Opinion Piece

The hidden challenge facing renewables in APAC: Grid capacity

Author: Daniel Gaefke, APAC Director, BayWa r.e.

APAC nations possess the raw ingredients necessary to take a leading role in the global shift towards renewable energy. The region has a massive, growing population and an economy set to triple in the coming decades. It also has a wealth of geographical advantages which naturally lend themselves to a diverse spread of renewable energy types.

It’s also home to big industry players who recognise the opportunities and pressing need for change. The sector is proactively engaging with science and willing to invest in infrastructure to meet consumer demand for clean energy. So, what challenges still stand in the way of all this potential and goodwill?

Having lived and worked in Southeast Asia for over 15 years, I’ve been lucky enough to see the sector develop and comment on the hurdles it’s overcome. We spoke recently about ways to address a regional skills shortage but there’s another elephant in the room; grid capacity.

Grid capacity in APAC: Challenges and possibilities

The fact is, development of renewable energy in APAC is outpacing the grid’s capacity to store and deliver it. The speed of that development has been grossly underestimated by governments across the region, creating bottlenecks and stifling innovation.

In Australia, for example, the growth of renewables has been held back by the nature of the grid itself over the past four or five years. A vast area has to be covered, with large numbers of small population clusters spread all over the country. Storage technology is a key area of focus for stabilising this particular grid.

Japan experienced a pro-renewables push after Fukushima. But again, the country’s existing infrastructure presents problems, with a grid split effectively in half. Eastern Japan runs at 50 Hz, while the west runs at 60 Hz.   

This state of affairs dates back over a century, when AEG and General Electric bought their first generators for either end of Japan in 1895 and 1896 respectively. Power can only be moved between the two via just four frequency converters. If you think that represents a massive chokepoint, you’d be right.

Meanwhile, Vietnam’s feed-in tariff scheme for rooftop solar panels was so successful that the grid now struggles to cope with the amount of energy being produced. Over 6.7GW was added to the grid in December 2020 alone.

With a national total of 16.5GWp in solar power being generated, the government here has been forced to slash those tariffs by up to 38% just to discourage people from producing so much clean energy!

Racing against the climate clock

There’s a crisis of leadership. Governments struggle to balance the legacy of fossil fuels with commitment to greener legislation and infrastructure. Industry is well aware of the opportunities, with some developers going so far as to offer to invest in extending the grid and constructing substations in some countries.

The situation in Vietnam shows that citizens themselves are also engaged and willing to produce more than enough clean power. The missing piece of the puzzle is a reinvented, innovative grid built around each nation’s unique needs. That can only come from government.

Time is not on our side. The ‘decade that matters’ is now more like eight or nine years. Hitting the target of the Paris Agreement means a global 7.6% annual cut in emissions until 2030. That’s going to take a 400% faster pace of growth in renewables and $737 billion in annual investment by the end of the decade.

But if the grid can’t take the strain and industry can’t efficiently deploy that investment, good intentions might not be enough to prevent considerable damage to our planet.

The renewables sector leads the way

Should the renewable energy sector sit back and relax while governments update their priorities? Of course not, there’s a great deal we can be doing to push for much-needed change at our end.

Developers should be moving away from that old-school feed-in tariff mindset, integrating storage and other technologies into the solutions we can offer. And while things aren’t moving fast enough, they are moving. We should be paying attention and learning from successes.

BayWa r.e. recently connected a 106MW solar farm to the grid in North Victoria, Australia. To get the Yatpool farm up and running, we had to contest with those same grid congestion issues we spoke about earlier. But with each successful project, we refine our approach.

In Japan, they’re taking a fresh look at how they calculate capacity. Traditionally they’d be hugely conservative in how much capacity they keep in reserve, making allowances for that two-grid system. Now, they’re releasing previously held ‘nuclear capacity’ reserve for big efficiency gains.

And in Vietnam, the success of their DPPA last year is forcing the government to accept its responsibility for grid planning and development.

Conclusion: A better future if we act now

The 2020 pandemic proved that governments can move fast and spend the money needed to address existential problems when properly motivated. As we move beyond Covid, funds can start being redirected to tackle climate change.

The time is now to have the conversations which determine what that process looks like. Action must then quickly follow on from the talk. The result could bring a wealth of positive changes, like:

  • A development community that proactively engages with governments, educating them based on evidence
  • Government which steps up into a leadership role, but still empowers industry to act on its own initiative
  • A renewable energy sector running on joined-up thinking, with a clearer supply chain and support for a diverse spread of renewable energy sources
  • Informed local communities who feel a sense of ownership and agency over how they access clean energy

This is a goal that’s as achievable as it is commendable. But with precious little time left to address the most harmful effects of climate change, the clock is ticking.


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