Energy Handbook 2011 - GBR

P o w e r S u m m i t - T h e E n e r g y H a n d b o o k 2 0 1 1 P o w e r S u m m i t - T h e E n e r g y H a n d b o o k 2 0 1 1 

Table of Contents 

Message for Dr Mohan Kaul ......................................................................... 5 

Sector Overviews 

Country Profile: Canada ............................................................................... 7 

Focus: Coal Power ...................................................................................... 17 

Country Profile: India ................................................................................. 21 

Focus: Nuclear Power .................................................................................. 37 

Country Profile: Singapore ......................................................................... 41 

Focus: Hydro & Marine Power ....................................................................... 60 

Country Profile: United Kingdom ................................................................. 67 

Focus: Solar Power ...................................................................................... 78 

Focus: Wind Power ...................................................................................... 71 

Transmission & Distribution .......................................................................... 87 

Acknowledgements ..................................................................................... 90 

Publisher – Rupert Birch 

Editor-in-Chief – Charles Butcher 

Research Directors – Oliver Cushing, Joseph Hincks, Tom Willatt & Eugene Yukin 

Sales Director – Agostina da Cunha 

Project Directors – Vanessa Acuna, Jolanta Ksiezniak, Aysana Omar, Sharon Saylor 

Graphic Design – Özgür Ergüney & Deniz K. 

 

© Commonwealth Business Council and Global Business Reports 2011 

The Survey is intended for the use and assistance of recipients. It does not provide investment 

advice and should not be regarded as a substitute for the exercise by the recipients of their own 

judgement. The Commonwealth Business Council and/or any person connected with it accept no 

liability whatsoever for any direct or consequential loss of any kind arising out of the use of this 

Survey or any part of its contents. The views expressed in this publication do not necessarily 

reflect the views of the Commonwealth Business Council and Global Business Reports.

P o w e r S u m m i t - T h e E n e r g y H a n d b o o k 2 0 1 1 P o w e r S u m m i t - T h e E n e r g y H a n d b o o k 2 0 1 1 

Message from Dr Mohan Kaul 

We are delighted to be working in partnership with Global 

Business Reports to produce our first power sector publication. 

The Power Handbook is designed to highlight opportunities and 

share information between Commonwealth Countries on the key 

issues facing the power sector. 

By featuring interviews with key people in the power sector 

we hope to share best practice and practical solutions that 

are already in use with those countries and companies 

looking to develop in this sector. 

As part of our forward planning for the next 10 years, CBC 

has prioritised infrastructure development in developing 

Commonwealth countries, and in particular the power sector 

as a key driver of economic growth and living standards. 

Too many Commonwealth countries are being held back by 

inadequate power supply and infrastructure. 

This Publication will examine the key policy issues relating 

to both energy efficiency and Generation Mix, and look at providing 

practical suggestions on how to move forward. 

Between now and 2035 global energy demand is expected to grow by 

49%, and at least 70% of this will come from developing countries, led 

by China and India. The opportunities represented by this huge growth 

in demand cannot be underestimated; government alone will be unable 

to deliver the generation capacity required to meet it. Partnership 

between the private sector and Government are going to be essential 

and the sharing of best practice between countries that have already 

developed successful models will be required. The Commonwealth is 

a good platform for this and CBC looks forward to continuing to work 

with governments and the private sector in the power sector. 

Dr. Mohan Kaul 

Director General, 

Commonwealth 

Business Council 

We hope this publication will be a useful resource for those with an 

interest in the power sector in the Commonwealth.

P o w e r S u m m i t - T h e E n e r g y H a n d b o o k 2 0 1 1 


C o u n t r y P r o f i l e 

Canada


C o u n t r y P r o f i l e : C a n a d a 

Canada in Focus 

Canada’s “clean” image extends to clean power. Canada’s 

extensive natural resources are the driver of its powerful 

economy, and energy is Canada’s single most important export. 

In the post–global financial crisis 

environment, many investors are favoring 

long-term secure investments with 

minimal political risk, which Canada 

seems to offer. Its banks weathered the 

financial crisis comparatively well, and 

the country is well established as a hub 

for energy investment. 

Sandy Taylor, president and CEO of ABB 

Canada, adds that from an investment 

point of view, “Canada has incredible 

wealth in natural resources combined with 

a very stable and predictable government 

and economic environment.” 

This transition is creating opportunities 

thoughout the industry. Engineering, 

service, and equipment companies that 

previously focused on the oil and gas or 

mining sectors are increasingly aware 

that the greatest opportunities now lie in 

power. Turgay Ozan, President of Atlas 

Copco Compressors Canada, states: “We 

see great potential as the entire power 

generation mix is investing in expansions 

or in new projects. The traditional thermal, 

hydro, and nuclear projects will continue 

to come on stream, as well as the new 

emerging renewable methods such as 

wind and solar.” 

 

Article by: 

Sharon Saylor and 

Tom Willatt 

Section Cover 

(previous page): 

Canada’s first 

250kW rooftop 

solar installation, 

Cambridge, 

Ontario; Photo 

courtesy of Aecon 

Above: 

Brookfield Power’s 

award-winning 

Shikwamkwa 

Replacement Dam, 

near Wawa in 

northern Ontario; 

Photo courtesy of 

Hatch Canada 

Yet policy makers across the nation 

are currently dealing with the 

consequences of a roughly 30- 

year lull in investment in the electricity 

system and deciding what the new grid 

and supply mix should look like. Several 

provinces are competing to lead the charge 

in renewable energy and grid intelligence. 

Policy makers hope that such efforts will 

not only provide for Canada’s electricity 

needs but also create the green economy 

jobs that will drive the nation’s next 

generation of economic development. 

The Canadian power system is almost 

entirely controlled at a provincial level, 

with each of Canada’s 10 provinces 

and four territories operating distinctive 

energy markets. Each jurisdiction displays 

different values, politics, and attitudes 

toward energy and power generation. 

“The Federation of Canada is not unlike 

the European Union in how the weight of 

responsibility lies. The decisions on power 

generation, transmission, or distribution 

are a provincial responsibility,” explains 

Dr. Murray Stewart, president of the 

Energy Council of Canada. 

This provincial focus allows each province 

to work to the strengths of its resources. 

It does, however, limit the ability of the 

federal government to advance a single 

vision for the nation’s energy sector. 

Despite this fragmentation, common 

themes emerge as each province works 

to create a favorable environment for 

power investment. 

In spite of its sparse population, Canada 

is the sixth-largest producer of electricity 

in the world, allowing vast scope for 

exports. “The electricity trade represents 

a few billion dollars a year. We sell more 

than we buy in the end, but there’s a lot 

of electricity that moves back and forth,” 

explains Pierre Guimond, president of the 

Canadian Energy Association. 

Power investment levels can generally be 

tied to the growth in demand, which in 

turn is typically a derivative of economic 

growth. However, market participants 

see added opportunities in Canada due 

the fact that large portions of the system 

require refurbishment or replacement. 

This has been noted by Luc Benoit, Global 

Managing Director for Energy at AECOM. 

AECOM is an engineering consultancy 

that has been on a rampant acquisition 

trail in Canada, most recently acquiring 

RSW, an international engineering firm, in 

September 2010. “Energy is following the 

growth of the economy, but beyond that, 

we are replacing, and that is why energy 

is becoming an increasingly important 

business for us,” Benoit says. 

John Brace, president and CEO of 

Northland Power, one of the earliest 

independent power providers (IPPs) in 

Canada believes that “The opportunities 

for our company have never been so great 

as they seem now with the movements 

towards clean and green power.” 

His opinion is shared by William Smith, 

senior vice president, energy sector for 

Siemens: “Canada represents an energy 

superpower with excellent political 

and economic stability. It has grown 

dramatically in importance, particularly 

in the past two years. Through the 

financial crisis, we managed to maintain 

a reasonably steady level of investment 

from our customers. There was a need 

for investment, and the government 

ownership of utilities meant that energy 

was used as a form of indirect stimulus.” 

Generation Options 

Across North America, jurisdictions 

are clamoring for green credentials 

and encouraging the establishment 

of wind, solar, and other renewable 

generation sources. Although a number 

of Canadian provinces can already boast 

impressive hydro generation capabilities, 

policy makers are targeting significant 

investment in other renewables. “The 

electricity sector right now is 75% clean, 

and the idea is that over a well-defined 

period of time we’ll be a 90% clean 

electricity sector,” explains Dr. Stewart 

of the Electricity Council of Canada. 

Hydro 

Hydroelectricity is Canada’s number 

one source of power generation and, in 

2009, it accounted for over 60% of the 

nation’s total electricity generation. The 

provinces of Manitoba, Québec, British 

Columbia (B.C.), and Newfoundland and 

Labrador all generate more than 90% of 

their electricity from hydropower. 

The storage capability and dispatchability 

of its large hydro assets provide Canada’s 

greatest electrical trade advantage: 

“These provinces make half their profit 

by buying electricity at night, when 

power is very cheap, from jurisdictions 

that operate thermal plants, which must 

run continuously. They can then produce 

excess electricity during peak day time 

hours, which can be sold at up to five 

times the price,” explains AECOM’s 

Benoit, an engineer with extensive 

experience in major hydro projects across 

those provinces.



Canada is said to have undeveloped 

potential of over twice the current 

hydro capacity, and every province and 

territory boasts some level of hydropower 

development potential. Although many 

large-scale projects, such as B.C.’s Site 

C and Newfoundland’s Lower Churchill 

Falls, have been mired in protest and 

delay, developments are being studied 

and planned throughout the country that 

range from major storage dam proposals 

to myriad smaller, run-of-river projects. 

“A huge market is developing in small 

and medium-sized hydro opportunities in 

Canada. Good regulation is being put into 

place, and due to the small environmental 

impact, it is much easier to get local 

acceptance,” says Denis Tremblay, 

President of the Power Division at BPR, 

a Québec-based engineering consultancy 

firm that has worked extensively in this 

field. 

Canada has been associated with 

excellence in hydropower for more than a 

hundred years but continues to innovate 

in order to make better use of its hydro 

resources. Nik Argirov, Business Unit 

Leader of MWH Canada Inc., the world’s 

leading wet infrastructure company, 

follows these developments closely. He 

says, “This is a very old industry, but 

while hydroelectric processes are already 

very efficient, we continue to invest 

in research and innovation. The most 

exciting technologies that I see now are 

coming from hydrokinetic research and 

its river and tidal application.” 

Hydrokinetics is the harnessing of the 

energy potential from natural water flow 

in rivers or ocean currents using turbines 

that operate without the need for dams 

or penstocks. One such example is the 

TREK turbine, which is being developed 

by RER (Renewable Energy Research), 

recently spun off from engineering firm 

RSW during its sale to AECOM. 

Imad Hamad, general manager of RER 

explains: “Hydrokinetic technology sits 

on the river bed, has no visual impact, 

does not sacrifice land, makes no noise, 

and works 24 hours a day and 365 days a 

year. It is foreseeable, it is predictable, and 

it is repeatable. We have made resources 

assessments and, with the dimensions 

of our machine, we found 30,000 MW 

of technically, environmentally, and 

economically viable potential projects 

around Canada. In the U.S., we found 

another 77,000 MW in a small selection 

of rivers and estimate a total potential 

market of 200,000 MW.” 

Similar technology is being developed to 

utilize Canada’s rich tidal resource. The Bay 

of Fundy boasts one of the highest tides 

in the world and is gaining a reputation 

as a global center of excellence for tidal 

energy innovation. Emera, a private 

corporation that owns Nova Scotia Power, 

in addition to a broad range of generation, 

utility, and transmission assets across 

North America, has been a key player in 

this development. Christopher Huskilson, 

CEO, explains the potential resource 

available: “The Bay of Fundy actually 

affects Nova Scotia, New Brunswick, 

and Maine. More water flows in and out 

of the Bay of Fundy on any given day 

than all the rivers in the world. It has the 

highest tides in the world, in excess of 20 

meters. It’s a huge resource. The testing 

here has been the most aggressive in the 

world, but you can deploy this type of 

technology in other locations, including 

those where tides are not as strong.” 

Fossil 

In addition to its vast renewable 

resources, Canada is also rich in fossil 

fuels, none more so than coal, of which 

it is estimated to possess more than 100 

years of supply. Oil and natural gas are 

also abundant. Canada has 269 fossil fuel 

thermal generating stations that represent 

a combined installed capacity over 

36,000 MW. These fuel sources remain 

economically competitive and play a vital 

role in grid reliability as dispatchable 

generation sources. However, politics and 

concerns over the risk of a forthcoming 

carbon pricing legislation mean that new 

coal plants are likely to be limited in the 

Although coal-fired generation 

development seems unlikely in Canada, 

internationally it continues to pick up pace. 

Steve Snyder, CEO of TransAlta, one of 

the country’s largest diversified energy 

companies, believes that Canada should 

see this as an opportunity to protect the 

viability of one of Canada’s most important 

resources and industries. “Coal is not the 

problem; the emissions are the problem. 

If we want to solve the problem of CO2, 

we’re going to have to find somebody to 

develop the technology.” 

The relatively cleaner option of natural 

gas generation is enjoying an upswing 

due to the falling price of gas as well as 

the need for a reliable counterbalance to 

the enormous investments in inconsistent 

wind and solar capacity. 

As the cleanest form of thermal 

generation available, natural gas plants— 

which are also quicker to construct than 

coal plants—seem likely to be a popular 

choice, along with renewables, in the 

short term for Canadian developers. 

“The new finds of shale gas brings the 

economics of natural gas projects much 

more into play. I feel that, especially in 

Ontario and probably Eastern Canada 

also, we’ll see natural gas play a more 

important part in the mix going forward,” 

says Stephen Somerville, director of 

development at Competitive Power 

Ventures, an IPP that has developed a 

number of renewable and natural gas 

projects across Canada. 

Peter Stalenhoef, president and COO, PCL 

Construction, the largest construction 

company in North America, also sees 

gas-fired generation as the most likely 

replacement for coal: “In the U.S., I’ve 

heard of as many as 40 to 60 coal-fired 

plants that need to be retired now. Nuclear 

won’t come on quick enough to replace 

that generation. I think you’re going to 

see a lot of gas-fired generation filling the 

void on retiring coal-fired units.” 

The TREK turbine can generate up to 

333 kW and guarantee 10 years of 

maintenance-free performance. The 

September 2010 installation of two of 

RER’s TREK turbine prototypes in the 

Saint Lawrence River, Québec, was the 

result of two years of in-house research 

10 

and development. 

near term. 

