Asian nations explore construction options to meet booming infrastructure needs
Asia is a sprawl of continental and island nations of cultural and climatic diversity, requiring innovative generation, transmission and distribution systems
By H. Tod Kennedy
The current wave of modernization in Asia is putting crucial demands on infrastructure development and energy production, providing huge opportunities for foreign investors and suppliers of the latest power plant technology, equipment and services. It is said that China and India together, having 40 percent of the world`s population, is expected to account for 25 percent of global electricity generating capacity within the next 25 years.
Diverse requirements include nuclear plant construction in Taiwan, Thailand, the Philippines and China; hydroelectric schemes in the Philippines, Laos and China; gasification and cogeneration in India; floating power plants in the Philippines; geothermal projects in Indonesia; and solar generation in Australia, to name a few.
As the Asian power industry is thrown into fast forward, it is collectively crying out to build more and larger power stations and upgrade existing ones to meet the massive demand for electricity generation and transmission leading up to the year 2000 and onward. However, along with all the hype and the hope there are a number of mine fields to be carefully crossed in the battle for Asian business, especially for foreigners who are well advised to do their homework before embarking on any serious venture. The trail is littered with the remnants of investors who have fallen foul of local authorities when it comes to “unique” legalities and such matters as repatriating funds.
Personalities and relationships play a big role, and expensive delays and stalemates can crop up, as seen in the case of Enron in India and Westinghouse in the Philippines. Although the Asians are all in a hurry to build the best, right now, negotiations need to follow the Chinese maxims: “slowly catch the monkey” and “kill one dragon at a time,” which may have mixed connotations in this Year of the Rat.
On the other hand, many large foreign companies, following years of local spadework, have found success in joint-venture arrangements with local governments and private enterprises where low labor rates, technology transfer and a variety of tax incentives exist, along with successful build-own-transfer (BOT) and build-own-operate (BOO) schemes–all good news for foreign independent power producers (IPP).
Singapore has recently privatized its generating and distribution sectors in a new competitive environment, with two generating companies, one transmission and distribution company and one gas company. Neighboring Malaysia is entering into the competition. YTL was the first IPP building and running projects. YTL has the 808-MW Paka Power Station and the 404-MW Pasir Gudang facility, which together provide about one-third of the country`s power needs. The largest IPP is Sikap Energy Venture, and the third Malaysian IPP is the 720-MW Genting Sanyen Power Station. Following this, Siemens is processing orders for 14 standardized power plants in 404-MW blocks in the region (Figure 1).
Other Asian nations are going the private route, with such examples as PLN in Indonesia, Napocor in the Philippines, and Taipower in Taiwan–while countries like Korea, Vietnam and Mynmar (Burma) are just opening their power sectors to private involvement.
Projections are encouraging, with the enormous growth of large coal-fired power plants in China and India, along with the construction of the world`s largest hydro dam–the Three Gorges Scheme in the People`s Republic of China (PRC). Countries are demanding an electricity growth of 7 percent a year throughout most of Asia, and 10 to 12 percent in some areas.
“Asia will need to invest (US)$50 billion a year in new power stations and transmission networks” said Mr. Yeo Cheow Tong, Singapore`s minister of trade and industry, at POWER-GEN Asia 1995. “A huge gap between supply and demand adds up to tremendous opportunities in construction, generation, transmission and distribution.”
The Chinese Ministry of Electric Power wants 273,000 MW of new generation to be on stream or under construction by the year 2000. Greater use of long-term coal gasification is expected as China converts from an oil exporter to importer, while aiming for a total capacity of more than 170 GW in the next decade.
Like India, which is aiming for 70 GW in the coming four years, China will depend on its coal reserves, guaranteeing that steam turbines will be in big demand. The boiler technology, handling low-grade fuels and reducing emissions, should also be popular.
China will account for about 25 percent of additions to the world`s generating capacity over the next five years, according to Mr. Ho Kwon Ping of Singapore Power Pte Ltd. Mr. Ho also observed that India`s installed electricity base increased about 80 percent in the last decade, while consumption grew 113 percent. He also warned foreign investors to “contend with political bottlenecks, delays, regulatory restraints and unrealistic limits on rates of return.”
