A ‘Pan-Asian Energy Infrastructure’ could be inspired by – and dramatically extend – the concept of cross-border grids elsewhere, most notably in Europe and North Africa. Examining infrastructure projects now underway in Asia, how might these organically develop into a ‘Pan-Asian Energy Infrastructure’ by 2050?
There has been increasing chatter about so-called “supergrids”, which could join up diverse regions in the power generation market, and help with integrating an increasing amount of renewable energy into the energy system. And such concepts, while until recently very much in the “visionary” category, continue to gain political traction.
The European Commission for example, recently announced proposals for regulation that could aid the development of a Supergrid: Guidelines For Trans-European Energy Infrastructure could be a major step forward in accelerating the building of such much-needed new electricity infrastructure schemes.
The Desertec Initiative – whose philosophy involves developing renewable energy resources in North Africa and ultimately exporting power back to Europe – continues to crystallise its ideas. As we go to press in fact, reports suggest that the location of Desertec’s inaugural solar thermal project could be the desert city of Ouarzazate, Morocco, where parabolic mirrors will cover an area of 12 km2.
But what about Asia?
And it is not just Europe where such visionary ideas gradually move out of the realms of fantasy. Over the next four decades, bundled natural gas pipelines, high-capacity electricity cables and fibre optic cables could transform Asia, stretching from Australia’s Southern Ocean to China’s northern province of Mongolia.
Were it ever to be implemented, this visionary infrastructure could serve an energy and data market of two billion people.
The vision – to serve a growing powerhouse
A multilateral, open access, common-carrier energy transmission system in Asia offers greater long-term advantages than ad hoc, bilateral energy transmission arrangements, which discourage new market players and result in rigid, brittle markets.
This is made all the more relevant because in the coming years, Asia will emerge as the world’s largest regional economy. To get from here to there, it needs tens of trillions of dollars of infrastructure. This necessary infrastructure includes road, rail, aviation, telecommunications, not to mention energy generation and transmission capacity. And much of this will be new, not replacement, infrastructure.
A prime example of the current status quo in the energy market is Japan. Japan’s lack of national and international energy network interconnections left the country struggling to meet its domestic power needs following the March 2011 earthquake.
Had an internationally-interconnected energy network been in place, Japan could have imported marginal power supplies from spare electricity in China or South Korea. These could have helped offset the shortfall caused by Japan’s loss of domestic nuclear energy generating capacity.
Gas and renewables in partnership
To illustrate the logic behind a Pan-Asian Energy Infrastructure, we begin from the assumption that Asia (and the world) needs to switch to low emission energy sources between now and 2050.
The most practical way to do this is to aggressively replace ageing, dirty, coal-fired base-load power plants between now and 2030 with cleaner-burning natural gas plants.
This will result in near-term greenhouse gas emission reductions, while ensuring ongoing grid stability. During this period, intermittent renewable energy sources will expand rapidly, but off a small base.
By 2030, renewable energy will have grown to the point where it becomes a significant – if not the dominant – carbon-adjusted energy source. At this point, natural gas capacity could be shifted away from providing baseload power, and towards providing peaking power and load-balancing – to a grid dominated by low-emission renewables.
And experts believe this is rational.
Over the short term, natural gas’ cleanliness compared to coal makes it attractive for meeting short-term greenhouse gas reduction needs. Over the long-term, gas’ rapid response qualities make it attractive for ensuring grid stability.
Over the long term, natural gas’ rapid-response qualities are undervalued by serving baseload power markets. Shifting this energy source to load-balancing, therefore, is merely common sense economics.
Meanwhile the benefits to energy markets are clear. Near-term greenhouse gas emission can be reduced through replacing coal, while grid stability can be enhanced during the transition to renewable energy. New investment in natural gas plant and equipment capacity can serve baseload power markets now, and premium-price load-balancing markets later. Meanwhile, renewable energy gets the breathing space it needs as an industry to grow.
Asia has an abundance of both natural gas and low-emission energy it can develop. Many of these resources are located in the same places. That lowers the costs of developing them, not to mention transporting the energy to power-hungry cities.
Of all of Asia’s renewable resources, solar energy is the biggest. China’s Inner Mongolia and Xinjiang are baked in strong sunlight. Virtually all of Australia’s interior has strong solar resources.
China and Australia also have lots of wind. China’s onshore wind resources are in its north. Its offshore wind resources are in the East China Sea. Australia’s onshore wind resources are in its southern regions. Its offshore resources are in the Great Southern Ocean.
Therefore, to apply a simple, two-country model: China and Australia could be connected by high-capacity, high-voltage direct current (HVDC) power lines. These would be similar to those envisaged for carrying solar electricity from North Africa to Europe.
However, there are differences, chief among them being the longer distances involved in Asia, compared to Europe/North Africa. But to counter that the size of Asia’s energy market is much larger, faster growing and far less burdened by legacy infrastructure than that of Europe and North Africa. What’s more, Asia has a much broader array of low-emission energy sources than anything available in Europe and North Africa.
