Boosting vitality effectivity could be the hidden key to fast-tracking Asia’s vitality transition. Whereas it could seem to be a no brainer, not sufficient efforts go in the direction of vitality effectivity throughout the area, which is squandering near- and long-term emission discount alternatives, says Karna Mohan, Siemens Vitality’s vice chairman, Finance, Asia Pacific.
Typically missed, vitality effectivity and grid modernisation provide an answer the place nationwide grids can concurrently optimise their energy utilization, scale back emissions and improve nationwide vitality safety.
Transitioning from a fossil fuels-based grid to 1 working on renewable vitality brings its personal challenges, from making certain constant provide and a grid infrastructure able to dealing with the calls for of a brand new energy combine, to balancing provide and demand, and an absence of funding.
For instance, general vitality demand in Asia has grown as a result of financial improvement and intense urbanisation. At current, fossil fuels dominate Asia’s major vitality provide, and the continent accounts for 80 per cent of the world’s coal energy consumption.
The World Financial Discussion board (WEF) issued a report suggesting that the worldwide vitality transition had slowed as a result of components equivalent to financial volatility, geopolitical tensions and modifications in expertise, whereas the Worldwide Renewable Vitality Company (Irena) famous that renewables continued to extend their international share in 2022, rising by 7.2 per cent over 2021.
Nevertheless, funding should considerably improve for areas like Asia-Pacific and Southeast Asia to hit their vitality transition and web zero emissions objectives.
Situation analyses outlined within the World Vitality Outlook 2024 report by the Worldwide Vitality Company recommend that developments in vitality effectivity, electrification and renewables might mood future development in vitality demand, however are contingent upon correctly enforced requirements and insurance policies.
Within the meantime, there may be different lower-hanging fruit that nations on their vitality transition journey might go for to enhance their present vitality output and assist them additional alongside this journey.
Round US$644 billion shall be spent on new renewable capability in 2024, in response to forecasts by unbiased vitality analysis agency Rystad Vitality. Nevertheless, Rystad additionally identified that outdated and insufficient energy grids might hinder this progress.
Karna Mohan, Siemens Vitality’s Vice President Finance for Asia Pacific. Picture: Siemens Vitality
If the planet goals to restrict international warming to 1.5 levels Celsius above pre-industrial ranges below the Paris Settlement, the world will want about US$3.1 trillion of grid infrastructure investments earlier than 2030.
In the meantime, international grid infrastructure is projected to double by 2050 to satisfy rising energy demand as a result of financial development, electrified transportation and industrial use, in response to unbiased threat administration consultancy DNV.
At present, Siemens Vitality is engaged on a number of tasks that help the area’s vitality transition, together with grid modernisation, vitality effectivity, and renewable integration in Singapore, Malaysia, Japan, and Australia.
On this interview, Karna explains to Eco-Enterprise why vitality effectivity and grid enhancements signify a “hidden” vitality supply and should accompany the enlargement of renewables in a rustic’s vitality combine.
Asia stays the planet’s largest emitter and contributes greater than half of world carbon emissions every year. From the attitude of an vitality expertise firm, the place ought to the area focus within the near- and long-term relating to decarbonisation? What actions will result in essentially the most tangible emissions reductions?
With rising populations and economies largely throughout Asia, measures are already being taken for vitality transition and decarbonisation, and vitality effectivity shall be key.
The Worldwide Vitality Company (IEA) as soon as coined vitality effectivity as a “hidden gasoline” as it’s a nice lever in vitality transition and decarbonisation.
Boosting effectivity requires a considerably decrease funding however it has a sooner turnaround – one will get essentially the most out of their present infrastructure or as they undertake renewable applied sciences.
[Energy efficiency] can be low-hanging fruit. For instance, we labored with Pacific Mild Energy (PLP) in Singapore on a complicated turbine effectivity package deal. We have been in a position to make PLP’s plant essentially the most environment friendly energy plant in Singapore with an effectivity increased than 60 per cent – the one plant in Singapore to achieve this proportion.