Suppliers of fuels, such as oil, gas and coal, are entering the power industry. World majors with a long history of operations and experience in the region`s regulatory infrastructure, with existing asset bases and knowledgeable people on the ground, are well equipped to be involved in electricity generation, as the line between power and fuel is fast disappearing. Meanwhile power is becoming a price-driven commodity–the awakening dragon
The PRC is said to be the fastest growing, and third-largest, economy in the world, with a gross domestic product of (US)$2.35 trillion, and a projected economic growth rate of 13 percent. With a population topping 1.2 billion, this growing giant ranks poorly in terms of per-capita installed electricity capacity, with a rating of 80th by world standards. According to John Hunter of Westcoast Energy Asia Inc., China is expected to go from 520 kWh power consumption per capita in 1990 to 1,650 by 2015. Add population growth, and the country`s power needs should increase by a factor of 3-to-4 in the coming 20 years. To match predicted demand, China needs to add some 12,000 to 15,000 MW per year
The central government has plans to double its installed capacity of 190 GW (fourth in the world) to come on stream at the rate of 10 to 12 GW a year in an effort to sustain economic growth. Some reports suggest it will attain 300 GW of installed electrical generation by 2000. As the country evolves through the painful metamorphosis from a communistic, agrarian society into rampant free-enterprise industrialization, we are reminded of Napoleon`s historical comment, “China is a sleeping dragon; and when she awakes, she will shake the world.”
To meet its energy targets, China is installing a range of new power plants and upgrading its many old and inefficient coal-fired units. Meanwhile, the long term is being catered to in the construction of the mighty Three Gorges Dam and hydroelectric scheme on the Yangtze River southwest of Shanghai. This project will eventually generate about 10 percent of the nation`s needs and will provide the “clean” power necessary to obviate China`s coal burning by 40 million tons per year along with the reduction of emissions produced from the indigenous low-grade, variable feedstock coal in the region.
Coal-fueled generation accounts for about 77 percent of China`s total generating capacity, while hydroelectric contributes 18 percent and oil 5 percent. In 1994 foreign investment in the power sector stood at $121 billion and included 64 medium and large power plant projects, according to Mr. Kang Jun Fu of Dongshan County. Much overseas technology transfer via private operators is being encouraged to overcome fuel and heating problems; and the latest technology in cogeneration, customized circulating fluidized-bed combustion (CFBC) boilers, steam turbines, coal-gasification combined-cycle systems (CGCC) and use of heavy fuel oils are in popular demand. And China has already started building world-class, 300- to 600-MW pulverized-coal power plants–which are about 35-percent efficient, with low-NOx burners, electrostatic precipitators and tall stacks.
According to SFA Pacific Inc., of the US, the huge growth in coal-fired power plants is well timed for Western developers of IPP projects, as the developed nations are affected by excess capacity of base-load coal and nuclear plants and the results of successful deregulation. “The capital and construction/operating expertise of IPPs from developed nations will be invaluable to China.”
In an SFA Pacific paper presented at a conference on clean and efficient coal use, it was stated that in the future the Chinese electric utility industry will want to build coal-fired power plants based on advanced technologies such as CFBC and CGCC in the interests of higher efficiency and lower emissions. Fluidized-bed systems have added advantages for use in China due to the high ash content and variability of local coals. In addition to this, “the low-sulfur content of indigenous coals greatly reduces the solid-waste disposal problems of fluidized-bed systems,” the paper stated.
There is a growing development of CFBC boilers, according to researchers at the Tsinghua University, Beijing, to meet ecological requirements. The biggest unit to date operates at 75 tons per hour. More than 30 CFBC boilers, with staged separation, have been built and developed in China and are said to be operating successfully along with other units, including CFBC boilers for use in a cogeneration power plant and a unit with horizontal vortex separator within the furnace developed at the Tsinghua University.
In the long term, coal gasification will be even better for industrial cogeneration in China, enabling large central facilities to transport coal-derived fuel gas via pipeline to various small, combustion turbine-based cogenerators. This is said to be better than steam turbine-based cogeneration, due to the much higher electric power-to-steam ratio of combustion turbines, lower emissions and coproduction of valuable industrial fuel gas and chemical synthesis gas.