11



Siemens 

combined-cycle 

gas turbines 

are setting the 

standard for 

energy efficiency; 


Siemens 

TransAlta’s Snyder is cautious about 

these possibilities: “Natural gas has 

potential to be an interim player, as you 

can build quickly and at a reasonably low 

cost. However, the challenge is that the 

cost of the electricity is 25% based on the 

cost of natural gas, which has historically 

been very volatile in price. Its viability 

also hangs on future CO2 regulations, 

and cost legislation.” 

Nuclear 

A number of factors tie Canada to the 

nuclear industry. Currently, Canada is 

the world’s leading supplier of uranium, 

and Canada’s nuclear capacity is eighth 

in the world. Ontario, New Brunswick, 

and Québec are the three provinces that 

produce electricity from nuclear energy. 

of the CANDU (Canadian Deutrerium 

Uranium) pressurized heavy water reactor. 

Today, 34 CANDU reactors, along with 

16 other heavy-water reactors based on 

the CANDU design, have been built or are 

under construction on four continents. 

However, the majority of Canada’s 

existing plants will reach the end of their 

service lives within the next 20 years, 

and many questions remain concerning 

Canada’s nuclear future. 

Kurt Strobele, Chairman and CEO 

of Hatch, one of the world’s largest 

engineering companies, believes that 

nuclear development will triumph: “I 

see an increasing role for nuclear. It’s 

a necessity, not a choice, because of 

its reliability. There is a lot of inertia, 

however, and the new projects and new 

technologies and developments have not 

been as successful as hoped. Once we 

get past that first hurdle, I think there will 

A political tussle has developed between 

the provincial and federal governments 

regarding Atomic Energy Canada Ltd. 

(AECL), the stewards of Canada’s nuclear 

technology. AECL is a Crown Corporation, 

and therefore under the control of the 

federal government, which decided to put 

the AECL up for sale in December 2009. 

At present it is unclear how much of the 

corporation is to be sold and to whom. 

Until this restructuring is complete, AECL 

is unable to sell any more CANDU reactors. 

This delay is of particular concern in 

Ontario, where the authorities have been 

waiting on these decisions in order to build 

two new reactors at the Darlington site. 

Ontario Minister for Energy Brad Duguid 

remains committed and hopeful that 

the process will be completed soon and 

that the province’s new build plans can 

go ahead: “We believe Canadian nuclear 

technology is among the best in the 

world, and our preference is to purchase 

these two new units with AECL. We’re in 

a vigorous process now to find a way to 

do that.” 

Babcock & Wilcox Canada (B&W Canada) 

provides high-tech services to a range 

of nuclear plants, mostly from its large 

manufacturing facility in Cambridge, 

Ontario. It is calculated that the nuclear 

industry supports 70,000 high-tech jobs 

in Ontario alone. Michael Lees, president 

of B&W Canada, highlights the concern 

that many market participants feel over 

the future of AECL: “Canada has a robust 

service community dedicated to servicing 

CANDU plants. The real risk is that if new 

builds do not move ahead, we may lose 

that capability. Any nuclear industry relies 

on the domestic market to sustain it, from 

which an export market can be built.” 

However, some market players believe 

that the most effective way of protecting 

Canada’s nuclear industry is to move 

away from CANDU technology and adopt 

light water reactors. 

Jean-Francois Béland is executive vice 

president of Areva, which hopes to 

develop Canada’s first light water reactor 

as part of the Clean Energy Park that it is 

planning with NB Power and the provincial 

government of New Brunswick. He says, 

the CANDU language 50 or 60 years 

ago. However, light water reactors now 

represent 92% of the market and heavy 

water is only 8%. For Canada’s nuclear 

service providers, taking a share of this 

92% is better than being the dominant 

player in an 8% market. It’s a global 

industry now; national players no longer 

exist. It is a worldwide market, and it is 

focused on what is the most reliable and 

economically viable technology for the 

taxpayer.” 

Some Canadian companies, such as 

B&W Canada, have already made the 

leap toward servicing non-Canadian 

technologies in order to reduce exposure 

to AECL and CANDU as well as to access 

the U.S. market: “B&W Canada fortunately 

stopped relying on new build, moved into 

international refurbishment, and started 

working not just with CANDU equipment. 

This leaves us better protected than 

some of the other domestic suppliers,” 

explains Lees. As the industry does ramp 

up again, the issues of nuclear waste 

and plant decommissioning are additional 

challenges. Facilities for low-level 

radioactive waste are under development 

at Port Hope and the potential for deep 

geological deposits at Tiverton and Chalk 

River, Ontario, remain under discussion. 

However, final decisions on these projects 

are still to be made. 

Carol Wilson Hodges, president of Energy 

Solutions Canada, a firm that specializes 

in nuclear services, feels the management 

of waste is key to the success of the 

industry: “We have some amazing host 

communities that are very supportive 

of nuclear development. As the nuclear 

renaissance gets under way, it’s important 

that people see that the aging plants and 

their waste are properly managed.” 

Wind 

Wind power is expected to lead the 

growth of newer renewable generation 

technologies. Industry Canada estimates 

that by 2015 there could be an installed 

capacity of 8,000 MW of wind turbines. 

According to the Canadian Wind Energy 

Association (CanWEA), Canada has a total 

of 92 wind farms and the leading three 

provinces for investment are Ontario, 

Canada was the second country in the 

world to undertake a controlled nuclear 

reaction and has been building nuclear 

plants since 1945. Canada led the way in 

12 

reactor design through the development be a very fast climb in nuclear build.” 

“The Canadian nuclear industry learned Québec, and Alberta. 

13



RES Canada is the local arm of the German 

renewable energy company RES. It sees 

good opportunities in both developing 

and constructing wind projects. Peter 

Clibbon, vice president, says, “In the near 

term, I am very optimistic. It took Canada 

15 years to build its first 1,000 MW of 

wind power. RES has now got plans to 

build 1,200 MW in Québec and Ontario in 

the next three- or four-year period.” 

Another generation opportunity for 

Canada that is yet to see construction is 

offshore wind. The country has potential 

capacity on both its extensive coast lines 

and within the Great Lakes. Offshore 

wind obviously comes with increased 

cost pressures and the need for large 

transmission investments. “There is a 

strong, consistent wind resource with 

a low diurnal fluctuation,” points out 

John Kourtoff, CEO, Trillium Power Wind 

Corp. “There are 95 million people that 

live around the Great Lakes. Relative 

to other international hubs of offshore 

wind development, the distance to get 

the power into the grid for usage is very 

short, and there is good interconnection 

between these jurisdictions.” He sees this 

as a potential coup for Ontario’s power 

exports: “The transmission that is required 

for offshore will significantly lower the 

hurdle of connecting the U.S. and Ontario 

grids. This means that, through offshore 

wind, Ontario has the opportunity to 

position itself to be a provider of clean 

power from the East Coast to the Midwest 

of the U.S.” 

Solar 

Photovaltiac (PV) According to the 

Canadian Solar Industry Association 

(CanSIA), the solar industry consists of 

more than 400 companies, employs more 

than 1,000 people in Canada, and grew 

at an annual rate of 25% between 1992 

and 2006. It ranges from the residential 

to the utility scale, and solar players 

are pursuing opportunities across that 

spectrum. The world’s largest solar park 

(97 MW) opened in Sarnia, Ontario in 

October 2010. 

and installation knowhow, as well as the 

efficiency of panels and new technologies, 

is improving. “If we continue this rate, 

we’re going to be competitive with peak 

grid energy in parts of North America 

within the next two to four years,” 

believes Jon Kieron, director, solar, for 

EDF EN Canada Inc. and vice chair of 

CanSIA. “That would have been unheard 

of four years ago.” 

“I never dreamed that solar technology 

would ever be at the cost it is today,” 

agrees Milfred Hammerbacher, president 

of Canadian Solar, one of the largest solar 

panel manufacturers in the world, which 

is opening a manufacturing operation 

in Ontario. He cites the government’s 

involvement as the key driver: “The 

government has shown willingness to make 

it an attractive market for manufacturing 

by lowering our corporate tax rates, which 

are scheduled to go down over the next 

several years. The truth of the matter is 

that it is very hard to compete with China 

for manufacturing. Without the Green 

Energy Act, we probably wouldn’t have 

been able to complete our projects here. 

As long as there’s a market driver, it’s an 

easy decision to make.” 

Financing Generation 

Investments 

In the aftermath of the global financial 

crisis, attracting finance to projects has 

become an even greater concern for 

developers. Power investment in Canada 

stems from a number of sources, both 

traditional and less conventional. 

Although Canadian banks weathered the 

crisis fairly well, James Harbel, a partner 

at Canadian law firm Stikeman Elliott LLP, 

believes that the banks have yet to fully 

engage in the renewable sector: “They 

are learning about the technology, training 

their people, and educating their credit 

committees in a time frame where there is 

an unprecedented demand from them for 

financing. International players, particularly 

European financiers, are more comfortable 

with the technology, but lack the financial 

depth. We are finding that consortiums are 

being formed and groups are learning to 

work together. It is taking a little while for 

In addition to the banks, Canada’s pension 

funds play a large role in financing projects, 

explains Aaron Engen, managing director 

of Investment & Corporate Banking at 

BMO Capital Markets, one of Canada’s 

leading investment banks: “There’s a 

Canadian phenomenon going on with 

pension funds becoming involved in 

direct investing. In the U.S., the pension 

fund model is that investments are 

channeled through private equity firms. 

In Canada, pension funds can bypass 

these channels and have become world 

leaders in direct investing. They are very 

interested in power, as they are focused 

on assets that have long-term contracts 

with transparent earnings and cash flow 

profiles because they are trying to match 

long-term reliabilities.” 

The role of pension funds in the industry 

is something that David Williams, 

managing director of Investment Banking 

at CIBC and head of the Power and 

Utilities Group, also sees as critical: “We 

see pension funds as a continuing theme 

in the marketplace. It makes sense, as 

pension funds can invest in infrastructure 

without taking currency risk and put longterm 

money against long-term liabilities. 

They might not be as helpful to the small 

developer, but we see this as appropriate, 

particularly for the larger-scale projects.” 

Capital is hardest to acquire for the smaller 

developer, particularly at the earliest stage 

of a project, explains Frank Carnevale, 

president and CEO of Bridgepoint Group: 

“There is a huge void in the development 

capital space. An investment of a few 

million dollars in development capital can 

get a large chunk of a project at its early 

stage. The pension funds are not looking 

at opportunities of this size; they need to 

place large amounts daily, and it’s just 

too small.” 

Bridgepoint Group is a boutique investment 

bank that specializes in these deals. It 

sees opportunities for both developers 

and lenders: “There is clearly a risk, but as 

long as this is mitigated and well managed, 

the returns are significant. It is the most 

profitable stage of the investment dollar. 

It’s not intended for large movers in the 

industry, but there are plenty of small 

and midsize players that need a friendly 

investor that won’t look to take over their 

company.” 

The 23.4 MW 

Arnprior Solar 

Project, located in 

Ottawa, Ontario, 

commenced 

commercial 

operation in 2009; 


EDF EN 

The cost of PV-generated solar energy 

has plummeted over the past three years. 

The price of inputs (panels, invertors, 

14 

and balance of plant) is going down, these relationships to be formed.” 

15


F o c u s : C o a l P o w e r 

Coal Power 

Coal is at the heart of the world’s electricity mix and its 

importance looks set to continue for at least the medium term. 

For most energy markets, coal-fired plants are the simplest and 

cheapest source of baseload energy. 

Coal presents one of the greatest ourselves as a pure renewables player; we Article by: 

threats to the world’s climate, yet want to be part of the mainstream solution Oliver Cushing 

it also represents one of mankind’s in our region”. 

greatest opportunities to manage global 

warming. “Clean coal” is an oxymoron 

to many environmentalists, but with coal 

generating 41 percent of the world’s 

electricity and the major growth markets 

The provision of new efficient coalfired 

capacity represents a phenomenal 

business opportunity, as does the renewal 

of the world’s 2,968 GW of existing 

committed to heavy investment thermal capacity. The geographical 

in additional capacity, responsible distribution of coal gives further reason 

management of this sub-sector will be 

at the centre of the fight to limit climate 

change. Even countries who are developing 

to believe that coal-fired capacity is set 

to grow: supply is most abundant where 

demand is strongest. 

substantial renewable capacity believe that 

16 

thermal power generation must remain part 

of the solution. As Rajiv Mishra, Managing 

Director of CLP India, says: “We recognise 

the threat of climate change. There is no 

doubt that managing carbon is a business 

risk, and carbon emissions will attract 

high charges in all countries, eventually. 

However, we did not want to marginalise 

The USA is both the world’s largest 

power market and the world’s secondlargest 

producer of coal. China and India 

are respectively the second- and fifthlargest 

energy markets in the world, and 

the fastest growing. China is the world’s 

largest producer of coal and India the 

third-largest. 

17


F o c u s : C o a l P o w e r 

As if the economics of coal, typically 

the cheapest source of energy, were not 

compelling enough, all three of these 

countries value energy security and are 

net importers of fuel. Additional coal-fired 

capacity is thus a geopolitical reality as 

well as an efficient route to economic 

development. 

Technical Advances 

Recent years have seen substantial 

developments in coal burning technology. 

Many modern coal-fired generating 

plants have thermal efficiencies of up 

to 40 percent, compared to typically 

25 percent for older plants. They achieve 

this primarily by producing steam 

at very high temperatures, because 

thermodynamics dictates that efficiency 

increases with temperature. 

So-called “supercritical” plants use steam 

at pressures and temperatures beyond 

the phase transition known as the critical 

point (374°C and 220 bar). Supercritical 

technology can in many cases be 

retrofitted to older plants, reducing 

capital expenditure compared to new 

plants and avoiding the need for complex 

and controversial planning permits. The 

International Energy Agency estimates 

that modernising the world’s existing 

coal-fired power plants could reduce total 

man-made greenhouse gas emissions by 

5.5 percent. 

The World Coal Association estimates 

that a 1 percent improvement in coal 

plant thermal efficiency results in a 2– 

3 percent reduction in CO2 emissions. 

Aside from reduced greenhouse gas 

emissions, there is a strong business case 

for employing supercritical technology: 

increased power output relative to coal 

consumption provides wider operating 

margins and helps to insulate operators 

from the volatility of international coal 

markets. 

of Germany supplied boilers producing 

steam at 300 bar and 600°C to drive 

the four 1,000 MW generating units. 

Yuhuan operates at a thermal efficiency 

of 46 percent. Even more advanced 

boilers now under development should 

see thermal efficiencies of 50 percent. 

For example, Indian firm BHEL, in a joint 

venture with French firm Alstom, is 

currently developing a 350 bar, 700°C 

boiler. 

