The energy transition of Asia Pacific
As Asia Pacific’s power demands and potential for energy production continue to grow, we discuss the region’s energy transition with Vestas’s regional President and CEO, Clive Turton
Asia Pacific represents one of the most diverse markets on practically every level, and its energy sector is no different. With the region set to become a technological powerhouse, the sleeping giants of its developing economies are increasingly positioned to capitalise on the region’s own growing demands for energy and the world’s imperative to convert to renewable energy sources.
We caught up with Clive Turton, President and CEO of Asia Pacific at renewable energy leader Vestas, to discuss the intricacies of the region’s shift to renewables, the firm’s exciting work in Vietnam and how it relates to the wider region’s prospects, and the cutting edge tech and strategies that are making it possible.
Tell us about yourself and your role as CEO of Asia Pacific at Vestas
I grew up in Australia and have been living overseas for more than 20 years, living and working in the US and Europe before I made my home in Singapore and the Asian region. Having begun my career as a corporate lawyer in Sydney, I transitioned across to banking where I ran the Energy and Infrastructure Group for ING Bank in Hong Kong and, since then, have managed a number of energy businesses in the region before joining Vestas as Asia Pacific CEO in early 2017.
I feel extremely lucky to be a regional leader for the world’s largest renewable energy company. We are at an immensely exciting time in the history of energy production and to be part of a world-changing energy company in an industry that changes, grows and adapts on a daily basis is very exciting. I am also very lucky to be supported by a fantastic team of smart, driven people who share my passion for the renewable industry and for building a clean, sustainable energy industry in Asia. As the CEO of Vestas, I get to see close up the birth of new clean energy projects across the region – from Australia one day to Mongolia the next, Japan, Korea, Vietnam, India and so on. We are in construction, operating and developing renewable energy projects across 15 countries, and the growth in activity level for our business over the last few years has been amazing.
I am extremely passionate about the region, and even more so about the regional prospects for the renewable energy industry. Renewables are abundant, clean, and increasingly cost effective, and it is clear they will play a vital role in the region meeting its fast-growing demand for energy.
Vestas has always been a leading player in the region and we’re now uniquely positioned to capitalise on this growth and further expand our leadership as a renewable solutions innovator.
How does Asia Pacific differ from other regions where Vestas operates?
Asia Pacific is a high growth market; the most important market for growth in the global energy market. By 2040, the power market here will be larger than the rest of the world’s combined. As the economics of renewables improve, wind and solar are increasingly competing with fossil fuels as a clean power source to replace coal in the region.
However, it is also a highly complex and diverse market. There are 11 time zones and more than 20 languages across the 15 markets in which we operate here. We also serve a diverse customer base, from mature markets like Australia to emerging markets like Vietnam and Thailand, and then there is the enormous potential of India. Our customers range from utilities to independent power producers and financial institutions, with a variety of experience in the wind energy space.
Due to this uniqueness, we need to set up a very fast-paced and agile organisation to tailor our solutions to customer needs.
What factors are driving the rate of growth of Vietnamese power consumption over other Southeast Asian countries?
Southeast Asia is primed to become the engine of global economic growth. The region’s electricity consumption has grown by nearly 6% annually since 2000, double the world’s average.
With a growing population of 96.7 million, Vietnam is at the forefront of power demand in the region. Its electricity consumption has increased by 13% annually since 2000. Electricity peak demand is growing at 11% annually as investments in the country continue to accelerate. Industries are adjusting their supply chain to be less reliant on neighbouring China, and are attracted by lower labour costs in Vietnam. Vestas is leading the pack in developing new wind projects in Vietnam – we closed four of the five deals last year in this market and we are now deep into execution of new projects. Vietnam has a feed in tariff and a government that is supportive of renewable energy. There is considerable interest in this market from investors the world over and it has the opportunity to be a regional leader in the renewable energy industry.
Compared with other renewable energy sources, why is wind the best option for Vietnam’s energy transition?
Vietnam has some of the strongest wind resources in the Southeast Asian region. Endowed with more than 3,000km of coastline, Vietnam has 24GW of estimated technical potential for onshore wind. Average wind speeds in Vietnam are 7.2m/s at 100 metres in height in the top 10% of windy areas.
In Vietnam, costs for wind and solar dropped below those of coal in 2017, meaning renewables are now the cheapest form of new power generation on a Levelized Cost of Energy (LCOE) basis. While the average LCOE of coal is projected to remain at current levels through 2030, wind and solar LCOE are set to continue to decline as the technologies mature. We project that wind and solar will be cheaper than hydropower around 2022.
This would be the same story though in a lot of Vietnam’s neighbours. Wind and solar are fast becoming the cheapest forms of new energy in markets throughout the region and across the world. Countries that previously relied on imported fossil fuels, sending money overseas month after month, are now realising that they can tap their own indigenous wind and solar resources to deliver clean, cheap power to consumers without the need to fund fuel shipments.
How does an intertidal wind farm differ from traditional offshore projects?
Intertidal projects are located in the shallow near-shore waters, and use onshore wind technologies to harvest wind resources from the sea. Turbines are built on top of raised foundations, using the same foundation technology as onshore wind farms. The tower, however, is coated in a special paint to prevent corrosion in the marine environment.
This technology reduces disruption to farming and other activities on land close to the shore but does not require the capital investment for full-scale offshore wind development. It is popular in Vietnam where there are tidal flats surrounding a lot of the coastline in the Mekong Delta where there are good wind resources.
What are Vestas’s current goals for capacity and operations growth both in Vietnam and the Southeast Asian region? How close is the company to meeting those targets?