Coal mines in China are mainly concentrated in the north, and coal transportation and distribution to other parts of the region are very difficult. Hydroelectric sources are mainly in the northeast and southeast, which would involve comparatively high costs of power transmission. Therefore, the coastal areas, where many new industrialized towns are being constructed, are considered ideal for installing nuclear power plants, according to Mr. Xu Damao of the Harbin Power Equipment Co.
Nuclear power provides 1 percent of the nations electrical generation from two plants: Qinshan (near Shanghai) and Daya Bay (near Hong Kong).
The world`s largest pumped storage hydro plant, costing (US)$90 million, is to be constructed in the Guangdong Province. A German consortium led by Siemens Power Generation Group in partnership with JM Voith Gmb won the contract in late 1994 for supply and construction of the project, which is expected to go on line on September 1999. The Voith Hydro Turbine Group is supplying the turbines and mechanical equipment.
Last February the US signed 26 energy agreements with China, worth more than (US)$4 billion. The largest deal involved a letter of intent for a 1,200-MW power station in West Sichuan Province via General Public Utilities of New Jersey in a joint-venture BOO arrangement.
Sargent & Lundy recently built a low-cost, high-efficiency, coal-fired power station for the Huaneng International Power Development Corp. (HIPDC) in Shidongkou, near Shanghai. This is the province`s second generating station and the first supercritical power plant in China. The first phase installation included two 600-MW units; however, there will ultimately be four units, providing a total capacity of 2,400 MW.
This was a joint venture effort by HIPDC and the Shanghai municipal government, which is selling power to an existing grid at fixed rates. A highlight of these installations is in the boilers designed specifically for this market. These Sulzer boilers are forced-circulation, spiral-wound, furnace-wall types, providing single reheat and sliding pressure operation with balanced draft furnace conditions.
Chinese officials said these units have the best turbine heat rate–7,248 Btu/kWh–of any units in the PRC. Texaco has several coal-gasification projects in China`s industrial sector in conjunction with combustion turbine-based cogeneration, industrial fuel gas and synthetic gas chemicals. And this business is expected to greatly expand.
According to Texaco, the increase in China`s use of liquid transportation fuels will force it to be a major importer of oil. Without natural gas and oil resources, the domestic and commercial markets–requiring electricity and heat–will continue to be the largest coal consumers.
China`s Three Gorges Dam project, on the Yangtze River, in the Hubei and Sichuan provinces is being constructed primarily for flood-control purposes, but it is also designed for hydroelectric generation, water supply, aquatic farming and tourism. It is planned to aid in irrigation and provide safe navigation for the host of shipping that plies this busy waterway. Total funds needed during the construction period are estimated at about (US)$25 billion.
Construction will take about 17 years. The first five-year stage, which started last December, will see the completion of the right-bank, open diversion channel works and left-bank, temporary ship lock works. This is to allow water craft to continue operation when the river is blocked in 1997. The second stage of six years will see various river diversions and construction of coffer dams and a spillway, along with the completion of the left-bank power plant and installed electric generation turbine units.
The second six-year stage will see the right-bank generator units installed one by one, along with the completion of a vertical shiplift. Following this, major excavation and placement of nearly 30 million cubic meters of concrete and 26 million tons (t) of steelwork, and the final installation of 26 of the world`s largest turbines with a unit capacity of 700 MW, and the Three Gorges facility will be a reality.
The Three Gorges power station will be the largest in the world, producing 18,200 MW–with an annual output of 84.7 TWh, which will reportedly replace the energy generated by 40 million t of coal per year. The China National Power Corp. will build a 9,100-km-long transmission system and a 24.75-million-kV capacity substation.
The second-largest hydro project in China is the Pubugou Hydro Station to be built on the Dadu River, Sichuan Province. The feasibility and preplanning design work has been completed for this 3,000-MW project, and the Sichuan Electric Power Administration is inviting foreign companies to discuss financing and construction. The project includes a 186-m-high vertical core rockfill dam with open spillway, two spill tunnels, an underground powerhouse, a log-passing tunnel and six generator units of 550 MW each.
