THE INADEQUACY of transmission and distribution (T&D) infrastructure and the topographical challenges in isolated islands such as those in Indonesia and the Philippines have created strong demand for distributed power generation (DPG) in Southeast Asia.
Myanmar, marked by low electrification rates of 26 per cent and high transmission-line losses of 25 per cent, will also have significant use for DPG, especially to provide electricity to smaller load centres, according to the research by Frost & Sullivan.
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According to the new analysis, the overall installed capacity of the DPG market was estimated at 20,450 megawatts last year and is forecast to reach 34,747MW by 2020.
The key types of power plants analysed are those fuelled by biomass or waste, solar photovoltaic (PV) plants, those based on internal combustion engines (fuelled by diesel, heavy fuel oil or HFO, gas, or combinations), and temporary rental power plants.
“Indonesia, Myanmar and the Philippines have been facing severe rolling blackouts due to the gap in supply, their geography, and weak power-sector infrastructure,” said Frost & Sullivan energy and environment research analyst Adwaith Visveswaran.
“Additionally, prolonged delays in completing base-load centralised power-generation plants in these countries create vast opportunities for diverse DPG solutions that can be quickly deployed to meet soaring electricity demand.”
Southeast Asia has an annual global horizontal irradiance (GHI) ranging from 1,200 kilowatt-hours per square metre to 1,800kwh/sqm, making it ideal for developing solar power plants.
As well, more than 60 per cent of the land in Thailand, Myanmar and Vietnam is suitable for large-scale solar farms, with substantial irradiance levels between 1,200kwh/sqm and 2,000kwh/sqm per year. This natural advantage has given a major fillip to the DPG market in Southeast Asia.
Though the opportunities are many, the prohibitive cost of batteries for solar PV panels and the inherent risks in fuel-supply contracts affect the returns on investment for project developers.
In any DPG project, except those based on solar PV, 40-60 per cent of the cost is earmarked for obtaining fuel. In some cases, project developers have to import fuel, and the returns from tariffs do not justify this expenditure. The lack of favourable policies and regulations is another hurdle to the rapid adoption of DPG.
Despite these issues, DPG is still a more viable option than conventional power solutions. A centralised power plant takes five to 10 years to become fully operational because of the obstacles created by environmental laws, protracted land-acquisition processes and overall construction delays.
During this period, power producers will look to meet the demand for power by setting up temporary rental power plants.
“Across Southeast Asia, gas-fired DPG solutions are likely to find greater uptake than diesel/HFO-fired DPG solutions due to their environment benefits, operational flexibility and shorter implementation time,” Visveswaran said.
“DPG solutions will also become less expensive once developers ensure the security of fuel supply through long-term partnerships with suppliers and the feedstock community.”
Overall, strong policy support and a change in utilities’ business models will go a long way in unlocking the true potential of the DPG market in Southeast Asia, the researchers concluded.