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The term ‘smart grid’ technology has been creating a lot of buzz in the global power industry for almost a decade now.

In the Asia Pacific (APAC) region, it started with the Jeju Island test bed project in South Korea where a comprehensive trial bed covering various technologies of the smart grid was set up. Soon after, Japan followed suit with four smart community test bed projects bringing together different technologies in the smart grid space.

This article first appeared in Metering & Smart Energy International issue 2-2018. Read the full digital magazine here or subscribe here to receive a print copy.

However, these projects failed to kindle immediate interest in the rest of the region. Southeast Asian countries took small steps in the smart grid market by kick-starting smart meter and demand response (DR) trials. In addition, funding limitations, aged grid infrastructure and varied grid operator priorities deferred some planned initiatives of incorporating smart grid technologies into the utility grid.

Nevertheless, several smart grid projects have been initiated in the APAC region, over the last five years. Currently, major utility companies in the region are testing and installing selective components of the smart grid, including smart meters, DR and battery storage systems.

The smart grid umbrella opens with heavy investments in smart meter installations. The year 2017 witnessed the installation of 17.5 million smart electricity meters in the APAC region (excluding China).

A few country specific developments include:

  • Japan, South Korea and India were the hotspots. Japan and South Korea have ambitious plans for smart meter installations: “Four utilities” in Japan aim to complete 27 million meters by 2024, and KEPCO in South Korea aims for 26 million smart meters by 2020.
  • In Australia, post the Victoria rollout of 3 million smart meters, other states have not been enthusiastic to follow course. Australia and New Zealand (ANZ) are expected to install nearly half a million meters every year between 2018 and 2025.
  • In Southeast Asia, 360 000 smart meters were installed during 2017, and this is likely to double by 2020. Singapore, Thailand, Malaysia and Philippines will be the key markets between 2018 and 2020.

– Singapore started the smart meter projects and had completed 1.2 million meter installations by 2016. Energy Market Authority (EMA) has started the ‘Optiwatt’ project to test the feasibility of DR in the country. The current DR capacity of 7.2MW is expected to remain stagnant till 2020. The Smart Grid City Project specialises in distribution grid analytics and condition monitoring.

It tests the effectiveness of dynamic optimisation and energy management in the distribution grid network. Singapore aims for widespread adoption of this model by 2020.

– The Metropolitan Electricity Authority of Thailand is developing a smart grid plan incorporating all relevant technologies under the ‘umbrella’, while Provincial Electricity Authority has started the smart meter trials and substation automation projects in Pattaya city. The smart meter installation in the country is projected to grow to 1.3 million by 2024.

– In Malaysia, smart meter installations are likely to swell as TNB has planned to cover 8.3 million households across the country by 2021.

– Meralco, the largest distribution utility in the Philippines, has embarked on a smart meter installation and advanced distribution management systems project as part of their long-term smart grid plan. Meralco aims to complete installation of 3.3 million meters by 2024. Through this mission, Meralco aims to integrate ‘smart intelligence’ into its distribution network to better manage the electricity consumption.

The definition of ‘smartness’ for smart meters varies within each country. Demand response: strives with regulatory support and incentives. The Asia Pacific region, outside of India and China, recorded an aggregated DR capacity of 4.9GW in 2017, the majority of which was emergency DR through capacity bidding.

The utilities in Australia and Japan are busy integrating DR into the ancillary services market. With such encouraging developments and strong regulatory push, the DR market is likely to grow four-fold to reach 20GW by 2021.

DR is still in testing phase in Japan, Singapore and ANZ markets. DR enables improvement of system efficiency, integration of renewable energy (RE) and achievement of national emission targets. Key developments in this segment include:

  • South Korea conceived this idea almost 20 years ago and has been adopting the same reducing peak demand during the summer and winter months. Since 2014, commercial and industrial (C&I) customers have been selling DR in the electricity market. South Korea achieved 3GW of DR in 2017, the highest in the APAC region.

KEPCO and Korea Power Exchange have planned to enhance the DR programme by introducing time of use and variable tariff structures. Besides, the Korean grids have already signed Open ADR Standards to help manage the demand and supply gap.