Currently, Vestas operates more than 80MW of wind assets in Vietnam and won an additional 200MW of orders in 2019. By virtue of our mature project execution record and service set up, we are already the dominant wind solution provider in the market. It is our goal to maintain our leadership position in both Vietnam and the Asia Pacific region as a whole.
As our business in the region grows, we will continue to strengthen relationships with key customers, provide innovative and advanced energy solutions, and offer market leading products suited to the Asia Pacific region.
In the end though, our goal for Vietnam, Southeast Asia and every market that we operate in around the world is to reduce reliance on polluting fuels and bring abundant clean, affordable renewable to the markets for the benefit of consumers, of industry, and ultimately the whole planet.
Wind and other renewable energy can play a bigger role in helping Vietnam meet its increasing energy demand, and bring clean, cheap, reliable energy to industries and communities.
More ambitious wind development targets, clearer future procurement framework post 2021 FiT expiry, and a fit-for-purpose PPA could help Vietnam move away from its reliance on coal, attract more foreign investment, and bring jobs and cheaper/cleaner energy to its communities.
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UK must stop blundering into high carbon choices warns CCC
The UK Government must end a year of climate contradictions and stop blundering on high carbon choices, according to the Climate Change Committee as it released 200 policy recommendations in a progress to Parliament update.
While the rigour of the Climate Change Act helped bring COP26 to the UK, it is not enough for Ministers to point to the Glasgow summit and hope that this will carry the day with the public, the Committee warns. Leadership is required, detail on the steps the UK will take in the coming years, clarity on tax changes and public spending commitments, as well as active engagement with people and businesses across the country.
"It it is hard to discern any comprehensive strategy in the climate plans we have seen in the last 12 months. There are gaps and ambiguities. Climate resilience remains a second-order issue, if it is considered at all. We continue to blunder into high-carbon choices. Our Planning system and other fundamental structures have not been recast to meet our legal and international climate commitments," the update states. "Our message to Government is simple: act quickly – be bold and decisive."
The UK’s record to date is strong in parts, but it has fallen behind on adapting to the changing climate and not yet provided a coherent plan to reduce emissions in the critical decade ahead, according to the Committee.
- Statutory framework for climate The UK has a strong climate framework under the Climate Change Act (2008), with legally-binding emissions targets, a process to integrate climate risks into policy, and a central role for independent evidence-based advice and monitoring. This model has inspired similarclimate legislation across the world.
- Emissions targets The UK has adopted ambitious territorial emissions targets aligned to the Paris Agreement: the Sixth Carbon Budget requires an emissions reduction of 63% from 2019 to 2035, on the way to Net Zero by 2050. These are comprehensive targets covering all greenhouse gases and all sectors, including international aviation and shipping.
- Emissions reduction The UK has a leading record in reducing its own emissions: down by 40% from 1990 to 2019, the largest reduction in the G20, while growing the economy (GDP increased by 78% from 1990 to 2019). The rate of reductions since 2012 (of around 20 MtCO2e annually) is comparable to that needed in the future.
- Climate Risk and Adaptation The UK has undertaken three comprehensive assessments of the climate risks it faces, and the Government has published plans for adapting to those risks. There have been some actions in response, notably in tackling flooding and water scarcity, but overall progress in planning and delivering adaptation is not keeping up with increasing risk. The UK is less prepared for the changing climate now than it was when the previous risk assessment was published five years ago.
- Climate finance The UK has been a strong contributor to international climate finance, having recently doubled its commitment to £11.6 billion in aggregate over 2021/22 to 2025/26. This spend is split between support for cutting emissions and support for adaptation, which is important given significant underfunding of adaptation globally. However, recent cuts to the UK’s overseas aid are undermining these commitments.
In a separate comment, it said the Prime Minister’s Ten-Point Plan was an important statement of ambition, but it has yet to be backed with firm policies.
Baroness Brown, Chair of the Adaptation Committee said: “The UK is leading in diagnosis but lagging in policy and action. This cannot be put off further. We cannot deliver Net Zero without serious action on adaptation. We need action now, followed by a National Adaptation Programme that must be more ambitious; more comprehensive; and better focussed on implementation than its predecessors, to improve national resilience to climate change.”
Priority recommendations for 2021 include setting out capacity and usage requirements for Energy from Waste consistent with plans to improve recycling and waste prevention, and issue guidance to align local authority waste contracts and planning policy to these targets; develop (with DIT) the option of applying either border carbon tariffs or minimum standards to imports of selected embedded-emission-intense industrial and agricultural products and fuels; and implement a public engagement programme about national adaptation objectives, acceptable levels of risk, desired resilience standards, how to address inequalities, and responsibilities across society.
Drax Group CEO Will Gardiner said the report is another reminder that if the UK is to meet its ambitious climate targets there is an urgent need to scale up bioenergy with carbon capture and storage (BECCS).
"As the world’s leading generator and supplier of sustainable bioenergy there is no better place to deliver BECCS at scale than at Drax in the UK. We are ready to invest in and deliver this world-leading green technology, which would support clean growth in the north of England, create tens of thousands of jobs and put the UK at the forefront of combatting climate change."
Drax Group is kickstarting the planning process to build a new underground pumped hydro storage power station – more than doubling the electricity generating capacity at its iconic Cruachan facility in Scotland. The 600MW power station will be located inside Ben Cruachan – Argyll’s highest mountain – and increase the site’s total capacity to 1.04GW (click here).
Lockdown measures led to a record decrease in UK emissions in 2020 of 13% from the previous year. The largest falls were in aviation (-60%), shipping (-24%) and surface transport (-18%). While some of this change could persist (e.g. business travellers accounted for 15-25% of UK air passengers before the pandemic), much is already rebounding with HGV and van travel back to pre-pandemic levels, while car use, which at one point was down by two-thirds, only 20% below pre-pandemic levels.