The nuclear option
Some Asian countries are already generating electricity from nuclear power stations or are in various stages of planning and developing nuclear facilities. Japan, South Korea and Taiwan already have some of the world`s most sophisticated nuclear power plants, while China has plans for 30 new nuclear power projects.
The PRC has approved construction of its third nuclear plant, which will cost (US)$32 billion, using Russian government loans to purchase two 1,000-MW Soviet, pressurized reactors in the first phase, leading up to an additional two units. This latest facility will be located outside the city of Wafangdian, on the southern Liaoning Peninsula, nearly 50 km from the Bohai Sea.
The Haiyang nuclear project is planned for the Shandong Province of China. Phase 1, beginning in 1999, will include two 1,000-MW reactors, while phase 2 will add two more, bringing the total capacity to 4,000 MW.
Framatome of France has a contract to supply units 2 and 3 for the Qinshan Nuclear Phase 2 project in the Zhejiang Province. ATEA, a Framatome subsidiary, will provide the reactor core instrumentation systems, while Weir Group of the UK will supply the main pumps and valves. Design work is expected to start this year.
Other Asian nations with plans for this form of power generation include Malaysia, the Philippines and Indonesia, despite the fact that they all have indigenous oil and gas supplies and the last two have ample resources in the ground such as coal, peat and geothermal energy.
Because of an ongoing power generation crisis in the Philippines, the government is looking at immediate fast-track power solutions, as well as the longer-term nuclear option. The construction of the country`s first nuclear power plant, 605 MW sited in Bataan, has been delayed since 1986 due to litigation between the government and Westinghouse Electric Corp., with talk of converting it into an 1,890-MW combined-cycle facility. It appears that this dispute has ended, and settlements have been agreed upon. So the (US)$2.1 billion construction contract can go ahead as previously planned.
In Thailand the National Economic and Social Development Board has been leading a group interested in establishing a nuclear power development program, and plans are afoot for a six-unit 6,000-MW power plant in northern Thailand.
Taiwan has a mixed source of power comprised of 17 percent hydro, 58 percent fossil fuel and 25 percent nuclear . Total electricity capacity in Taiwan is 21,000 MW. With an annual average growth of 5 percent per year in power requirements, the Taiwanese government plans to produce a total of 43,000 MW by 2006–of which 7,744 MW will be nuclear.
One of the larger power projects listed for construction in Taiwan is the Forth Nuclear Plant, to produce 1,200 MW when it comes on stream in 2006.
A number of countries in the Asian region, including Australia, produce electricity from hydroelectric dam projects and have new plants under construction. Malaysia, Thailand, Vietnam, the Philippines, Laos, Pakistan and Nepal all have sizable hydro power projects under way or in the feasibility or planning stages.
In Malaysia, where hydroelectric production accounts for 24 percent of the country`s total installed capacity, the 2,400-MW Bukun hydro project is planned for completion in 2003, at a cost of (US)$6 billion. This is in spite of environmentalists who object to the clearing of almost 200,000 acres of forest and the displacement of 9,000 people. There are 12 bidders waiting announcement of the construction of the turnkey plant, and Lahmeyer International has been engaged for plant planning and preparation of contract documents. The company will also provide ongoing advisory services to the Malaysian electricity authority, Tenaga (Table 1).
Another current project is the 600-MW Pergau Hydroelectric Scheme in the state of Kelantan. Under construction is a 75-m-high earthfill dam, a 24-km tunnel system and underground power plant–all to be completed this fall.
In Thailand 22 percent of the nation`s total electric power is hydroelectric, compared with other fuel-based sources–including oil and gas, which power 12,000 MW or 50 percent of the total installed capacity (Tables 2A, B, C).
There are 19 existing hydroelectric plants at present, the largest being the 720-MW Srinagarind at Kanchangaburi. However, with the importing of energy from neighboring Laos hydro operations and due to environmental pressures, Thailand may not be building many new projects despite the country`s large hydro potential of 16,000 MW, according to World Bank estimates. This will help boost the nation`s installed capacity to 20,000 MW by 2001; however, some reports suggest the plan is to have 38,000 MW by that time (Table 3).