  • The Australian Electricity Market Operator (AEMO) and Australian Renewable Energy Agency (ARENA) came together for a DR research programme covering C&I and residential customers to study the feasibility of the technology for adoption in the country. Currently, Australia does not allow private companies to participate as aggregators.
  • In Japan, Comverge and Enernoc have acquired a small share of DR as aggregators. However, nearly 90% of the DR market share is taken up by four utility companies that have initiated DR programmes. Smart meter rollout in the C&I sector and favourable government regulations are driving growth in Japan.

While the benefits of DR are manifold, lack of funding, data privacy and security issues hinder the DR market growth in the region.

Battery storage: highly attractive but an expensive option to improve grid resilience

Most countries in the APAC region are prone to natural disasters such as typhoons and tropical storms. As a result, the centralised power grid infrastructure has been subjected to severe damage. Therefore it has become imperative to improve the resilience of the power grid. To overcome the challenges posed by an aging grid, many communities have started deploying microgrids, backed by battery storage support.

Besides, national RE targets and intermittency of RE power is the key demand factor for gridlevel battery storage in APAC.

China, Japan, South Korea and Australia have quickly adopted this technology and currently account for 0.5 GW installed capacity. Pushed by regulations and falling battery prices, the installation capacity is expected to cross 1.8 GW by 2020. Li-ion and sodium-sulphur chemistries are most suited for grid application. Li-ion‘s market share was estimated to be as high as 73% in 2017.

  • The Japanese government has been providing subsidies to two leading battery manufacturers of sodium-sulphur and flow batteries to enable them to lower the cost of their battery products to attain cost parity with hydroelectric plants at the rate of US$230–US$240/kW.
  • In China, the Energy Technology Revolution Action Plan (2016–2030) focuses on battery storage and set targets to demonstrate and extend the 100MW level each for redox battery, sodium-sulphur cell and lithiumion battery storage systems by 2020.
  • South Korea has over 13 operational battery storage plants and the government promotes battery integrated RE projects in the nation, which has an RE target of 7% in the energy mix by 2020.
  • In Australia, with strong financial backing from ARENA and the Clean Energy Finance Corporation (CEFC), utility-scale battery storage projects have received a major boost since 2011.

Cooperation between regional countries in adoption of battery energy storage systems have also been evident.

  • A Japan-India task-force has been created to deploy battery storage systems in power systems in India and formulate policies for large scale deployment in the country.
  • Recently, Vietnam announced collaboration with the Republic of Korea to receive technological support in battery storage and RE related projects in the country. High CAPEX, low awareness and the absence of strong policies in the region will continue to deter market growth in developing Asia.

The APAC region boasts several leading global battery manufacturing giants such as Samsung SDI, BYD, NGK Insulators, and Redfow. The battery storage market is expected to become highly competitive, resulting in partnerships between system integrators and battery OEMs. System integrators are expected to have a strong command in utility-scale projects.

Conclusion

Rising demand for electricity and growing penetration of RE technologies have been posing major challenges to utilities in the APAC region. This has brought smart grid technologies to the forefront. The smart grid market has had an encouraging start with the deregulation of the Japan electricity market, deployment of smart meters in South Korea, Japan and Australia, introduction of DR, and battery storage projects across the region.

In the next five years, the gaps hindering market growth are expected to be actively addressed by the utilities and regulatory bodies. This could have a massive impact not only within the smart grid market, but also on the overall power transmission and distribution industry. MI

About the author

Avanthika Satheesh is the industry analyst under the Energy & Environment Practice at Frost & Sullivan, Asia Pacific and is based in Chennai, India. Avanthika has over nine years of experience in the electrical power industry with market research experience in smart grid technologies, microgrids, renewable power and energy storage systems in the Asia Pacific region. Her research experience includes megatrends, emerging business models, virtual power plants and the Internet of Things. She has rich experience working for consulting assignments with the leading multinational companies, research institutes, and government utilities in the APAC energy & power sector.