Environmental Aspects 

In Europe, where the campaign to reduce 

global warming is most established, coal 

is deeply out of favour. However, many 

countries in the region face a looming 

energy crunch and have limited options to 

deal with this. While nuclear is enjoying 

improved support from politicians and 

the public in many countries, it still has 

considerable hurdles to clear. Europe has 

led the pack in developing and adopting 

renewable technology, but this is currently 

still a marginal contributor to the energy 

matrix. Most of Europe’s leadership in 

managing greenhouse gas emissions from 

power generation has been achieved 

through the increased use of natural gas. 

With North Sea gas reserves in decline 

and Russia proving itself ever less reliable 

as a source of gas, the continent has 

turned to imports of liquefied natural 

gas (LNG) – the UK currently imports 

32 percent of the gas it consumes 

– whose environmental credentials are 

questionable. Refurbishment of existing 

coal capacity and the construction of 

new coal-fired plants is therefore likely, 

given that Europe’s electricity demand 

continues to grow. 

Subcritical, supercritical and ultrasupercritical 

plants all fire their boilers with 

pulverised coal. Integrated gasification 

combined cycle (IGCC) plants, on the 

other hand, react coal or other solid fuels 

with steam and oxygen to produce a 

fuel gas known as syngas which can be 

handled in the same way as natural gas 

in a modern gas-fired plant. In an IGCC 

plant, syngas is burned in a gas turbine 

which drives a generator. The waste heat 

from the gas turbine is used to produce 

steam; this drives a steam turbine which 

also generates power, giving high overall 

IGCC is seen as a cleaner method of 

generating electricity from coal, partly 

because many experts argue that it is 

easier to integrate carbon capture and 

storage (see below) into IGCC plants than 

conventional coal-fired plants. 

Thermal efficiencies of 40–50 percent 

are achievable, and IGCC produces fewer 

particulate and other emissions than 

conventional plants, though both types 

of plant typically use scrubbers and filters 

to reduce emissions. IGCC pilot plants 

in the USA, the Netherlands and Poland 

have been running for up to 17 years, but 

issues of cost and reliability mean that the 

technology has still not found widespread 

commercial acceptance. 

In the UK, the Government’s energy 

strategy includes carbon capture and 

storage (CCS) technology to remove 

and dispose of CO2 emitted from large 

generating plants, though no actual 

CCS scheme has yet been approved. UK 

Energy Secretary Chris Huhne has stated 

that “the lights will not go out on my 

watch” but has implied that the no new 

coal-fired stations will be permitted in the 

UK without CCS. While a CCS scheme 

has been under trial in the Canadian 

province of Saskatchewan for ten years 

and oil companies have been using CO2 

to enhance oil recovery rates for many 

years, it has not been comprehensively 

demonstrated that the technology can put 

greenhouse gases beyond harm’s way. 

Current CCS technology also significantly 

reduces the overall efficiency of the 

power plant. 

USA, India and China 

In the USA coal generates 49 percent 

of the nation’s electricity and although 

debate rages about the future of the black 

rock, this figure looks set to fall. The 

emergence of new technologies facilitating 

the extraction of natural gas held in shale 

bed formations have dramatically changed 

North America’s gas supply situation. 

During 2009 proven reserves went up by 

10 percent and prices, which hit a peak of 

$13 per million BTU in 2008, have fallen 

to the $5/MMBTU mark today. Industry 

pundits seem confident that prices will 

hold below $6/MMBTU in the medium 

Low gas prices make the replacement of 

coal-fired stations with cleaner gas-fired 

capacity an attractive option. President 

Obama has generally been negative 

toward the coal industry and his move to 

impose limits on America’s greenhouse 

gas emissions would place severe 

constraints on the development of new 

coal-fired capacity. 

Set against the environmental logic 

and economic viability of increasing 

gas-fired capacity are hard political 

realities, however. America’s coal 

mining heartland in the Appalachian 

mountains is traditionally Democrat, and 

mining unions and industry lobby groups 

hold considerable political sway. The 

Democrats risk losing control of crucial 

states if they pursue an anti-coal agenda, 

and on this basis the future of coal power 

in America looks more secure than it 

otherwise might. 

The US notwithstanding, India and China 

will account for the bulk of capacity 

additions to the world’s coal-fired fleet in 

the coming decades. 79 percent of China’s 

electricity comes from coal, almost double 

the global average, while coal provides 

65 percent of India’s power. India and 

China have abundant coal reserves but 

very limited supplies of domestic gas; 

with this and environmental concerns in 

mind, both countries are pursuing largescale 

underground coal gasification pilot 

projects in a bid to increase indigenous 

gas supply, diversify their energy matrices 

and utilise reserves that might otherwise 

not be economically viable. In 2030 it is 

predicted that coal will be only marginally 

less important to China and India than it 

is today; the question for energy investors 

is how the coal will be used. 

Over the last decade, consumption of 

coal grew faster than any other type of 

fuel and this trend is set to continue. 

Coal consumption is predicted to grow 

by 54 percent in the next 20 years, and 

power generation will account for the 

lion’s share of that growth. The abundance 

of coal reserves in the world’s largest and 

fastest-growing markets, plus the low 

cost of coal, mean that this resource will 

remain a dominant source of energy for 

The new frontier of coal-fired capacity 

is “ultra-supercritical” technology, and 

the industry is witnessing unprecedented 

international cooperation as governments 

work with each other and the private 

sector to bring the technology online as 

fast as possible. An example is the Yuhuan 

18 

power plant in China, for which Siemens thermal efficiencies. 

term. 

the foreseeable future. 

19




India 

20 21


C o u n t r y P r o f i l e : I n d i a 

India in Focus 

The Indian power sector presents one of the largest business 

opportunities in the world at present. India, the world’s second 

most populous state, combines rapidly growing demand with a 

crippling 12 percent power deficit. 

Article by: 

Oliver Cushing and 

Jolanta Ksiezniak 

Section Cover 

(previous page): 

CLP’s Wind 

Power Project, 


CLP Power India 

Private Limited 

The power sector needs to expand 

rapidly if the country is to 

continue on its path of economic 

development. “India’s current installed 

capacity is about 150 GW and this needs 

to go up to nearly 800 GW in the next 

fifteen years,” says Baba Kalyani, owner 

of Bharat Forge and one of India’s most 

celebrated industrialists. “The power 

market is the biggest opportunity in the 

Indian manufacturing sector today”. 

“Income per capita is growing at a faster 

rate in rural areas that in urban areas… 

Therefore it is expected that demand 

for electricity will grow at a faster rate 

in the countryside.” Development of 

India’s power sector will require not just 

investment in new generation capacity 

and upgrades to the existing transmission 

and distribution (T&D) infrastructure, but 

also a new greenfield T&D infrastructure 

capable of supplying a population larger 

than that of the USA. India has changed 

dramatically in the space of a decade. 

This was the power market where Enron 

first started to unravel publicly, and issues 

surrounding Enron’s Dabhol plant have 

deterred international investors from the 

generation sector for many years. After 

the plant finally shut in 2001 the country 

embarked on a second phase of power 

market liberalisation culminating in the 

Since the reforms of 2003 Indian privatesector 

investors have become extremely 

active in generation, but the major foreign 

players are notable by their absence. 

“When the sector was initially opened 

to investment there was an abundance 

of investors. But the experience was 

not pleasant for some of them, which 

explains the current reticence on the 

part of international investors to re-enter 

the market,” says the manager of the 

power sector’s largest debt portfolio, 

B.K. Batra, Executive Director & Group 

Head of Corporate Banking at IDBI Bank. 

Batra argues: “This is the time for major 

players to reconsider India and perceive it 

as an attractive area for investment. ROI 

is at an impressive level of 15.5 percent, 

which strengthens the business case for 

investing in the power sector.” 

For the power equipment manufacturer or 

service provider, India presents the perfect 

combination of demand and supply. The 

Indian power manufacturing sector is 

still dominated by large state-controlled 

companies, both producers and clients, 

and is not perfectly liberal. The market 

is open to new entrants, however, and 

international companies are rushing to 

secure joint ventures with local partners 

as they enter the country. 

Power is a “concurrent” subject in India, 

meaning that it falls under the jurisdiction 

of both the central and state Governments. 

This division of authority has led to a 

wide variation in investor activity across 

the country, with the more liberalised 

and creditworthy states enjoying the 

most development. The prime central 

Government law regulating the power 

sector is the Electricity Act 2003, which 

revised earlier attempts at liberalisation 

and has resulted in a solid and stable legal 

framework for private-sector involvement 

in the Indian power market. 

however, there is clearly space for 

growth. The Government has set out 

plans for capacity to more than double 

by 2017. Generation has traditionally 

been the exclusive domain of central 

and state-owned companies, in some 

regions integrated with transmission and 

distribution operations to form utilities. 

Today the largest generation company 

remains the central-Governmentcontrolled 

National Thermal Power 

Corporation (NTPC), with 30,600 MW of 

capacity generating some 27 percent of 

the nation’s power output in 2009. Fellow 

public sector undertakings National Hydro 

Power Corporation (NHPC) and Nuclear 

Power Corporation of India Ltd (NPCIL) 

run 5,300 MW and 4,500 MW of capacity 

and generate 2.2 percent and 2.4 percent 

of the nation’s output respectively. The 

private sector controls only 13.5 percent 

of Indian generation capacity, stateowned 

generators own 52 percent, and 

central Government is responsible for the 

remaining 34 percent. 

Government policy since the Electricity 

Act of 2003 has been that private capital 

should fund the majority of capacity 

addition. The market has been opened 

to private investment in three ways. 

First, the Government has floated the 

public-sector undertakings, raising capital 

through a series of initial public offerings 

that have seen up to 33 percent of 

equity sold to investors. Although the 

public-sector undertakings remain very 

much in the control of the Government 

and there are limits on who may own 

shares, the fresh capital has allowed the 

under-funded generators to invest in new 

projects and they are increasingly acting 

as joint venture partners. 

The Act also permitted any company or 

group of companies to develop captive 

Above: 

power plants. This ruling has had a 

According to some estimates there are 

A crowd gathers 

substantial effect on the wider sector. 

as many as 400m people without access 

Generation 

in front of the 

Industrial users are charged higher rates 

to electricity in India, the Government 

Mysore Palace, lit 

India has a total installed capacity of for power and are far more likely to pay 

up for the Dasara 

having failed to meet the 2005 RGGVY 

162 GW and generated some 803 TWh in their bills than their fellow consumers 

festival 

plan’s target of connecting all villages 

2007. India is now the world’s fifth-largest in the retail market. Allowing industrial 

to the grid by 2010. Dr. J.M. Phatak, 

producer of electricity, representing consumers to generate their own power 

Chairman and Managing Director of the 

4.1 percent of total world output in 2007 has forced distribution companies to 

Rural Electrification Corporation and 

according to the International Energy strengthen collection efforts and freed 

the man tasked by the Government 

Agency. Given that Indians represent over industrial consumers from paying crosssubsidies. 

22 

with funding rural electrification, notes: Electricity Act 2003. 

17.3 percent of the world’s population, 

23



‘‘ 

We recognise the 

Many of today’s 

independent power 

producers (IPPs) started out 

as captive power divisions 

of their parent companies: 

India’s ever-dominant 

industrial conglomerates. 

As Dr. R.P. Singh, 

Executive Vice-Chairman 

of Jindal Power, explains: 

“We first entered the 

power sector… when we 

constructed a captive plant 

for a steel mill. Once we 

had successfully executed 

the first project for Jindal 

Steel & Power Ltd. we 

decided that we should 

become a major power 

player in our own right. By 

2009 we had commissioned India’s first 

private-sector mega power plant.” 

and reliable power to the city of Mumbai. 

Since deregulation in 2003 Tata Power 

has become the only private-sector 

company to be present in the generation, 

transmission and distribution sectors.” 

Tata Power is also set on exponential 

growth: the firm currently has 6 GW of 

capacity slated for completion by 2015 

and Agrawala says it is aiming for 25 GW 

by 2017. 

Coal and Gas Power 

Currently 53 percent of India’s generation 

capacity is coal-fired, and this dominance 

is set to continue in the medium term; 

India, poor in oil and gas, is coal-rich. 

Gas, both from new fields and imported, 

will play an increasingly important role in 

power generation in the coming years. 

India, already host to the world’s fifthlargest 

fleet of wind turbines, has placed 

major emphasis on renewable energy as 

part of its 12th five-year development 

plan (due to commence in 2012). Nuclear 

power forms the fourth pillar of India’s 

generation matrix, but new reactors are 

likely to only play a small role in the next 

decade. 

Energy Ltd. “The location of mines makes 

them difficult to develop. Despite the rail 

linkages provided by the Government, 

the efficiency of coal supply is poor. 

Nevertheless, we are fully committed to 

ply the domestic linkages for our plants. 

But to safeguard the sustainability of our 

plants we decided to install them next 

to ports, facilitating the use of imported 

coal.” 

India’s continuing reliance on coal 

has attracted international concern 

on environmental grounds; not only is 

consumption high and growing fast, but 

India’s coal is of a low grade, with high 

sulphur and ash content. Those within the 

industry note however that India badly 

needs coal-fired capacity if the country is 

to continue to reduce poverty. 

“Today the USA generates thrice as much 

electricity from coal as India does,” notes 

Reliance Power’s Kumar. “Natural gas or 

renewable sources of power alone cannot 

provide the 150 GW of capacity that the 

country is looking for in the next seven 

to ten years. Once we decided on having 

coal-based power in our portfolio, we 

observed that the best way to do it was to 

control the entire value chain to mitigate 

the risks.” With Indian emissions of 

greenhouse gases per capita a fraction of 

those in the west (India’s CO2 emissions 

per capita are less than a third of the 

global average) there is an international 

consensus that the country’s emissions 

will inevitably have to rise. 

Those within the industry are keen to see 

coal developed in a responsible manner, 

and tend to view coal as one part of a 

wider portfolio development strategy 

which will include sources which emit 

less CO2. 

“We recognise the threat of climate 

change – there is no doubt that managing 

carbon is a business risk,” says Rajiv 

Mishra, Managing Director of CLP. 