Vietnam is being eyed by the world as a fast developing nation with a lot of potential in many industries, and it is set to exploit its abundant hydroelectric reserves. It is no wonder the government is planning to build more dams in the future, especially since in the dry season the existing plants can only produce one-third of their total capacity.
According to some reports, the potential output attainable from hydro operations is about 300 billion kWh/year; however, only 10 percent of this has been realized to date. The country`s total generating capacity is about 2,900 MW.
Planned hydro projects include about 200 small units throughout the country; however, some of the larger ones include the recently completed Russian-built Hoa Binh project in the north (four 240-MW units); Ban Mai, currently planned for central Vietnam (350 MW); and Hai Thuan-Da Mi for the south (472 MW) to be completed by 2000. Feasibility studies were under way for the 400- to 600-MW Pha-Lai extension and a 600- to 1,000-MW Pha-Lai project, both in the north, while the 600-MW Phu My project in the south is expected to be completed this year. It was funded by a World Bank loan of (US)$180 million after Hanoi agreed to Phase 2 being completed on a BOT basis, involving competitive bidding.
The Vietnam Ministry of Energy is conducting feasibility studies for construction of the Son La hydro plant near Hanoi. This 3,600-MW project will cost about (US)$3.5 billion and on completion in 2007, may export electricity to Thailand.
The World Bank reported that electricity demand in Vietnam will increase by 14 percent per annum to 2000, requiring a total investment of (US)$6.5 billion.
The Philippines hydroelectric potential is said to be 14,300 MW on the main island of Luzon; and as a consequence, 293 hydro sites have been identified for hydroelectric projects. The country`s present overall capacity of 9,061 MW is to be increased by 50 percent through the year 2000, according to reports. Of this, 1,870 MW will be hydro.
There are three main island groups, each with its own separate grid system: Luzon in the north, the Visayas in the center region and Mindanao in the south. The largest hydro projects planned include the 300-MW Kalayaan 3 and 4; a BOT arrangement with an Argentinian company IMPSA; 360-MW Agbulu; and 345-MW San Roque, to be privately developed. The Mindanao system may get an increased capacity of 816 MW.
The small country of Laos is tucked away across the Mekong River, north of Thailand. With its high production of hydroelectric energy, small population and lack of industrialization, it already is exporting power over the river to Thailand. There are three 194-MW hydro plants in Laos which produce 85 percent of the nation`s needs; however, the Lao government intends to expand capacity five by 2000.
In March of last year there were 20 power plants under construction, including the Nam Ngum 111 hydro project which was contracted to a Thai company, MDX in partnership with the Lao government. MDX is presently a partner in the 210-W Theun-Hin power station.
The (US)$1.6 billion 618-MW Nam Theun 11 hydro plant is also set to be developed by a consortium led by the Australian Transfield, with Electricite de France and three Thai companies. Meanwhile more expansion is expected at Nam Ngum, and a 35-MW plant at Nam Mong is under way.
Another Australian company, Hydro Power, is to construct two hydro electric plants in Laos, with a total capacity of 80 MW. Thailand`s energy authority, EGAT, has agreed to purchase 1,500 MW a year from these when they come on stream.
Taiwan is very dependent on fossil fuel and nuclear generation; however, some 17 percent, or about 3,600 MW, of this island nation`s electricity comes from 37 hydro power stations, including pumped storage systems. With a growing resistance to nuclear power generation, there may be more opportunities for hydro and fossil-fuel driven projects to keep pace with the average annual growth rate of 5 percent (Figure 2).
Some of the major trends which most Asian countries have in common include the immediate and fast growing and critical need for new power generation and the move toward privatization, public tendering and BOO and BOT schemes.
With this comes a plethora of technical equipment and services–including coal gasification, cogeneration, fuel technologies, boiler and turbine supply, emission control, and others–which offer a host of ongoing opportunities to foreign specialists in the power generation and transmission business.
Installation of Australia`s first IPP combined-cycle cogeneration power plant, at Smithfield, outside Sydney, rated at 160 MW.