This interprets to eradicating 60,000 tonnes of carbon emissions yearly. Think about some 9,300 automobiles taken off Singapore’s roads every year simply by bettering effectivity.
Lever quantity two is investing in renewables and rising its share throughout the vitality combine. This additionally is determined by the nation, however it may be photo voltaic, wind or a combination.
The third lever is investing within the grid infrastructure itself.
Investing in renewables and grid infrastructure should go collectively because the grid must be dependable and steady sufficient to deal with the intermittency that comes with renewables, and the vitality combine.
Traditionally, renewables have been in a position to work along with fossil fuels, so the grid should deal with this distinction in vitality combine and be dependable and steady, which would require funding.
The Asean Energy Grid (APG) has lengthy been touted as a key answer to bettering the area’s entry to safe and reasonably priced vitality. How do you see those self same applied sciences enhancing grid effectivity inside Asia Pacific, and what long run challenges have to be overcome?
Roughly US$3.3 trillion is forecast to be invested over the following 10 years in Asia Pacific’s energy era. Forty-nine per cent of this is able to come from wind and solar energy, and one other 12 per cent will go to storage.
As vitality consumption goes up and the vitality combine modifications, funding within the grid and in renewable vitality shall be important. Higher collaboration between authorities and personal sector is required to incentivise the transition in the direction of clear vitality; technological developments and their availability should even be mirrored in laws that help and advance their adoption.
It is because nationwide and even subnational governments have completely different guidelines and laws. If you transfer to a regional energy grid, it’s necessary that laws are harmonised throughout the completely different international locations, and that everybody can help this funding right into a regional energy grid.
Take excessive voltage direct present (HVDC) for instance – these extremely environment friendly, long-distance vitality transmission programs that may carry energy from each on- and offshore grids can be found now.
In Germany, we labored with our companions on a undertaking within the North Sea, the place we constructed seven grid connections supplying 5.6 gigawatts (GW) of energy, offering electrical energy to seven million households. That is an instance of the enormity of the undertaking that must be labored out.
In Asean, you’ve gotten a number of international locations with completely different laws, ranges of expertise and grids, and at completely different phases of their vitality transition. For this reason Asean member international locations should come collectively for a regional grid to work.
On the similar time, what key attributes does Asia have that may allow decarbonisation, as long as companies and people take motion?
A lot of Asia is blessed with renewable vitality sources that may be harnessed to drive decarbonisation. Should you have a look at many Asia-Pacific international locations, there’s photo voltaic, wind, geothermal, and hydro in abundance. All these are nice levers if you wish to drive renewable vitality as the important thing ingredient is already there.
Vitality effectivity will develop into extra necessary then. We additionally labored with Sumitomo Chemical compounds in Japan to assemble a excessive effectivity fuel turbine energy generator at their Chiba plant. Our purpose was to scale back the carbon dioxide (CO2) emissions for the plant by 20 per cent, which interprets roughly to 240,000 tonnes of carbon emission yearly. Once more, that’s a large carbon footprint discount you possibly can obtain with vitality effectivity.
Then there may be funding – which the entire world is competing for – as a result of it is going to be a multi-trillion greenback effort for the entire planet to transition to scrub vitality.
On that observe, Siemens Vitality helps numerous pilot tasks in Asia, equivalent to inexperienced hydrogen vegetation in China and Japan and grid initiatives in Southeast Asia. Why are sustainable pilot tasks key to decarbonisation throughout the area and globally?
Inexperienced hydrogen pilot tasks can draw better confidence from traders and different stakeholders in the event that they display their viability. Proper now, we’re collaborating with the Nationwide College of Singapore on a authorities grant to look right into a low-carbon vitality undertaking utilising ammonia. One other instance is Hydrogen Park South Australia, the place we’re supplying 700 clients with an as much as 5 per cent (by quantity) renewable fuel mix, and was then expanded in March 2023 to produce an extra 3,000 clients in Adelaide’s south within the suburbs of Mitchell Park, Clovelly Park and elements of Marion. This contains households, companies and faculties. In March 2024, the renewable fuel mix was elevated from as much as 5 per cent to as much as 10 per cent (by quantity).