The 2003 Act reworked legislation 

threat of climate 

designed to create IPPs. India’s industrial 

conglomerates have seized the opportunity 

change – there to enter the sector and power generation 

is no doubt that has become a core business line for many 

of the nation’s largest companies. NTPC 

managing carbon is 

may still be the largest power generation India is the third-largest producer of coal 

a business risk. company in India but the likes of Tata in the world and the third-largest importer. 

and Reliance ADA are fast catching up. With 85 GW of capacity to feed, and 

Reliance was not even in the power considerable new development under 

Rajiv Mishra business a decade ago, but as Ashwani way, “king coal” looks set to dominate 

Managing Director Kumar, Head of Business Development the sector for the medium term. One 

of CLP 

at Reliance Power, explains: “We are of the Government’s key strategies to 

currently in the process of substantially encourage investment in the power sector 

expanding our generation portfolio from has been the creation of special-purpose 

about 1 GW to approximately 35 GW… vehicles to fast-track 14 “ultra mega 

We are diversified geographically, in terms power plants” (UMPPs) each of 4 GW 

of fuel type and in terms of our customers. plus, to create 60+ GW of new privatelyowned 

Reliance Power aims to be the leading 

coal-fired capacity by 2017 with 

power generation company in India.” The low risks for investors. The Ministry of 

Tata Group built and operated India’s first Power acquires the land and (where 

large-scale hydro plant in 1915 and has applicable) coal rights, and undertakes all 

been in the industry ever since. While the clearances and permitting needed to 

central and state Governments came to develop a project. Companies then bid for 

dominate the sector after independence, the tender on an operating cost basis. So 

Tata maintained its foothold in the power far four UMPPs have been awarded. 

game and today it is India’s largest privatesector 

generator, with 3 GW of installed Despite India’s vast reserves of coal, most 

capacity. “Tata Power is almost 100 new plants under development are on the 

years old,” explains Banmali Agrawala, coast due to weaknesses in the transport 

Tata Power’s Executive Director of infrastructure. “The supply of coal in India 

Strategy and Business Development. “We is becoming a challenge, even for some 

started off by building hydro projects, of the existing plants,” says L.K. Gupta, 

24 

with a vision of providing cheap, clean Joint Managing Director and CEO of JSW 

25 

‘‘



“However, we did not want to marginalise 

ourselves as a pure renewables player; we 

want to be part of the mainstream solution. 

There is a requirement for conventional 

energy within our region. In India flue-gas 

desulphurisers are not required and we 

are the only company to have made a bid 

on the basis that we will implement an 

FGD. We recognise that renewables must 

also be an integral part of the solution, 

and we are now the largest developer of 

wind farms in India.” 

India’s lack of domestic gas reserves, 

and its inability to build a pipeline from 

Central Asia or Iran through neighbouring 

Pakistan, has prevented the development 

of significant gas-fired generation 

capacity. Joint Secretary at the Ministry 

of Petroleum and Natural Gas Sunil Jain 

explains: “Worldwide, gas represents 

some 30 percent of the energy basket; in 

India it is only 9 percent. India has a huge 

appetite for natural gas, and demand is 

only constrained by supply and the supply 

network itself.” 

Interview with Jayant Deo 

Managing Director and CEO, Indian Energy Exchange 

Q – Please could we start 

with a brief overview of 

IEX and how it came to 

be established? 

A – In 2006 the CERC 

realised that it was 

important for India 

to have a live trading 

platform for power and 

initiated a programme to 

establish one. In 2007 

a consortium lead by 

Financial Technologies and key private players in 

the energy sector got approval to start developing 

an Indian power exchange and agreed a deal with 

the Scandinavian power exchange, Nordpool.On 

22nd June 2008 we went live with the Indian 

Power Exchange. We sell power here on an 

hourly basis. The bidding is done blindly so as to 

ensure a fair playing field, it is a futures market, 

but a short term futures market. In a very short 

period of 24 months we have come to have more 

than 400 traders on the Exchange. This is an 

impressive uptake by any measure, but given the 

economic problems of 2008/9 it is superb. 

Gas from the Krishna Godavari basin is set 

to increase India’s production dramatically, 

and exploration work is underway across 

the country. A long-running court case 

involving Krishna Godavari gas supplied 

by Reliance Industries to Reliance ADA 

has recently been resolved and the pricing 

mechanism and allocation system has 

been clarified as a result. 

The Government is keen to encourage 

further exploration, and Jain notes: 

“India has a very friendly regime when 

it comes to oil and gas, I think one of 

the best in the world. Last year, during 

the global economic crisis, our latest 

round of block licensing was fully 

subscribed.” Gas-fired capacity is set 

to grow substantially in the coming 

years (Reliance Power alone intends 

to build 8 GW of capacity) though the 

combination of ever-increasing load and 

competition from alternative uses for 

gas will ensure that it does not become 

a dominant source of power in the 

medium term. 

Q – The IEX is the only power exchange operating 

in a market in which there is a deficit, how does 

this affect the dynamic of the Exchange? 

A – India is a vast and varied country, daily peak 

demand in the east will not fall at the same time 

as in the south, and peak supply during the rainy 

season in the north (where many hydro facilities 

are located) does not match peak demand there. 

Renewables 

Renewable energy is a hot topic in India, 

as in many other countries. India’s 

objectives are threefold when it comes to 

renewables: build a large-scale industry 

which will generate jobs and export 

revenue, demonstrate a commitment 

to reducing emissions relative to 

economic development, and go some 

way to achieving energy independence. 

Renewable sources of power have the 

potential to play a significant role in the 

electrification of rural India. 

As a means of addressing India’s energy 

deficit crisis, renewable sources have a 

dual role to play: aside from the obvious 

capacity addition they are also an ideal 

source of distributed energy. As Rabindra 

K. Satpathy, the man in charge of solar 

at India’s largest corporation, Reliance 

Industries, observes: “We believe that 

distributed power will play a crucial role 

in the development of India, instantly 

cutting the 37 percent transmission and 

distribution losses.” With an installed 

capacity of over 12 GW as of mid-2010, 

and a substantial home-grown turbine 

manufacturing industry, India has already 

achieved a strong position in the wind 

sector. Under the 11th Five Year Plan 

(due to conclude in 2012) the Government 

envisaged 10,500 MW of new capacity, of 

which more than 5 GW had been installed 

by mid-2010. The Ministry of New and 

Renewable Energy appears confident that 

the remaining capacity will be added by 

the end of the plan. 

In hydro power India has phenomenal 

potential. The Government distinguishes 

between large- and small-scale hydro, 

with only schemes of up to 25 MW 

qualifying for full-scale renewables 

support. Sameer S. Shetty, Managing 

Director of India’s largest producer of 

small hydro turbines, BFL (a Fouress 

Group company), says: “The market has 

huge potential, but the the disconnect 

between potential and realisation is quite 

big. There is 22 GW of viable identified 

capacity for small hydro but India is 

building 600–700 MW annually at best. 

Power is a state subject and even though 

the Central Government and the Central 

Ministry determine a framework, they 

have no means to ensure that the state 

fulfils its requirements.” Nevertheless, 

a substantial number of small hydro 

schemes are under development and 

among the great variation between states, 

some have a supportive and pragmatic 

attitude to small hydro. 

The private sector, with a handful of 

exceptions, has proven reticent to take 

up the challenging of developing India’s 

numerous large-scale hydro opportunities. 

Nimish Patel, Director of India’s largest 

dam and hydro tunnelling company, 

Patel Engineering, says: “Thermal plants 

have predictable time lines and you can 

commission a plant in three to four years. 

Hydro however requires long investigation 

periods and the schemes can take a very 

long time to get approved. Research 

reports are not always up to standard 

and thus the private sector has been 

very wary of these risks.” Things are 

beginning to change and some extremely 

successful hydro schemes have been 

developed by private-sector investors. 

Bhilwara Energy developed its first hydro 

scheme in 1995, and unlike early privatesector 

thermal plants it has proven to be 

a commercial success. Riju Jhunjhunwala 

of Bhilwara Energy explains: “We recently 

commissioned a new 200 MW plant in 

India and are looking into developing a 

much larger plant in Nepal. The land is 

already acquired, infrastructure is being 

developed, and the tender documents 

are being prepared. All the electricity 

generated there will be sold to India.” By 

2015 the company intends to have 3 GW 

Across the world most government 

While net demand is higher than net supply in 

targets for wind energy have been 

India, we have found that the market did not 

missed, yet India (which met the target 

ensure that all power being generated was 

for its 10th Five Year Plan in 2006) 

consumed, the IEX helps address this issue. 

seems to have implemented a strategy 

that works. Co-founder and Director 

Q – How easy is it for you to sell the concept of 

of wind farm developer Veer Energy 

merchant trading to a generator? 

and Infrastructure Ltd Dhimant J. Shah 

A – A company’s decision to go merchant or not 

will of course be informed by their appetitive for 

says: “The Government has made it 

risk and their debt profile. For most generators, 

a regulation that every energy service 

entering a fixed term contract for 50 or 60% of 

provider has to provide up to 7 percent 

their output makes a project viable as it satisfies 

of their energy sourcing from renewable 

lenders that there is a secure income stream to 

energy. We are happy with the way that 

pay debt, they may chose to sell the remainder on 

we have progressed. The model works 

the IEX as it gives them exposure to the upside 

here in India but it may take some time for 

that the Indian energy growth curve presents. 

manufacturers, developers and investors 

to get used to it.” 

of installed capacity under operation. 

26 27



A small dam to 

be constructed 

at the valley of 

Mahabaleshwar 

Hill Station in 

India for local 

consumption, one 

of the several 

around the country 

With such a vast potential and a 

commitment to managing its emissions 

of greenhouse gases, India needs to 

encourage substantial private-sector 

investment in large-scale hydro schemes. 

One solution might be to reconsider the 

rules distinguishing large-scale hydro 

schemes from their smaller siblings, as 

Patel argues: “We need to consider all 

hydropower as renewable, which will 

allow developers to sell their output 

for more profit, therefore making the 

sector more attractive and increasing 

investment.” India was an early pioneer 

in the use of biomass as an energy 

resource, with efforts initially focused 

on farm waste gasification. Attention is 

now being given by both the Government 

and the private sector to generating 

electricity from biomass. With the world’s 

largest rural population and multiple large 

metropolises that have yet to come to 

grips with the disposal of urban waste, 

there exists a window of opportunity 

to integrate energy generation into the 

waste management system. 

One early mover in biomass is power 

transmission engineering and waste 

management group A2Z. This company 

aims to become an engineering expert 

in the field as well as an independent 

power producer in its own right. “We 

are now setting up three new biomass 

power plants, each of 15 MW capacity, 

integrated with the sugar industry,” says 

Rakesh Aggarwal, Chairman and Managing 

Director of A2Z Powercom. “Our strategy 

with setting up these plants is to be able 

to integrate with any industry that has 

agri-waste or municipal waste. A very 

important factor for the smaller renewable 

energy plants is that they are exempt from 

environmental clearance. Construction 

time is less than a year, which is a much 

better proposition compared to other 

kinds of power plants.” 

Much of India is blessed with high and 

consistent levels of solar radiation. The 

central Government and a number of states, 

which are competing to become India’s 

solar manufacturing hub, have introduced 

attractive subsidies to foster development 

of solar power. Central, state and city 

governments are providing householders 

and businesspeople with support to install 

photovoltaic (PV) panels and thermal 

water heaters at the distributed level. One 

pioneer in this field is Delhi. “Delhi has had 

the reputation of being ‘power cut city’,” 

explains Rakesh Mehta, Chief Secretary 

at the Government of the National Capital 

Territory of Delhi. “Mega-cities like Delhi, 

which depend almost exclusively on power 

to meet their economic needs, will have to 

find new and innovative solutions to meet 

their requirements.” As part of a wider 

campaign to reduce pollution and improve 

the electricity supply Delhi has adopted 

a large-scale programme to promote 

solar water heaters, giving subsidies of 

up to 6,000 rupees ($130) for 100-litre 

systems in the domestic sector and up to 

60,000 rupees ($1,300) for commercial 

buildings. 

The Jawaharlal Nehru National Solar 

Mission is a nationwide scheme to promote 

PV usage. Dr. Farooq Abdullah, Union 

Minister for New and Renewable Energy, 

says that the Mission has twin objectives: 

“To contribute to India’s long-term energy 

security as well as its ecological security. 

The rapid development and deployment 

of renewable energy is imperative in this 

context, and in view of high solar radiation 

over the country, solar energy provides a 

long-term sustainable solution. The Solar 

Mission recommends implementation in 

three stages, leading up to an installed 

capacity of 20 GW by the end of the 

13th Plan in 2022. What we do in the 

next three to four years will be critical. 

Therefore, the Cabinet has approved the 

setting up of 1,100 MW of grid solar 

power and 200 MW of off-grid solar 

applications utilising both solar thermal 

and PV technologies in the first phase of 

the Mission. In addition, the Mission will 

also focus on R&D and human resources 

to develop and strengthen Indian skills 

and enhance indigenous content to make 

the Mission sustainable.” 

want to make solar power affordable to 

the masses.” India has refused to signed 

the Nuclear Non-Proliferation Treaty and 

for three decades it was blocked from 

trading with the Nuclear Suppliers Group. 

In 2008 an American-brokered deal saw 

India re-enter the world of international 

civilian nuclear trade and the country has 

set out a route map to increase its nuclear 

fleet more than thirteen-fold, to 63 GW, 

by 2032. 

Transmission, Distribution 

and Trading 

India’s transmission and distribution 

(T&D) sector has been the silent sister 

of generation since 2003, but over the 

coming decade this is set to change 

dramatically. As the private sector has 

rushed to spend billions of dollars on 

new generation capacity, only a handful 

of distribution concessions in Delhi and 

Mumbai have been privatised. Instead, 

new transmission lines have invariably 

been built by the Government-controlled 

PowerGrid Corp., sometimes in joint 

ventures with private-sector partners. 

Amul Gabrani, Chairman and Managing 

Director of transmission engineering 

company Hythro Power, explains the 

situation in T&D: “The public-private 

partnerships in the power sector started 

in the generation side. Originally, 

transmission lines were being delivered 

by a single body, PowerGrid Corp. Now 

the market is starting to liberalise and 

there are more public-private partnerships 

(PPPs) in the transmission sector. Since 

there is a time lag between transmission 

and generation, you will find increased 

interest in transmission in the next two 

years.” Gabrani is confident that the 

private sector can help cut India’s terrible 

T&D losses, which account for 37 percent 

of all power generated. “One of the 

impediments in India has been the losses 

because of the quality of equipment,” he 

says, “but this will change and the private 

sector will look at more efficient systems. 

