of more than 1 trillion baht for two new 10-year contracts — 700 billion baht for Erawan and 400 billion for Bongkot.

Mr Phongsthorn said the gas sales price PTTEP offered the state has been estimated at an appropriate level (116 baht) and will allow PTTEP to gain margins from two gas fields.

The Erawan and Bongkot fields can trim production costs due to greater gas production volume in the future.

PTTEP forecasts the production cost of two fields will average US$30 per barrel of oil equivalent.

PTTEP plans to invite new strategic partners for a joint venture in two gas blocks in the future, said Mr Phongsthorn.

Electricity/Power Grid

LGUs press electric coops to pay real property tax

25 March 2019

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Philippines

SORSOGON CITY — Electric cooperatives (ECs) nationwide are now being pressed by local government units for payment of their real property taxes (RPT) following the issuance of a ruling by the Supreme Court, which declared sub-stations and other coop assets as taxable.

In an interview Monday, Edwin Garcia, general manager of Sorsogon I Electric Cooperative (SORECO I) based in Irosin, Sorsogon, said LGUs had already levied them and were demanding payment. The power cooperative has a PHP30-million outstanding arrears in RPT, he noted.

According to him, this is the reason electric cooperatives had filed a petition with the energy Regulatory Commission (ERC), through the Philippine Rural Electric Cooperatives Association (Philreca), last October 2018 for an authority to pass on RPT payments to their member-consumers.

“It’s a big burden on the part of ECs since we are not allowed to generate profit, we are non-profit that’s why we don’t have surplus funds for tax payments, so we are appealing to the ERC to grant the petition,” he added.

However, the ERC suspended the initial hearing on the petition scheduled last March 14 for the establishment of jurisdiction.

This, after advocacy groups held a rally on the hearing day in front of the ERC main office to express their opposition to the petition filed in behalf of its 121 member-distribution utilities nationwide.

The ERC had also scheduled on that day the public consultation for Luzon stakeholders. Public consultation for Mindanao was set on March 22 and April 2 for the Visayas stakeholders.

Philreca wanted ERC to adopt the rules formulated by the petitioner for the “pass-through of real property tax” as it argued that ECs have no surplus funds to which they could charge the RPT payments.

The petitioner stressed that adopting the rules is “valid and timely considering the fact that local government units (LGUs) had assessed and collected RPT payments from ECs”.

It pointed out that the Supreme Court had already ruled that ECs are not exempted from paying RPTs as enunciated in the case of “Manila Electric Company vs. The City Assessor and the City Treasurer of Lucena City”.

The SC ruling stated that transformers, electric posts, transmission lines, insulators and electric meters are not exempted from RPT under the Local Government Code.

However, organizations behind the Malinis at Murang Kuryente (MMK) Campaign rallied in front of the ERC office to urge the Commission to reject the proposal of Philreca.

“All property owners pay amilyar (real property taxes) on what they own. Why do we also have to pay for what the coops own?” MMK convenor Gerry Arances pointed out.

“Already, electric consumers are bearing the brunt of many ECs’ violation of system loss caps, mismanagement of financial liabilities, and the costly Power Supply Agreements (PSAs) with dirty energy generation companies. Meanwhile, many ECs are guilty of long and frequent interruptions in their respective franchises and failure to electrify areas within them,” Arances stressed.

The group had filed a motion on behalf of its members and consumers nationwide for the ERC to dismiss the petition.

“In previous years, consumers have always been one with ECs to be recognized as tax-exempt just like any other cooperative, since they are supposed to be people’s enterprises owned by the consumers they serve,” said Dr. Clint Pacana, convenor of the Mindanao Coalition of Power Consumers (MCPC) and president of the Institute for Power Sector Economics (IPSE).

In a press release, Pacana explained that in filing the petition, Philreca abandoned consumer groups that were calling for the exemption of cooperatives from paying for real property tax.

“While the consumers fight it out for their tax exemption, ECs want the easy way of passing on the burden to their supposed owners — the unfortunate consumers. We hope there is no collusion among local officials, ECs, and other distribution utilities for this,” Pacana added.

Electricity/Power Grid

Myanmar to build LNG power stations to meet energy requirements in 2022

25 March 2019

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Myanmar

Myanmar is planning to start three liquefied natural gas (LNG) power projects and a combined cycle power project to meet energy requirements in 2022, said Union Minister Win Khaing of Electricity and Energy.