In coming years, Asia’s economic growth rate is similarly expected to be much higher and faster than Europe’s. This will – over time – reduce the overall investment burden required for the infrastructure in the Asian region, as a percentage of the aggregate Asian economy as a whole.
Since the investment will raise energy marketplace efficiency, the benefits will be compounded. And given that Asia requires huge infrastructure investment anyway, the key figure to examine is the additional amount an integrated system would cost, compared to “business as usual” investment.
The technical case
Potentially there could be compelling technical benefits to an Asian Supergrid. To take just one, frictionless interconnection across a large geographic area (like Asia) can enable uncorrelated intermittencies of geographically-dispersed renewable energy sources to partially or wholly cancel each other out. This can increase system stability.
In addition, integrated markets can improve aggregate investment price signals by reducing spurious “noise”. This will speed the discovery of the lowest-price, carbon-adjusted power sources.
This matters because, as above, Asia has a broad suite of low emission energy sources it can develop. These include geothermal from Australia’s interior; biomass from tropical Queensland, Southeast Asia and coastal China. And for their part, wave; tidal; and even ocean thermal energy from Australia and the Indonesian archipelago also hold great promise.
But for all these energy sources to be developed, assured access to market is needed. This access has other benefits too. One of which will be a reduction in the need for expensive but largely idle capacity to be built to handle grid demand fluctuations, peak power needs, and unexpected outages in national markets. Unused capacity in one market can be sold to other markets across-borders.
Natural gas in Asia
In the coming years, huge new gas fields are slated for development in the East China Sea; the South China Sea; Indonesia’s offshore waters; the Timor Sea; Papua-New Guinea; and in Australia’s Northwest Shelf and Queensland.
Present plans are for most of this gas to be developed and shipped to China, Japan and South Korea (the region’s big consumers) in the form of highly-compressed Liquid Natural Gas (LNG). The problem is that LNG has questionable environmental credentials, due to huge internal energy needs. These emit the very greenhouse gases the underlying natural gas is supposed to reduce.
This begs the question: what are the alternatives? One answer could be pipelines. However, lengthy pipelines are expensive. Examined on narrow metrics, they look more costly than LNG.
But this leaves several things out. The most important is that natural gas pipelines create networks. By contrast, LNG can only transport compressed natural gas between two fixed points via a single purpose, single-generation technology. In other words, LNG isn’t readily adaptable to future uses. Pipelines can be. And these have an economic value that needs to be further evaluated.
If high-voltage, high-capacity power lines were built between Australia and China to create a pan-Asian electricity network, natural gas pipelines could be laid alongside. This would lower the investment costs of both pieces of infrastructure, because labour and other logistics costs could be shared.
Also, gas pipelines are flexible. They can carry fuels apart from natural gas. Properly constructed, pipelines can carry hydrogen, CO2and biofuels.
These are also strong qualitative arguments in favour of bundling a natural gas and electricity infrastructure in order to reap intrinsic network flexibilities. This is particularly so given that fibre optic cables can be tossed in at virtually no extra cost.
‘Bundled’ infrastructure – gas pipelines, high voltage power lines and fibre optic cables – could offer a “1+1=3” outcome for Asia.
A combined electricity, natural gas and communications network would enhance ‘fuel switching’ between electricity and natural gas.
For example, Chinese electricity import demand could be dynamically satisfied through imports of (among others) electricity from:
- Solar or wind energy generated elsewhere in Asia;
- Gas-powered electricity from spare capacity elsewhere in Asia;
- Imports of the natural gas itself, for combustion in a China gas plant.
The flexible network could allow this to occur, particularly if the fibre optic cables enable the rapid transmission of demand and supply information needed to balance markets in real time.
Conclusion – a grand vision
In summary, a Pan-Asian Energy Infrastructure could usher in an Asian era of ‘cloud energy.’ This analogy to telecommunications is apt. In the past 20 years, the telecoms industry has been turned upside down by dramatic reforms. These have huge efficiencies. The enabler was the common-carrier Internet.
There’s now a strong argument that the hidebound energy industry should follow in the footsteps of the telecommunications industry.
And that means building a multilateral; common-carrier; open access network – allowing the marketplace to lead the way.
The timing is fortuitous. Asia needs huge amounts of greenfield infrastructure in the coming years, which can be designed largely free of legacy replacement considerations.
With imaginative thinking, a Pan-Asian Energy Infrastructure offers a once-in-a-generation opportunity to create flexibly-designed infrastructure that could last well into the 22nd Century.
NB: the issues in the above article are explored in a research paper by Stewart Taggart, entitled Solar and Wind in Asia Connected by a Pan-Asian Energy Infrastructure – recently published by the Institute for Electrical and Electronic Engineers.