Technical losses will go down and a lot 

of groups are concentrating on this. Once 

technical losses go down, the profitability 

of the power sector will increase; this 

will happen only with the support of the 

The private sector has reacted favourably 

to the Mission, though Reliance Industry 

Group’s Rabindra K. Satpathy notes: “We 

still have to confront a lot of assumptions 

regarding reliability and expense. Currently 

solar costs 12.5 rupees per unit, against 

about 3 rupees for coal and gas. But if 

you add other costs, such as transmission 

loss, that is pushing the price up to 4 or 

5 rupees.” Reliance Solar wants to bring 

the cost of PV cells down to $2/MW of 

capacity, Satpathy says. “We want to 

speed up the pace of installation as this 

will give PV a major advantage over other 

generation types. Solar projects are not 

controversial and can be built quickly. 

Also, they are not subject to trade 

embargoes: no one can stop the sun! We 

have seen that people want a high quality 

28 

of power, which PV can provide. We private sector.” 

29


I n F o c u s : D e l h i T r a n s c o L i m i t e d 

Green Power for Green Delhi 

Be it plantation, no-industry zones or 100% Commercial Vehicles 

on CNG, Delhi’s obsession with Green is quite evident. No wonder, 

Delhi has also engineered one of the greenest power generation 

and transmission systems. Clean and green production processes 

of Pragati Power Corporation Ltd. (PPCL) and minimum loss 

transmission systems of Delhi Transco Ltd. are at the heart of 

Delhi’s Green Power Vision. 

Sheila Dikshit 

Chief Minister, 

Delhi 

Power Foundation: 

Pragati Power Corporation 

Ltd. (PPCL) was started with a 

mission to play a pivotal role in 

the development of NCT and 

uplifting of the living standards 

of the citizens. The company 

is committed to provide clean 

& green energy with special 

emphasis on sustainable 

development by adopting 

energy efficient technology for 

power generation. The existing 

and forth-coming projects are 

the mirrors of self imposed 

corporate standards for clean 

& energy efficient technology products & 

services. Delhi Transco Ltd was formed 

in 2002 following the unbundling of the 

erstwhile Delhi Vidyut Board under the 

Delhi Electricity Reforms Act 2000. 

DTL has been responsible for establishing, 

upgrading, operating and maintaining the 

EHV (Extra High Voltage) network in and 

around Delhi. 

Delhi Transco Limited: 

A noteworthy achievement of DTL has 

been the company’s transmission loss 

reduction. Transmission loss level has 

been reduced from 3.84 per cent in 

2002-03 to 1.38 per cent in 2009-10, 

which is the lowest transmission loss 

level in the country. For improvement of 

operational efficiency, regular monitoring 

and maintenance of equipment is carried 

out through patrolling of transmission 

lines and hotline washing of insulator 

strings. Further the work of replacing 

the existing 400 KV insulators with 

polymer insulators is being carried out. 

To ensure adequate and efficient 

power supply for the citizens of Delhi, 

DTL has been continuously upgrading 

its transmission capacity and adding 

transmission line to its system. The modern 

technologies are being implemented in 

DTL by way of constructing GIS substations 

at Ridge Valley, Indira Gandhi 

International Airport (DIAL) as well as 

other places. 

DTL is also in the process of laying 220 KV 

cables by employing cable link techniques 

and would be the largest network of its 

kind going to be established in India. Out 

of all the projects initiated by DTL, the 

work of two 220 KV GIS sub-stations has 

been completed and will be synchronized 

by the end of September 2010 after 

testing. The work for 2 sub-stations of 

400 KV and 5 sub-stations of 220 KV is 

in full swing. 

Powered by IT: 

Following the e-Governance initiatives of 

GNCTD and to enhance its efficiency and 

productivity, DTL has initiated several IT 

based projects. For constant access to realtime 

data of the entire network, the utility 

has implemented Supervisory Control and 

Data Acquisition (SCADA) systems. 

DTL has also carried out system studies, 

adopting state-of-the-art-software. 

Enterprise Resource Planning Software, 

is being implemented which will offer an 

integrated software solution to all the 

functions of the organization. With ERP 

software DTL will standardize business 

processes and facilitate best practices 

by creating more efficient systems 

and concentrating its efforts towards 

maximizing profits. 

Power Finance: 

DTL has achieved a commendable financial 

turnaround after a three-year financial 

engineering process. It has posted profits 

in each of the past 4 years. 

In 2008-09 DTL profits, after tax stood at 

Rs. 634.9 million, an impressive 22.84% 

increase over the Rs. 516.9 million 

New Projects of Pragati Power Corporation 

Limited (PPCL) 

Name of Project 

Pragati Phase 3,Bawana, 

Delhi (Gas based) 

Pragati Phase 2, Bamnauli, 

Delhi (Gas Based) 

Source: Delhi Transco Limited 

registered in the preceding year. The 

company also paid a dividend of Rs. 90.8 

million to the Government for 2008-09. 

It has been accredited rating A+ Company 

by top two rating agencies of the country 

i.e. CRISIL and Fitch Rating India Ltd. This 

is the highest amongst all state utilities in 

the country. 

Energy Audit: BEE accredited energy 

auditors M/s Petroleum Conservation 

Research Association (PCRA) has 

conducted energy audit of the IPGCL 

Plans. 

All efforts have been made to run various 

systems as per the designed parameters to 

conserve energy. 

1.Overhauling of the unit was carried out 

as per the manufacture’s direction to run 

the machine optimally. 

2.2. 220 KV CVT’s were installed in 

each phase of all the three generators to 

improve the accuracy of metering system 

for the sale of energy. 

3.The Auxiliary consumption of the Pragati 

Power Station- 1 in the year 2009-10 was 

2.85% and achieved the Aux. consumption 

target 3%. 

Generation Capacity 

1500 MW (1st unit 

commissioned in Oct 2010) 

750 MW (Proposed) 

30 31



Interview with Mr. Rakesh Mehta, Chief Secretary, Government 

of N.C.T. Of Delhi, CMD of Delhi Transco and Chairman of 

Pragati Power Corporation 

Q – Please could you 

start by giving us a 

personal professional 

background and an 

overview of the power 

sector in Delhi? 

A – I belong to the 

civil services and have 

had a long relationship 

with the power sector, 

having been the power 

commissioner in Goa 

and having managed the electricity sector in the 

local body. Later on I became the CMD of Delhi 

Transco and Chairman of Genco. 

In 2001 the power sector in Delhi was 

restructured and the Delhi Electricity Board 

was broken up into seven companies: three 

distributions, two generation, one holding 

transmission and a holding company. 

Q – You were a panelist at the Copenhagen World 

Summit on Climate Changes forum of the world’s 

largest cities, what efforts is Delhi making to limit 

its impact on the environment? 

A – To promote energy conservation and to 

conduct energy audits of all majors buildings in 

the city. The Energy Efficiency and Renewable 

Energy Management Centre was established. 

We have started investing in renewable energy 

sources, it has been made mandatory for 

large buildings to implement energy efficiency 

measures, distribution companies have been 

successful in promoting CFL lamps, on solar 

water heaters subsidy is given from 6,000 rupees 

($130) to 60,000 rupees ($1,300). 

We are also developing waste- to- gas plants and 

have one operating in the canteen in my building, 

which serves 5,000 people and have two plants 

under development, One scheme will come into 

operation in 2011 and will consume 1,500mt/ day 

providing 16mw of capacity. 

Q – The population of Delhi is projected to grow 

substantially in the next decade, how is the 

N.C.P. Government going to ensure that the 

capital’s energy needs are met? 

A – Two years ago we adopted a policy of load 

growth generation keeping in mind that Delhi, a 

city of 17 million people, is projected to grow to 

24 million. We decided that 40- 50% of Delhi’s 

supply should be generated within 40km of 

the city. The power generation companies of 

N.C.T Delhi have set up a 1,500mw plant 40km 

near Delhi border in a joint venture with the 

Government of Haryana and NTPC. The plant 

can be upgraded by a further 1,000mw. Delhi 

will receive 50% of the power. In Delhi we are 

establishing a 1,500mw gas plant and a 750mw 

gas plant, we are closing all three of our coal fired 

Delhi plants which will have a huge impact on the 

air quality of the capital. 

Q – Delhi Transco has really lead the way in India 

in terms of cutting transmission losses, how has 

the company achieved this? 

A – Transco has substantially cut transmission 

losses, prior to privatisation they were 6% and 

now they are below 1%. Delhi Transco has 

completed 400kv ring around Delhi having a 

capacity of 4000MW Load. 

The new master plan 2021 has recently been 

approved and it is projected that 700 sqkm of 

territory on the outskirts of Delhi will be urbanised 

over the next fifteen years. We are conducting a 

major review to establish which areas are likely 

to be developed in the next few years to identify 

where to set up new substation infrastructure. 

Delhi has had the reputation of being ‘power cut 

city’, my vision is to make Delhi an inverter free 

city. 

Q – What would your message be to our 

international readership about the Indian power 

sector and investing here? 

A – The Indian economy is growing at about 

9% a year. Mega cities like Delhi, which depend 

almost exclusively on power to meet their 

economic needs, will have to find new and 

innovative solutions to meet their requirements. 

There is a great opportunity for people across the 

world to become partners with us. 

The Indian transmission network was 

originally split into several regions. In 

recent years PowerGrid Corp. has made 

significant headway in interconnecting the 

regions but there is still much work to be 

done. “India is a vast and varied country. 

Daily peak demand in the east will not 

fall at the same time as in the south, and 

peak supply during the rainy season in 

the north, where many hydro facilities are 

located, does not match peak demand 

there,” says Jayant Deo, MD and CEO 

of IEX, India’s new and fast-developing 

power exchange. “As the energy market 

was structured on a regional basis, supply 

has traditionally been built to meet local 

demands and thus there was often a 

mismatch between demand and supply.” 

India is developing a network of ultrahigh-voltage 

transmission lines to improve 

regional interconnection and to transmit 

power efficiently from the country’s new 

mega and ultra-mega generation plants. 

Indian transmission engineering firms are 

rushing to meet demand in the sector. 

One challenge, common throughout many 

sectors of Indian industry, is security of 

supply for parts and equipment. With this 

in mind, many of the larger transmission 

engineering firms have invested in their 

own fabrication plants. 

Technical T&D losses have been kept 

high by lack of investment and a system 

that has held back the adoption of new 

technologies. As the private sector 

becomes more involved in T&D the hope 

is that losses will fall further. 

“Power transmission is a big area for 

improvement, as the distribution losses 

are very high – well above 30 percent in 

India compared to 11–15 percent globally. 

We are developing high-tech solutions 

in order to cut the energy losses,” says 

Rajesh Agarwal, Managing Director of BS 

TransComm. Looking to the future, PPPs 

will increasingly be the chosen method 

of development. “The Government has 

already budgeted $14bn via partnerships 

with private companies, through the 

Build-Operate-Transfer model. The private 

players are just starting to enter the sector. 

Within the next five to seven years there 

Manufacturing 

Like many of Asia’s other success 

stories, India’s manufacturing industry is 

dominated by three classes of company. 

Large state-controlled enterprises, the 

hangover of a three-decade dalliance with 

socialism, have continued to prosper in 

India’s increasingly free market. The private 

sector is characterised by conglomerates 

set on integration and diversification, while 

young and aggressive firms are chasing 

niche positions. India is a great incubator 

of entrepreneurship – Bharat Forge’s 

Baba Kalyani notes: “India’s growth is 

largely dependent on the entrepreneurial 

skills of our people” – and there is space 

in the power market for smaller players. 

However, this expanding market is likely to 

be dominated by a handful of major Indian 

and foreign corporations (often working in 

partnership) with the smaller companies 

operating at the lower end of the value 

chain. As Kalyani observes: “Energy, like 

any other big market, is regulated. The 

Government gets involved somewhere. 

Therefore, knowing the system, knowing 

how it works and having the network 

always helps.” 

Manufacturing 

unit; Photo 

courtesy of Bharat 

Forge. 

We have created an air ambience fund which is 

essentially a very small tax on diesel. This creates 

about 700m rupees ($15m) which we use to 

subsidies by one third the price of electric vehicles. 

will be a shift in this sphere.” 

32 33



‘‘ 

While we 

started out as a 

manufacturing 

organisation, we 

have now become 

an innovation-driven 

company. Last year 

we spent almost 

2.5 percent of our 

turnover on R&D 

and filed patents at 

the rate of nearly 

one a day. 

B.P. Rao 

Chairman & 

Managing Director 

of BHEL 

‘‘ 

The Indian parliament 

recently adopted overtly 

protectionist measures, 

including the reintroduction 

of an a tax on imported 

power equipment. 

State-owned generators, 

including India’s largest 

generator NTPC, are obliged 

to favour domestically 

manufactured equipment 

if the price is within 

15 percent of the closest 

foreign-made product. 

These measures threaten 

to undermine the country’s 

generation capacity growth 

objectives as well as 

damaging the development 

of a domestic industry. 

For many years India’s power sector was 

virtually a closed shop with privileged 

status given to Bharat Heavy Electricals 

Ltd. (BHEL), the Government-controlled 

manufacturer of everything from turbines 

to capacitors. Some 70 percent of 

turbines in Indian power plants were built 

by BHEL. Today, however, BHEL has 

emerged from its protected position to 

compete successfully in the open market, 

and indeed has prospered in recent 

years. “Over the last five to six years we 

have grown at a rate of 20–25 percent 

annually, our top line has tripled and the 

bottom line quadrupled in a matter of 

four years,” explains B.P. Rao, BHEL’s 

Chairman and Managing Director. “In 

2006 we had 6 GW/y capacity, in 2007 

this was upped to 10 GW and in March 

2010 we went to 15 GW.” It is a sign of 

quite how fast the market is growing and 

how well the old monopolist has thrived 

in the free market that 15 GW/y is still not 

enough for BHEL; by 2012 Rao is aiming 

for an annual production of turbines and 

generators totalling 20 GW. 

and filed patents at the rate of nearly one 

a day. The company followed the process 

of acquiring technology through tie-ups 

with many of the leading companies. 

Today we have technology partnerships 

with about 70 companies.” 

Exports and international collaboration 

have played a major part in the 

development of many Indian companies. 

Looking to the future, CEOs see that 

participating in the world market will not 

only widen their markets but also help 

them create world-class products. “At 

the end of the 1990s things were really 

slow in India and the markets were not 

doing very well, but we wanted to grow 

the company and start exporting our 

products,” says Aditya Knanna, Director 

of the switchgear and busbar manufacture 

C&S. “That was a significant point in the 

company, and when we started getting 

orders, we had to up our game in terms of 

quality, delivery, logistics and aesthetics. 

By the time the market opened in the early 

2000s we were already there, which is 

why C&S is an anomaly today: we are 

a small company competing against 

multi-billion-dollar companies and have 

managed to establish a strong market 

position in India.” 

