Behind the developing and power-hungry façade, lies a vulnerable region - unapologetic in its consumption of coal to cope with rising electricity demand, but acutely aware that it needs to actively engage in energy market reforms, protect itself from prolonged blackouts, go on a diesel subsidy detox, and improve its dismal electrification rate of 75%.
The rapid rise in electricity demand in South East Asia is mainly linked to the region’s swelling economy and population growth. Aside from Singapore, the rest of South East Asia is characterised by a young workforce, gradually gaining middle-class status, while the industrial sector is increasingly defined by more energy-intensive manufacturing activities at the expense of agriculture. Figure 1 highlights the anticipated annual growth in Gross Domestic Product (GDP) for some of the major ASEAN (Association of South East Asian Nations) members.
Figure 1: Forecast annual GDP growth of major ASEAN countries (%)
The fear is real – under a business-as-usual scenario, electricity demand will continue to outpace supply leading out to 2020. This is where distributed power generation can help– and already has a modest track record. Throughout South East Asia and Australia, we’ve seen 5 GWe / year of reciprocating engines being installed for stationary power between 2011-2014 alone [Figure 2]. This includes engines running on diesel, dual-fuel, and gaseous fuels.
This is mainly due to high levels of investment in energy infrastructure projects [predominantly government undertakings, but also via independent power producers (IPP)]. For example, between 2011 and 2014, Wärtsilä won power plant contracts in Indonesia with the following installed capacities: 200 MWe (duel fuel); 155 MWe (natural gas); 113 MWe (dual fuel); 110 MWe (natural gas); and 184 MWe (natural gas).
The ratio between diesel, dual-fuel, and gaseous fuel engines – gas engines to gradually increase its share at the expense of diesel engines
As of 2014, power plants near Liquefied Natural Gas (LNG) terminals and industrial sites along the gas network account for the largest market for natural gas engine deployment in South East Asia, though there have been a handful of tri-generation projects within the commercial sector as well. Where access to gas supply is feasible but limited, typically customers opt for dual-fuel engines. In remote areas, the vast majority of end-users choose small diesel engines (<2 MWe size band) to provide uninterrupted power supply in the event of grid failure.
Going forward, the proposed expansion of gas pipelines, LNG plant constructions, and deployment of floating storage and regasification units (FSRU) will likely facilitate an increase in natural gas engine sales. These FSRUs, in particular, are seen as a quicker and cheaper way to enhance gas security and flexibility compared to costly onshore terminals, and also provide gas storage for times of peak demand.
Beyond national developments, there’s also the Trans ASEAN Gas Pipeline (TAGPS), which is designed to create a regionally integrated gas market by interconnecting existing and planned gas pipelines of ASEAN members. It is due to be completed in 2020.
We anticipate a much faster rate of fuel-switching to natural gas in the coming years, especially with diesel subsidies gradually being cut across South East Asia. Dual-fuel engines are likely to continue playing a key role as well during this transition from liquid fuels to gas.
Figure 2: Annual installed capacity (MWe) of reciprocating engines in South East Asia and Pacific region based on engine size bands
Delta-ee’s outlook for gas spark ignition engine sales – positive growth leading out to 2020
According to Delta-ee research, there are growing opportunities in both natural gas and biogas applications (palm oil and agro-industrial sectors are key applications) in South East Asia, with the market likely to be ~600-700 MWe pa. by 2020. Some of the key characteristics of the major markets are summarised below:
Indonesia : The largest gas engine market today in the region, with annual installed capacities of ~300 MWe pa. The Government of Indonesia has set the goal of developing 35GWe of additional generating capacity by 2019 to sustain the forecast rise in electricity demand (assuming 5-6% economic growth pa.). In preparation for this, PLN (the state-owned electricity distributor and supplier) is increasingly purchasing power from IPPs and renting / developing power plant projects. PLN’s pipeline involves a range of energy sources, of which ~1 GWe has been tentatively allocated to gas-fired engine projects between 2015 to 2020.
Myanmar : Despite having large gas reserves and over the last decade, its production has increased substantially – Myanmar’s infrastructure has remained underdeveloped. However, the uplifting of sanctions and increased Foreign Direct Investment (FDI) have gradually helped make Myanmar an attractive gas engine market as the country continues its pursuit of reliable decentralised power.
Malaysia, Thailand, Singapore : Natural gas-based opportunities are primarily in industrial sites - e.g. Gas Malaysia and Tokyo Gas are working together on industrial CHP projects in Malaysia. Large biogas opportunities are also present (in Malaysia and Thailand), supported by strong renewable policies and incentives, and significant sources of fuel (palm oil estates, municipal waste sites, etc.). Trigeneration opportunities in commercial buildings in Singapore are also increasingly present.
Dina Darshini is a market analyst at Delta Energy & Environment, a consultancy specialising in global heat and distributed energy markets. To find out more about Delta-ee’s ongoing Distributed Power research, please contact Dina at email@example.com