“The ministry provided electricity to 30 per cent of households recent years and the supply will be up to 50 per cent at the end of 2019. It planned to provide electricity to all by 2030. Annual electricity usage is increased from 15 to 19 per cent year by year and expected to rise till 2030. We are planning to start the projects to meet the energy requirements,” said the union minister.

At present, the ministry is implementing hydropower projects, which generally has less impact on environment, and some are still under construction. Some are still conducting surveys and total electric production is 1,355 megawatts.

Moreover, the ministry is developing a 40-megawatt solar power project in Minbu and electricity generated from the power plant will be connected to national grid soon.

More than 50 per cent of family households in Myanmar will gain access to national grid in coming November, said the minister in the opening ceremony of 225-megawatt natural gas fired power plant in Myingyan held on March 16.

“Myanmar has over ten million households and over four million (about 43 per cent) of them had gained access to power grid in November 2018. The ministry used funds from the union government, regions and states government funds and overseas loans to meet the energy requirement,” said the minister.

The maximum usage of electricity is 3,483 megawatts in Myanmar. It is generating 2,400 megawatts from 28 hydropower plants and 1,083 megawatts from 16 thermal energy power plants including natural gas fired power plants, he said.

Energy Efficiency

HQ of Singapore construction firm being built with sustainable material from local waste

25 March 2019

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Singapore

SINGAPORE – The first step in developing sustainable construction material using local waste was taken today (Mar 25), with the signing of an agreement that will include its use in the building of a new headquarters of a local construction company.

The agreement between JTC Corporation and Samwoh Corporation will see recycled materials processed from construction and industrial waste, like sedimentary rocks excavated from Jurong Rock Caverns, being used in erecting the four-storey building near Kranji Reservoir.

Senior Minister of State for Trade and Industry Chee Hong Tat, who witnessed the signing of the memorandum of understanding (MOU) between JTC and Samwoh, told The Straits Times he is confident Singapore can play a key role in sustainable technology.

The Government will continue to provide opportunities for companies to test-bed new concepts, he said, adding that such eco-friendly projects need to be commercially sustainable as well.

“With the right methods, using recycled materials and adopting eco-friendly measures need not incur higher costs. Samwoh’s commitment to sustainable construction in its very own building is a great example that it can be done,” he added.

Samwoh’s current headquarters, the Samwoh Eco-Green Building, is a testament to sustainability as it is the first building in Southeast Asia that is entirely constructed with recycled concrete aggregates, said its spokesman.

The new HQ, to be called Samwoh Smart Hub, is slated to be completed by 2020.

It will adopt state-of-the-art technologies to bring down its energy consumption. Also, about 30 per cent of its area will be dedicated to greenery that will blend in with Singapore’s 150 km park connector outside its compound and add to the plant life surrounding the reservoir.

It will be the first positive energy industrial building that will produce 20 to 30 per cent more energy than it uses, said Samwoh. The excess energy will be used in an upcoming asphalt plant to be built by the company, a market leader in the production of the sticky, black and viscuous material commonly used in building roads.

The MOU will also allow JTC and Samwoh to explore and collaborate on research and development (R&D) in such areas as digital technologies and automated solutions to improve productivity and maintenance.

As well, they will share resources such as equipment, laboratories and manpower to help defray the high costs of R&D.

To improve productivity, they will work towards developing smart machines and equipment to build higher quality and more reliable roads at lower cost.

SamWoh also noted in a statement that the sedentary rocks being used for the building of its smart hub are prevalent in the geological formation of Singapore and a common byproduct from underground developments.

The collaboration will, among other things, increase the applications and commercial value of these rocks, it added.

Oil & Gas

Enough petroleum supply to meet domestic demand: Ministry

25 March 2019

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Vietnam

HÀ NỘI — The Ministry of Industry and Trade has said domestic petroleum supply is able to meet local consumption demand.

According to a press release issued on March 26, large petroleum trading companies and some departments of industry and trade have reported that companies have provided enough supply for the local market.

Companies have also committed to ensuring petroleum supply for domestic production, business and other consumption activities via their retail system.

In addition, traders must monitor changes to the petroleum supply, the ministry said. In case they have difficulty meeting domestic petroleum demand, they must report the issues to the ministry to find solutions.

The companies said that if the domestic supply could not meet the local demand, they will find reasonable imports to ensure enough supply for the market.

To ensure strict implementation of regulations on petroleum business, the ministry has also asked the General Department of Market Surveillance to strengthen inspection and supervision of petrol and oil trading companies and their retail system. The ministry will strictly handle traders who violate regulations. — VNS

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