India on the World Stage 

For many years Indian power service and 

equipment manufacturing companies had 

little option other than to look overseas 

if they wished to grow. With a complex 

and often corrupt tendering process 

and only a few state-owned clients, the 

domestic market was often stagnant and 

impenetrable. Today the domestic market 

is far more active and transparent, yet 

many manufacturers still wish to increase 

revenues and margins through exports. 

Africa and the Middle East are the key 

markets for most Indian export-oriented 

companies, with neighbouring South 

Asian countries such as Bhutan attracting 

the attention of Indian generation 

companies. 

company,” says Khurshed Daruvala, 

Managing Director of engineering and 

contracting company Sterling and 

Wilson. Daruvala notes that most African 

countries take a pragmatic attitude to the 

importation of labour and goods when 

it comes to executing projects: “Most 

African countries allow Indian labour to 

come and work, and also accept material 

coming from India. 75 percent of the cost 

of a project comes from India, which is a 

real advantage for us.” 

Mohan Energy Corporation is an Indian 

engineering firm established over 30 

years ago specifically to target the 

African market. Director Amitabh Agrawal 

explains the Indian experience of Africa: 

“In the African marketplace it is hard to 

distinguish between an Indian company 

and a European company. African clients 

are very clear about what they want and 

if you are able to give them this then they 

are happy to work with you. Africa is not 

as price-sensitive as India; in India people 

are entering pricing wars, which are not 

sustainable and have to compromise the 

quality of the product. In Africa, people 

understand that there is a minimum price 

and they demand a higher standard. 

Most of the time, the consultants and 

supervising engineers come from western 

countries and projects have to be executed 

to the highest international standards.” 

It is an indication of the international 

standards that Indian firms achieve 

that they tend to focus on privately or 

internationally funded projects rather 

than on large, government-to-government 

deals. “Tata Consulting Engineers 

has successfully carried out several 

assignments overseas – in south-east 

Asia, the Middle East, Africa, Europe, 

Asia Pacific, Australia and the Americas,” 

notes Vice President U.K. Hambarde. 

“Some of our projects were sponsored by 

the World Bank, Asian Development Bank, 

UNDP and other international agencies. 

Our focus at the moment is the African 

region, as it is a growing economy and 

we have a lot of experience there. There 

are many opportunities, especially in the 

T&D sector.” Indian firms have sometimes 

struggled to overcome a perception that 

they do not deliver to international quality 

one of India’s “big three” construction 

companies, is working across the world 

in a vast array of technical areas. 

Essar is a national champion in the 

construction and engineering sectors 

and one of the largest and best-equipped 

construction companies in Asia. CEO 

Alwyn Bowden explains: “There are a lot 

of misconceptions around, and in the past 

Indian construction companies have not 

always been highly regarded overseas. 

Most of the labour for the international 

sites has come from India and the skilled 

work base is originating from here. The 

Indian market has been very chaotic in the 

past, but the management of the various 

groups realise that and are recruiting 

trained people to make sure that they catch 

up with existing management standards 

elsewhere.” It is clear, however, that 

India can produce world-class companies. 

“We are currently running two sites with 

25,000-person workforces and that 

is quite rare anywhere in the world,” 

Bowden says. 

Conclusion 

India’s generation and transmission 

sectors are now open to private investment 

and the nation’s leading companies have 

rushed to fulfil the country’s burgeoning 

demand for electricity. The country has 

taken some time to develop a model of 

private sector participation that works 

and is respected by national and state 

governments. The Indian experience for 

international companies in the 1990s 

and early 2000s has resulted in a muted 

foreign response to the opportunities that 

exist in the modern market. 

The reforms of 2003 have gone a long 

way to fixing early problems and foreign 

private firms should look anew at India. 

The country still has some way to go 

before it can hope to attract investment 

in the regions of the country where it 

is most needed; it is not uncommon for 

Indian power executives to define the 

Indian market as just four states, ignoring 

the 22 which are deemed uncreditworthy. 

Many states still need to fully implement 

open access legislation and ensure that 

state-owned distribution companies pay 

generators according to the terms of their 

BHEL has placed great emphasis on 

technological development, both as a 

partner to foreign firms and more recently 

through in-house R&D. “While we started Africa is the new frontier for many Indian 

out as a manufacturing organisation, we companies who see that they have a 

have now become an innovation-driven number of comparative advantages in 

company,” says Rao. “Last year we spent that continent. “I believe that Africa 

34 

almost 2.5 percent of our turnover on R&D will be the most exciting area for this 

and time standards. Essar Projects, agreements. 

35


F o c u s : N u c l e a r P o w e r 

Interview with Baba N Kalyani, 

Chairman and Managing Director, Bharat Forge Ltd. 

Q – Please could you 

start by giving us an 

overview of Bharat Forge 

and how the company 

has evolved since you 

became CMD? 

A – In the 1990s, I 

converted our company 

to a global business and I 

believe that we are now 

the leading company in 

our segment. We have 

diversified from being purely a supplier to the 

automotive industry into other industrial sectors 

as well. Our strategy for this decade is to build 

our non-automotive businesses -- primarily our 

capital goods interests -- substantially, so that 

they contribute to 70- 75% of our revenue. Five 

years ago it was only about 5 or 10%. Within the 

capital goods segment, power is one of the key 

verticals. 

We are a technology-driven company and within 

the power sector we are going to be present in 

the renewable energy as well as thermal and 

nuclear energy sectors. Our focus is to build 

equipment for these sectors. We are currently 

building wind turbines which we manufacture and 

sell in India and Europe. We are now setting up a 

plant to build steam turbines and generators using 

super critical technology. We are partnering with 

Alstom in this. 

We are also setting up a plant to build turbines 

and generators for thermal power plants in the 

range of 300 to 800MW – sub critical, super 

critical and ultra super critical. Bharat Forge 

also has a relationship with Areva of France 

to manufacture and supply components for 

the nuclear power sector. We currently supply 

specialised forgings to the Indian nuclear industry 

and by the nature of our upcoming businesses 

we will become a very large player in the power 

sector. 

that is BHEL. Production capacity was about 

5,000MW to 6,000MW, which they are currently 

doubling. India’s current installed capacity is 

about 150,000MW and this needs to go up to 

nearly 800,000MW in the next fifteen years. This 

growth cannot be met by one company alone. 

The power market is the biggest opportunity in 

the Indian manufacturing sector today. Power 

equipment by its nature requires a lot of forging - 

- which is our core business. We are world leaders 

in our field and experts at manufacturing. 

Q – How do you see the Nuclear Liabilities Act 

impacting on your aspirations in the sector? 

A – I think that there is a lot of media hype 

surrounding the issue. My own personal view is 

that between the government of India and the 

people who plan to build the nuclear plants, there 

will be a very clear understanding of liabilities. 

If you have a one-sided view of liability then no 

one is going to build the plants. The market has 

its own way of finding its balance. I don’t think 

there will be any delay caused by this. If you have 

any liability you can go to an insurance company 

and they can give you cover for a certain price. 

This price will be the same for anyone. If it is 

uninsurable then no one will build the plants. 

Q – What would be your message to our readers 

around the globe about the Indian Power Sector, 

and Bharat Forge specifically? 

A – Bharat Forge aims to grow by three times 

within the next five years - and will be a $4bn 

company. Power equipment sales will play 

a substantial role in this growth. The power 

industry in India; whether it be the manufacturing 

of equipment, energy generation, transmission 

or distribution; is going to be one of the largest 

drivers of growth over the next two decades. 

In order to reach at least moderate levels of 

electricity consumption in India, the sector will 

require major investment. India is without a doubt 

one of the most exciting places in the world when 

it comes to doing business in the power sector. 

Nuclear Power 

Nuclear power has never been so widely, and extensively, 

employed as it is today. More and more of the world is 

embracing nuclear generation on an unprecedented scale due to 

its near zero emission of greenhouse gas and relative insulation 

from commodity price fluctuations and supply chain disruption. 

In many countries, nuclear is the 

only large-scale alternative to fossil 

fuels that is readily available to meet 

growing demand for baseload power. 

Here we look at the opportunities and 

challenges associated with nuclear power 

and explore the major avenues of research 

and development within the field. 

power that nuclear power provides: “I’ve 

always said: “We are nuclear. No one 

likes us. We don’t care. The market place 

is very obvious. The world cannot survive 

without our contribution.” 

In 2009, 13–14 percent of the world’s 

electricity was generated from nuclear 

power. According to the European 

Nuclear Society, in October 2010 there 

were 441 nuclear plants in operation, in 

30 countries, with a combined capacity 

of around 375 GW. The World Energy 

Council reports that this capacity is 

expected to rise to between 600 and 

1,340 GW by 2030. Over 30 countries 

are currently planning or delivering nuclear 

energy programmes. Across the world, 52 

reactors are under construction, a further 

140 are on order or planned, and an 

Article by: 

Tom Willatt 

“The perfect answer for the reduction of 

CO2 emissions, on a large scale, is nuclear 

power plants,” believes Bob Prantil, 

North Region Executive at GE Energy. But 

Q – You have built a dominant position in your Bharat Forge is committed to play a significant 

despite its emission credentials, nuclear 

core business of components, why then enter role in manufacturing equipment and energy 

generation promotes an ideological 

an industry (power equipment) that has been production. India will emerge as one of the 

discussion perhaps more than any 

under the control of a handful of state-owned most competitive places for manufacturing high 

other energy issue. Duncan Hawthorne, 

companies for many years? 

technology products within the next twenty 

President and CEO of Bruce Power, a 

A – For many years there has only been one years. Brand India is already improving, but there 

privately owned company that operates 

player in the Indian power equipment sector and is still a long way to go. 

a nuclear facility in Canada, believes that 

this is due to the necessity of the reliable additional 344 are at the proposal stage. 

36 37


F o c u s : N u c l e a r P o w e r 

Developing World Demand 

Nuclear technology was born in the 

laboratories of North America, western 

Europe and the Soviet empire, and these 

regions were the first to feed nuclear 

power into their grids in the 1950s and 

1960s. 

In the 1970s and 1980s, however, 

the western world was shaken by the 

Three Mile Island and Chernobyl events. 

The resulting regulatory changes led to 

enormous project cost over-runs and 

cancellations, and a 30-year lull in nuclear 

power investment in this region. 

Yet the nuclear industry did not stagnate. 

The focus for development of nuclear 

plants shifted to new adopters, keen to 

diversify their power generation options. 

Over the past 30 years the number of 

countries employing nuclear power has 

grown steadily. 

Currently, nowhere is this more true than 

in China. According to the World Nuclear 

Association, China has the world’s 

fastest-growing nuclear programme, with 

a target for 2020 of 70 GW in operation 

and a further 30 GW under construction. 

In other countries, however – Iran being 

currently the most notorious example – the 

spread of nuclear power is constrained by 

political concerns about the proliferation 

of nuclear weapons. 

Western Renaissance 

Since 2001, industry observers have been 

increasingly discussing the potential for a 

nuclear renaissance across the developed 

world. Bans on nuclear development have 

been repealed in Sweden and Italy, and 

nuclear fleets are being refurbished or 

expanded in South Africa, Japan, Ukraine, 

the Czech Republic and the USA. 

The trend is not universal – Germany and 

Spain are uncertain about their nuclear 

future and are continuing to phase out 

nuclear – but overall the industry is 

certainly gaining momentum. 

Finland’s Olkiluoto 3 development, for 

example, has been plagued by delays, 

over-runs and safety concerns. “Nuclear 

is ideal for the baseload, because once 

it is up and running the operating cost 

is very low,” says Tony Masella, Partner 

and MD for the Resources Practice at 

consultancy Accenture. “However, there 

is a lot of debate about whether the cost 

of a new build or refurbishment is a good 

use of public funds.” 

The length of time since the last Western 

nuclear plants were constructed means 

that the necessary experience may be 

lacking. 

“The issue that we face in North America 

is that we haven’t built one in thirty 

years, which causes great uncertainty 

in terms of cost,” says Pierre Gauthier, 

President, Alstom Canada and USA. “It 

is hard to evaluate today what will be the 

end cost of a nuclear power plant in North 

America.” 

Decision-making is made more difficult 

by the fact that the cost of natural gas, 

although often volatile, is currently low 

and looks to stay that way. 

“While shale gas is being found everywhere 

in huge pockets and being traded at around 

$5 a ton the value proposition of nuclear 

becomes an even greater challenge,” says 

Tony Masella of Accenture. Compared to 

nuclear, gas-fired power plants are also 

quick to build. 

International cooperation 

Whether or not nuclear power does see 

a western renaissance, the established 

nuclear suppliers in these countries see 

the global spread of nuclear power as a 

great opportunity. 

The extension of nuclear power to new 

countries is underpinned by international 

cooperation. Companies from nations 

with expertise are working with aspirants 

to provide the technical assistance they 

need to take their nuclear programmes 

forward. 

increasingly globalised. Jean-François 

Béland, Executive Vice President at Areva 

Canada, says: “It’s a global industry now; 

national players no longer exist. Areva 

is no longer a French player. We have 

employees around the world. It is that 

paradigm shift that Canadian companies 

are going through now. It is a worldwide 

market and it is focused on what is the 

most reliable and economically viable 

technology for the taxpayer.” 

Given that carbon neutrality is one of 

nuclear power’s greatest strengths, the 

introduction of a globally acknowledged 

carbon price would greatly add to the 

ability of nuclear energy to compete with 

fossil-fuel generation. 

“The lack of regulatory certainty regarding 

carbon pricing is constraining large capital 

investment,” explains Keith Triginer, 

Country Executive, GE Energy Canada. 

“Unfortunately, large nuclear plants fall 

into that bracket. If and when carbon 

pricing gets established, I think that will 

accelerate large capital investment in 

nuclear around the world.” 

Next-generation Technology 

Nuclear power is generally considered in 

terms of four generations of technology 

over its five decades. The first generation, 

developed in the 1960s and 1970s, is 

now rarely operated. Second-generation 

reactors were mostly developed in 

North America and Europe, and remain 

in operation across the world. The third 

and fourth generations, now under 

development, should make nuclear 

power more efficient, safer and easier to 

construct. 

Though current reactor sizes are typically 

around 1 GW, there is a movement 

towards smaller, modular reactors to 

replace small coal-powered plants. 

Michael Lees, President, Babcock & Wilcox 

(B&W) Canada Ltd., explains: “We are 

developing the B&W mPower advanced 

light water nuclear reactor that can 

range in the 150–300 MW size. The cost 

saving from a large nuclear plant is quite 

dramatic, as you move construction and 

manufacturing into a shop environment 

to create complete, road transportable, 

This strategy reduces 

construction 

risk 

significantly, not least by 

allowing utility companies 

to replace a single large 

facility with a number of 

smaller modules. “We hope 

to have sales in the US 

within the next decade,” 

says Michael Lees. 