These initiatives present us with useful information to refine the expertise. After refinement, we check them on a pilot undertaking, then scale-up for wider deployment. Pilot tasks aren’t only a nice testing floor, they will result in strategic partnerships, the sharing of greatest practices and produce numerous stakeholders collectively.
Then it comes all the way down to the industrial points – our pilot expertise and calculating the speed of return if it was commercialised, and the worth we’d be capable of generate for our stakeholders and shareholders
We make investments about US$1 billion a 12 months in analysis and improvement (R&D) on many tasks. Some succeed, and a few don’t. Whereas that is to be anticipated, R&D wants funding nonetheless. It’s not only for the corporate – it’s additionally our contribution to the entire vitality transition effort. We proceed to develop extra energy-efficient, cleaner options our clients and companions can undertake.
Malaysia’s Deputy Prime Minister Fadillah Yusof, who additionally heads the Vitality Transition and Water Transformation Ministry, introduced plans to halve the nation’s coal vegetation by 2035 and an earlier phase-out of all coal vegetation by 2044. Given that the majority of Malaysia’s energy comes from fossil fuels, how do you see Siemens Vitality’s good grid and digitalisation applied sciences serving to the nation to achieve its vitality targets, particularly interim ones?
Options now exist that may combine massive quantities of renewable vitality. Intermittency, reliability and stability, nevertheless, will stay as challenges.
For instance, in South Australia, we have now a Siemens Vitality flywheel at a substation for Electranet, their energy supplier, which has a reasonably good portion of renewables of their energy combine. At instances, this exceeds 50 per cent.
By stabilising the grid, you possibly can proceed the enlargement of renewable vitality tasks and facilitate the transfer additional away from fossil fuels. When individuals have a look at vitality transition, they have a tendency to give attention to investments in renewables immediately. However quite a bit could be completed with present expertise by means of digitalisation and rising effectivity, which is commonly missed.
Digitalisation applied sciences are additionally very important in serving to Malaysia transition to a extra sustainable vitality future, particularly because it seeks to scale back reliance on fossil fuels. By leveraging information analytics, utilities can establish inefficiencies and optimise operations, that means lowered prices and higher service. Superior modeling instruments additionally assist policymakers consider vitality methods and guarantee they align with nationwide targets.
Digital options additionally assist combine renewable vitality sources into the grid and guarantee a steady provide. These assist decarbonisation efforts by optimising vitality use and decreasing emissions, from simulations to foretell and mitigate potential points and making them them extra sturdy and versatile to deal with the elevated load from renewable sources.
Cybersecurity can be a precedence for utilities, and Siemens Vitality has a cybersecurity operations middle in Cyberjaya to offer sturdy options and operational expertise (OT) companies to clients throughout the Asia Pacific.
As vice chairman of finance, would you say there may be elevated investor sentiment for local weather applied sciences within the area, or do earnings nonetheless take priority?
Should you have a look at Southeast and East Asia, all of them have formidable decarbonisation targets. Southeast Asia goals to be carbon impartial by 2050. Japan and South Korea have already written carbon neutrality into regulation. These two international locations are additionally creating insurance policies and roadmaps to boost their funding into clear vitality. International locations like Vietnam are additionally more and more trending in the direction of renewable vitality.
What’s missing is funding. As we speak, Southeast Asia’s “spend”, or contribution to scrub vitality funding is simply two per cent of the worldwide share. The lion’s share comes from the USA and Europe.
To present some context, if we’re to maneuver in the direction of assembly a few of these targets, the funding would wish to rise from US$72 billion to over US$130 billion, which is a major funding improve wanted for Southeast Asia.
So we clearly see elevated sentiment throughout the area and not simply in Malaysia. Traders nonetheless search earnings, however as we transfer alongside in decarbonisation and our vitality transition journeys, gamers will look to stability their long-term profitability along with their dedication in the direction of sustainability. However each have to go hand in hand – it can’t be one or the opposite.