Given the increased risk 

associated with being 

an early adopter of new 

technology, some people 

think that the renaissance 

will only really gain speed 

once the next generation 

of reactors is already 

up and running. “I see 

an increasing role for nuclear – it’s a 

necessity, not a choice, because of 

its reliability,” believes Kurt Strobele, 

Chairman and CEO of Hatch, a global 

engineering firm that is active across the 

power industry. 

“But it will be a small start. There is a lot 

of inertia, and the new projects and new 

technologies have not been as successful 

as hoped. Once we get past that first 

hurdle I think there will be a very fast 

climb in nuclear build.” 

Questions to be Answered 

Nuclear energy is clearly going to play 

an increasingly important role in global 

electricity generation. The world is driving 

towards a lower-carbon economy and 

nations are looking for reliable baseload 

energy to complement renewable 

sources. 

The nuclear industry needs not only to 

convince the public of its green credentials 

but also to show decision-makers that 

the economics of nuclear energy can 

compete with the other baseload options 

available. 

To allay the fears of policy-makers, nuclear 

technology companies will need to show 

that they can build the next generation of 

reactors repeatably, efficiently and costeffectively. 

If this can be accomplished, 

the long-heralded nuclear renaissance 

‘‘ 

I see an increasing 

role for nuclear – 

it’s a necessity, not 

a choice, because 

of its reliability. 

Kurt Strobele 

Chairman and CEO 

of Hatch 

One of the big concerns for policy-makers 

is the lingering risk of large cost over-runs Nuclear power was traditionally a very 

on nuclear construction projects, with nationalistic industry, but today’s 

billions of dollars at risk. 

nuclear companies are now becoming 

units.” 

seems likelier that ever. 

38 39 

‘‘




Singapore 

40 41


C o u n t r y P r o f i l e : S i n g a p o r e 

Singapore in Focus 

Singapore’s ability to reinvent itself as one of Asia’s economic 

leaders, following a troubled early history, has continued to 

serve as an example of sound economic policy and planning. 

Having embraced independence 

from Britain in 1963, Singapore 

was briefly part of the Malaysian 

Federation before being expelled in 1965. 

Forty-six years later, this unique member 

of the Commonwealth has become 

one of the world’s premier centres for 

finance, chemicals and electronics, and 

experienced the fastest growth of any 

Asian country in 2010, when its economy 

expanded by an estimated 14.7%. 1 

Having been ranked in first place by 

the World Bank’s 2010 Ease of Doing 

Business report, Singapore continues to 

attract investment and its growth has 

diversified into other sectors. Utilising 

its geographical location, one of the 

world’s busiest ports, and its regulatory 

framework, the island country has also 

become an energy leader for south-east 

Asia. With electricity demand in Asia 

Pacific expected to grow by 26% by 

2014 2 , Singapore will continue to play a 

central role in energy growth. 

Singapore’s small physical size – a 

total land area of just 687 km2 – has 

posed significant challenges. But while 

geography has sometimes been a 

problem for industries which want to 

grow here, an economic system based 

on tax benefits, government support, 

and industry promotion has brought in a 

multitude of companies specialising in the 

power sector. 

The past four years have also seen the birth 

of a dynamic renewable energy industry, 

which benefits from Singapore’s well- 

Article by: 


and Eugene Yukin 

Above: Marina Bay 

Sands; Photo by 


1 

Singapore Ministry of Trade and Industry 

2 

Business Monitor International: Singapore Power Report 2010 

42 43



developed R&D sector to fuel innovation 

in green products and technologies. 

However, the most important cause of 

Singapore’s rise as an energy centre has 

been the immense demand for power, 

as countries in south-east Asia struggle 

to find enough electricity to fuel their 

burgeoning economic growth. 

History and Recent 

Developments 

Singapore’s power industry has seen 

two major trends that have accentuated 

its attractiveness for investment in the 

south-east Asian region. Singapore was 

one of the first Asian countries to embark 

on a market liberalisation path in the 

late 1990s, and having once benefited 

from the experience of other countries, 

it is currently serving as an example 

for its neighbours who are considering 

liberalisation. 

Dave Carlson currently runs the Energy 

Market Company (EMC), which is charged 

with operating Singapore’s wholesale 

electricity market. As he explains: “I am 

a New Zealander, and in the southern 

hemisphere New Zealand was one of 

the pioneers in reforming and liberalising 

its electricity industry. When Singapore 

decided that it was going to go down 

a market-based path for its electricity 

industry, it looked around to see who had 

done this before – and started engaging 

New Zealand.” 

“New Zealand has a similar market 

design and similar-sized system,” 

Carlson continues, “so there were lots 

of commonalities there. Starting up new 

markets is not the easiest thing to do and 

so Singapore had to see how they could 

reduce risk. There was an agreement to 

set up EMC as a joint venture between 

Singapore and at that time a New Zealand 

market operator.” 

The Energy Market Authority (EMA), the 

chief regulator of Singapore’s electricity 

and gas market, plans to incorporate 

smart grid technologies to open up the 

market further. “We still hope to open 

up the market for the small consumers. 

We think this will be possible because of 

the new technologies that are now being 

developed, especially in the area of smart 

meters and smart grids,” says Lawrence 

Wong, EMA Chief Executive. “Right 

now, we are doing a pilot to see what 

the technologies can do and whether at 

the end of the day it will be worthwhile 

for the consumers to pay for these 

technologies.” 

Generation Mix 

Singapore’s premier challenge has been in 

finding secure fuel resources to power its 

electricity-dependent industries. Having 

no fuel resources itself and little space 

for renewables, Singapore has depended 

heavily on gas imports from its neighbours 

Indonesia and Malaysia. So far about 

80% of electricity is generated from gas, 

with the rest mostly from fuel oil, and a 

tiny amount from renewables and other 

sources such as waste-to-energy plants. 

In an effort to increase energy security, 

the EMA recently embarked on the 

construction of the country’s first LNG 

terminal. This will be Asia’s first such 

facility that is able not just to import but 

also to re-export LNG. 

The terminal, which will begin 

commercial operation in 2013, 

will increase the fraction of gas in 

Singapore’s generation mix. 

“I think in the near to medium term, we will 

still be very much a gas-fired economy,” 

says Lawrence Wong. “We currently have 

80% of our electricity generated using gas 

and with LNG coming into Singapore we 

will have even more gas as a proportion 

of our energy mix.” 

of Singapore’s power generators have 

already signed long-term contracts for the 

use of LNG. Neil McGregor, who used to 

run Singapore electricity generator Power 

Seraya, was recently appointed CEO of 

Singapore LNG Corporation, a subsidiary 

of the EMA, and is currently responsible 

for the construction and future operation 

of the terminal. 

As he explains: “When you look at the 

oil and gas industry, Singapore is in the 

first five of the major traders in the world. 

The fact that we are now building a gas 

capability pretty much dovetails with the 

infrastructure that’s already here. We are 

halfway between supply and demand, 

with suppliers based in the Middle East 

and Australia, while significant volumes of 

the demand is in north Asia. North Asia is 

feeling constrained by the size of the ships 

that they can take – there are a number 

of ports in Korea, Japan and Taiwan that 

cannot take larger vessels and are thus 

missing out on an economic opportunity, 

but they can take smaller vessels at a 

higher frequency. The economic equation 

will be: do those countries wish to 

continue building expensive storage 

terminals when Singapore can do it more 

cheaply? The construction costs and the 

infrastructure that exists here is more 

diversified than what you will find in 

north Asia, which is why we are looking 

at Singapore becoming a world premier 

gas trading destination.” 

Privatisation and Major 

Players 

Another major trend that has demonstrated 

confidence in Singapore’s power sector 

has been the privatisation of the citystate’s 

major power stations in the past 

several years. 

Currently, electricity generation is spread 

among three large players – Senoko 

Energy, Tuas Power and Power Seraya 

– and two smaller ones: Keppel Energy 

and Sembcorp. Tuas Power was recently 

acquired by China Huaneng Corporation; it 

has 2.7 GW of capacity from four natural 

gas combined-cycle plants and two oilfired 

plants. “The fact that you have 

major players buying the generators here 

is seen as a good business case to invest 

in Singapore,” says Lim Kong Puay, CEO 

of Tuas Power. 

All five power entities have retail 

electricity subsidiaries and compete with 

one another in terms of the tariffs they 

offer to eligible consumers. John Ng, 

CEO of Power Seraya, believes that the 

deregulated market structure has opened 

up competition in more ways than one: 

“We have experienced what a regulated 

market is like and we have experienced 

what a deregulated market is like. I am 

a firm believer in the deregulated market 

because it brings about much greater 

efficiency – we have seen that happen in 

Singapore.” 

Since competition was introduced into 

the market, Singapore has been able to However, the construction of the LNG 

open up 75% of all electricity consumers. terminal holds the potential to transform 

Currently the largest industrial users in Singapore from simply being a leader 

Singapore have a choice in their electricity in the oil-trading sector to become one 

retailer, while the other 25%, representing of Asia Pacific’s largest gas trading 

residential users, buy their electricity at a hubs. The terminal will eventually be 

44 

regulated tariff. 

able to handle 6m t/y of LNG. All five 

45



Despite the limited space to expand, 

and with the EMA’s efforts to boost 

competition, Singapore’s generators 

have shown resilience by planning ahead 

and diversifying their activities. Senoko 

Energy, for example, is Singapore’s 

largest generating company, with a 

license for 3.3 GW, and is currently 

looking within Singapore for opportunities 

in new sectors. “We hope that the cap 

Interview with Lawrence Wong, 

Chief Executive, Energy Market Authority 

Q – With only a handful 

of large players in 

Singapore’s power 

industry, entry into 

the market here is 

challenging. Please 

introduce us to the 

current market structure 

and EMA’s efforts to 

make it more competitive. 

A – We currently have 

five power companies 

in Singapore, three big and two small. The sixth 

company to come in is Island Power, which is 

building an 800 MW plant. The three big ones 

make up about 80% of our generation capacity, so 

it is not an entirely competitive market – there is a 

large concentration of market power. One initiative 

that the EMA has taken to boost competition is to 

cap the licensed generation capacity of the three 

big players. Beyond that, our strategy is to keep 

the market open, to minimise the barriers to entry, 

and if demand grows, to encourage the smaller 

players to extend their capacity or to welcome 

new entrants into the market. We facilitate this 

by providing as much information as we can. 

That is why we publish every year a Statement of 

Opportunities for the energy market, demonstrating 

how much demand and how much supply there 

will be. One of the key constraints in Singapore 

is land, but we have certain parcels of land 

specifically earmarked for power generation and 

we provide that information to those investors who 

think there is an investment opportunity here. 

Q – Due to its excellent business environment 

ratings, Singapore has become a hub for many 

renewable energy companies as a centre for R&D. 

What steps is EMA taking to keep Singapore as 

an attractive destination for renewable energy 

companies to come and set up base here? 

on authorised capacity will not be here 

forever, although we do understand 

that, from the regulatory point of view, 

there is an interest in gradually reducing 

concentration,” says Brendan Wauters, 

CEO of Senoko Energy. “Even if you only 

focus on Singapore, it does not mean 

that you should only focus on power 

in Singapore. That is why I have high 

hopes for Senoko Energy to become 

A – There are two different aspects to this 

question. One is whether Singapore is attractive 

for renewable companies for the deployment of 

renewable energies. In this respect we have to 

accept the practical reality that we are not a very 

big market for renewable energy and we do not 

have the potential for renewable energies. Solar is 

one that has some promise, but solar is still more 

expensive than electricity from the grid. 

We do not have a feed-in tariff, and we do not 

think that the feed-in tariff is a good policy, since 

it is a subsidy for renewable energy and it distorts 

the market. However, we encourage any company 

to put up their solar PVs here and they are free to 

do so. 

Separately, Singapore still offers something 

meaningful to the renewable energy industry, not 

as a market for investors but rather as a hub for 

companies who wish to be based here, to establish 

their manufacturing operations here and work in 

clean-tech and renewable energies. We are quite 

attractive as a regional hub serving south-east 

Asia and the broader Asian region because we 

have good infrastructure, skilled manpower, and 

a strong intellectual property regime. These are 

our competitive strengths and advantages and this 

gives us the capability to attract companies to 

Singapore. This strategy has worked quite well and 

we have grown the clean-tech sector by having 

more companies coming here to work in the area 

of biofuels, solar and wind. 

We welcome and encourage international 

companies to make use of Singapore as what we 

call a “living laboratory”. We are a small market 

– you might not be able to deploy everything in 

Singapore – but if you have an interesting and 

innovative product, then come here, test-bed your 

product and use Singapore as a launching pad to 

market your product or application to the region. 

involved in gas retailing. I still see quite 

a bit of potential in Singapore and this 

is why Senoko will keep focused on the 

Singaporean market.” 

Sembcorp, on the other hand, has plans 

to grow further outward into the region. 

As one of the smaller generators in 

Singapore, Sembcorp recently received 

a licence for an additional 900 MW on 

top of the 785 MW that it already has. A 

pioneer in clean energy power generation, 

Sembcorp was the first company to 

introduce cogeneration to the local market, 

but Ng Meng Poh, Sembcorp’s Executive 

Vice President, Singapore and ASEAN, 

sees his company expanding abroad. 

“Sembcorp’s playing field is not restricted 

to Singapore. We are already in the UK, 

China, UAE and Vietnam power market, 

and have power plants in India and Oman 

in development,” he says. “We continue 

to look for further opportunities to grow 

the business and are open to looking at 

other opportunities in the region.” 

New Entrants 

The liberalisation of the power sector has 

opened up opportunities for newer players 

to come into the market. Island Power, 

which was acquired in 2009 by India’s 

GMR Infrastructure, is now planning to 

start construction of an 800 MW gas-fired 

power plant on Jurong Island, home to 

the majority of Singapore’s manufacturing 

and processing industries. With a planned 

cost of S$1.25bn, the Island Power 

project will bring substantial foreign 

direct investment (FDI) into Singapore’s 

infrastructure. 

After Island Power received its generation 

licence back in 2002, the project ran 

into severe challenges when it could not 

arrange to import the necessary gas from 

Indonesia. InterGen, which was running 

the project at the time, decided to sell 

it to GMR and since then things have 

proceeded quickly. “Singapore is a very 

secure environment and our shareholders 

felt very comfortable because of the legal 

and social systems in place here,” says 

Ng Quek Peng, who currently serves as 

GMR’s head for the region. “There is 

definitely a demand here for electricity 

and it is growing. This is GMR’s first 

greenfield power plant outside of India. 

Singapore is a very good place to start, 

and from here we will be looking at other 

power plant projects in south-east Asia.” 

Island Power’s success owes a lot to 

government support. When it comes to 

the domestic power sector, the EMA and 

other agencies play the leading role in 

inviting companies to Singapore, and in 

making the move as smooth as possible. 

“The Singapore government agencies have 

been very efficient, and more importantly 

they have been very transparent. The 

more we deal with Singapore agencies 

the more comfortable we feel about our 

investment here,” says Ng Quek Peng. 

46 47



Transmission and 

Distribution 

While Singapore took the decision to 

liberalise electricity generation, the 

transmission and distribution network has 

remained in the hands of Singapore Power, 

a leading utility company which owns 

and operates all of Singapore’s electricity 

and gas network. “While our business is 

regulated, we run as a corporate entity, 

always seeking to enhance our operations 

through innovation and rigorous quality 

processes,” says Sim Kwong Mian, 

Managing Director of SP Power Grid, 

which manages and operates Singapore’s 

electricity grid. And certainly Singapore 

Power has been able to construct 

one of the world’s most efficient and 

sophisticated underground power grids. 

While south-east Asia in general suffers 

from imperfect grids and power cuts, 

Singapore is distinguished by the reliability 

of its power supply. “The nature of the 

industry is one where expectations for 

Q – How important is 

Asia for MTU’s power 

products? 

A – We have seen 

tremendous growth in 

our power business in the 

last couple of years, and 

this looks set to continue 

into the future. Currently 

about one third of our 

revenues in Asia come 

from our products to the 

power generation industry. The demand for power 

in Asia and the region is very high, so we have a 

strong position here. 

Q – What have been some of the recent projects 

that MTU Asia has been involved with in the 

region? 

A – MTU Asia Singapore has become the hub 

for the whole region and thus we engage with 

a variety of countries. For example, we recently 

launched an office in India, which was officially 

opened in February 2011. India is a very important 

market for us in power generation so we are 

building up our presence there. We are also 

constantly improving our distribution network and 

increasing the number of our dealers with respect 

quick delivery are very high and constantly 

increasing,” says Sim. “The multinational 

companies that set up base in Singapore 

require a quick start to their operations 

and the first thing they need is the speedy 

delivery of our services. To manage such 

high expectations, we are always pushing 

ourselves to deliver in shorter periods of 

time. “Over the past years one of our 

challenges has been to design the grid in 

such a way to prevent any interruptions 

in electricity supply and also to minimise 

any risk of a voltage dip. As a result we 

have built up one of the best transmission 

and distribution systems in the world.” 

The age of the Singapore grid has 

necessitated renewed investment in the 

construction of new cable tunnels, both to 

replace old cables and to further expand 

the grid. In what is expected to be a very 

costly investment, the next six or seven 

years will see the construction of largescale 

tunnels below Singapore to carry 

more-efficient transmission cables. 

Interview with Hermann Roehm, Director, MTU Onsite Energy 

to our diesel and gas generator sets. 

Q – Competition in this region is very high for the 

provision of power generators. How do you rate 

the levels of competition here and what is MTU 

Asia’s competitive advantage? 

A – Of course MTU Asia operates in a very 

competitive market, but our biggest advantage 

is that we develop all of our engines with the 

best and most up-to-date technology. We are 

a technology leader here, not only for power 

generation but for all our products, and especially 

when it comes to fuel oil consumption. This is 

very important for any continuous applications, 

where the major cost driver is the amount of fuel 

you consume. If you could save 5–10% in fuel 

consumption, then the customer is already very 

satisfied. 

Q – How do you see MTU Asia’s role developing in 

the region? 

A – Our key mission is to develop and provide 

our customers with very reliable products using 

cutting-edge technology in the area of power 

generation. We are also focusing on new markets 

and our customer base, and we are looking into 

long-term partnerships with those customers who 

need our technology to operate their power plants 

safely and more effectively. 

International Power 

Market 

With electricity demand expected to 

balloon in Asia, there has been an 

increase in Singaporean companies 

playing a role in power plant construction 

in the region, as well as an influx of 

major international power players like 

Wärtsilä, Siemens and GE. 

The presence of companies who specialise 

in gas, diesel and combined-cycle plants 

provides countries in the Asia Pacific with 

the opportunity to choose a power plant 

most applicable to the local market. 

Colben Energy 

The emergence of smaller Singaporebased 

power plant companies is another 

trend, as an ever-increasing number of 

companies have realised the potential of 

entering the power industry. As a power 

plant constructor and operator in the 

south-east Asian region, Colben Energy 

currently operates fossil-fuel, hydro 

and biomass power plants in Vietnam, 

Cambodia and Malaysia. Diversifying from 

its original business in fire protection, 

the company ventured into the power 

business and most recently has been 

targeting renewable energies. 

Colben Energy positions itself as a smaller 

player, but one which has the unique 

experience of working in countries where 

other companies are afraid to go. 

George Tan, CEO of Colben Energy, reveals 

where his company has an advantage: 

“The countries where we work are frontier 

countries, and they are very challenging 

markets. Most companies are not 

attracted to come there and bid for power 

plant projects since there are concerns 

about these countries’ infrastructures, the 

political risk, and the ability of customers 

to pay. These countries demand direct 

negotiations; they set the parameters and 

ask you to put your proposal forward. If 

the company is granted approval, it can 

negotiate. This is where Colben Energy 

steps in, because we have the experience 

of working in those countries and know 

how to make the best deals for our 

clients.” 

Looking ahead, Colben Energy plans to 

continue its expansion into the region with 

a renewed focus on renewable energy 

projects. Having learned that the key to 

success in south-east Asia is the ability 

to have local partners on the ground, the 

company plans to increase its presence. 

“For a small company to grow, it is 

necessary to present its whole track 

record and all of its assets,” Tan says. 

“Given our successes in the region we 

will be seeing ourselves participating in 

projects in Vietnam, Cambodia, Thailand, 

and Malaysia over the next several years. 

We are opening up to opportunities to 

find strategic partners or investors as we 

continue our work in those countries.” 

48 49



MTU Asia 

The Asia Pacific Region presents one of 

the largest opportunities for suppliers 

who specialise in decentralised power 

plants. With many areas of south-east 

Asia underdeveloped and power grids not 

reaching rural communities, players such 

as rental power companies and diesel 

generators have had much success in 

growing in the region. 

MTU Asia, which is the Asia arm of MTU 

Friedrichshafen GmbH, is a world leader 

in large diesel engines and complete drive 

systems. MTU’s growth in south-east 

Asia began 35 years ago when the Asia 

operational headquarters was established 

in Singapore. Today, MTU Asia has 

more than 500 employees working in 30 

countries all across Asia Pacific. MTU 

specialises in the production and design 

of engine sets with capacities of 125– 

9,000 kW. With many generators in the 

region failing to provide enough electricity 

for the population, MTU also provides 

custom-made emergency diesel generator 

sets for power plants. 

Due to Singapore’s central location, 

MTU Asia is able to supply its customers 

with a variety of engines and products. 

While the main engine manufacturing 

facility is still located in Germany, MTU 

holds enough local stock to allow it to 

deliver generators within a few days. To 

reduce lead times even further, Hermann 

Roehm, Director of MTU Onsite Energy, 

expects that local manufacturing facilities 

will open soon. MTU Asia uses external 

partners to provide various financing 

options to its customers. Given that many 

projects in the region are required only for 

limited periods, MTU has followed other 

companies by selling engines to power 

rental providers. “Just recently we rented 

out our equipment to a huge power 

plant, where our generators are now 

feeding power into the grid directly, with 

requirements anywhere from 5–10 MW 

up to 100 –200 MW,” Roehm says. 

Renewables 

being constrained by its small size and 

being geographically ill-suited for many 

alternative energy sources like wind, 

Singapore attracts rapidly-growing 

investment in its renewable energy sector. 

Ever since the Singapore government 

identified the clean energy sector as one 

of strategic importance for the economy 

in 2007, it has invested more than S$350 

million (US $274 million) into boosting 

the growth of the industry. The key to 

success has been the country’s ability to 

build a strong and encouraging network of 

government agencies and consultancies to 

help companies both large and small come 

to Singapore and set up base there. 

One of the leaders in this respect has been 

the Sustainable Energy Association of 

Singapore (SEAS), which is Singapore’s 

sole association for companies working 

in the renewable arena. Now with 

165 members, SEAS has been helping 

companies expand their operations in 

Singapore, but not only that. “Most 

companies cannot survive if they just 

stay in Singapore,” says Kavita Ghandi, 

SEAS Executive Director. “We therefore 

help them expand outside of Singapore 

by doing business intelligence, business 

reports and trade missions.” 

One such company that has benefited 

from SEAS and Singapore’s other 

agencies has been WoodHolmes, a small 

innovation company from the UK which 

helps a variety of industries with their 

projects. When CEO Stuart Smith came 

to Singapore two years ago to plug into 

the renewable scene he found a lot of 

support. 

“SEAS has been really fantastic in helping 

us to establish our business here. The 

Ministries themselves were very polite and 

welcomed us coming here by giving us 

information and time to show us how we 

need to do our business,” Smith says. 

Solar 

The clear leader in Singapore’s drive to 

become the clean-tech capital of southeast 

Asia has been solar power. With 

very low wind speed inhibiting the 

effectiveness of large wind farms, one of 

the world’s busiest ports rendering tidal 

technologies unreasonable, and no rivers 

most promise in introducing an alternative 

energy source into Singapore’s power 

generation mix. 

When government policy toward clean 

energy changed in 2007, the Economic 

Development Board (EDB), which is 

charged with developing and growing 

Singapore’s industries, embarked on an 

ambitious program to boost the solar 

power sector. 

Since solar power does not carry any 

immediate large-scale promise in terms 

of generating electricity for domestic 

consumption, the major question facing 

Singapore was what exactly this small 

country could offer the multi-billion-dollar 

solar industry. 

Utilising its well-established base in 

semiconductor and electronics R&D, 

Singapore’s government began to attract 

large renewable energy companies by 

offering them a place to set up their 

production and R&D operations. The 

challenge, however, was in transferring 

the expertise that Singapore had in the 

electronics sector to renewable energies, 

and then nurturing the appropriate levels 

of skill to support it. 

When companies such as Renewable 

Energy Company (REC) and others started 

setting up in Singapore in 2007 and 

2008 with the help of EDB, the need for 

solar R&D only multiplied. “When these 

companies were negotiating with EDB, 

one of their main requests was their need 

for good and well-trained staff and R&D 

on a very applied scheme,” says Joachim 

Luther, who now heads up one of Asia’s 

largest institutes for solar power, the 

Solar Research Institute of Singapore 

(SERIS). “Until then Singapore did not 

have that much of focus on applicationtype 

research, so EDB decided that there 

was a need for such an R&D centre and 

went ahead in setting up this Institute,” 

Professor Luther explains. 

Singapore’s ability to craft itself into 

a leading power hub in south-east Asia 

is seen nowhere more clearly than in 

50 

the renewable energy sector. Despite to power hydro, solar power holds the 

51



Since SERIS opened in 2008 its role has 

been threefold: working with private 

industry, developing PV technologies, 

and supporting the push for solar power 

in Singapore. In the last few years alone, 

the significance of the Institute has been 

reflected in the increasing number of 

staff. Says Professor Luther: “We were 

established in April of 2008, and we 

started with two people and now we have 

140 people. We are going for something 

between 150–200 people by next year.” 

Apart from REC, other large solar companies 

have also made Singapore their regional 

home. Germany-based Conergy, a major 

player in the power sector worldwide, is 

both a service provider – with activities 

including project development, financing 

and engineering solutions – and a product 

designer and manufacturer. Conergy is 

also one of the few companies to offer 

“output insurance” covering power loss 

due to lack of sunlight. Marc Lohoff, 

President of Conergy Asia Pacific and 

Middle East, explains how solar investors 

are becoming more sophisticated. “We 

see that the market is currently shifting, 

especially in south-east Asia, and so is 

the mindset of investors,” he says. 

“We are a very new industry, and a lot 

of investors lack experience on how to 

rate projects. In the beginning they were 

looking at the return on equity, but they 

assumed that even though the cost varies, 

the quality remains the same – so they 

would go for the cheapest offer. They are 

now understanding that they have to look 

at the cost of electricity generation over 

the lifespan of a plant. This is Conergy’s 

advantage: we provide a high-quality 

system with a very high output. This is 

why we sell more and more of our premium 

products in this competitive market.” 

Backed by government support and 

strong innovation in renewable energy, 

both Singaporean and international 

companies have been seeing growth in 

their businesses across the region. Despite 

the lack of a domestic market, companies 

such as Asiatic Group Engineering and 

Phoenix Solar have been targeting the 

installation of solar panels on Singapore’s 

buildings. While the absence of a feedin 

tariff means that Singapore has less 

stimulus than other countries for the 

growth of solar energy, the government 

nevertheless believes the domestic 

market could grow. As Lawrence Wong 

puts it: “We would be happy for more 

people to set up more solar installations in 

Singapore and the power grid can easily 

accommodate up to 350 MW of solar, so 

we can take in a lot more than we are 

right now.” 

Wind 

While solar might still hold potential for 

Singapore in limited capacities, wind 

speeds in Singapore are low, so the 

installation of large-scale wind turbines 

is not considered. Other countries in 

the region, however – especially the 

Philippines, Thailand and Vietnam – have 

been exploiting their wind capacity 

more and more. “Traditional markets for 

wind energy are clearly in Europe,” says 

Sean Sutton, President of wind turbine 

manufacturer Vestas Asia Pacific. “But 

for the past three years, there has been 

a big shift towards Asia and especially 

the developing countries,” he notes. With 

this in mind, Vestas, the world’s largest 

producer of wind turbines, decided just 

a few years ago to base its regional 

headquarters and one of its largest R&D 

centres in Singapore. 

Another recent entrant into the wind 

energy market has been EnergyCorp 

Global, which was established two 

years ago when the renewable energy 

industry in Singapore started to grow 

with government support. EnergyCorp 

Global decided to enter the wind turbine 

industry as well as becoming a system 

integrator for a wider spectrum of 

products. “Seeing that the government 

was supporting the growth of this sector, 

we also came out into the market,” 

says Michael Heng, a former professor 

at Singapore’s School of Electrical and 

Electronic Engineering, and currently 

CEO of EnergyCorp Global. 

Interview with Sanjiv Lamba, 

Managing Director (South and East Asia), Linde Gas 

Q – What is the role of 

the Linde Gas Singapore 

office? 

A – Linde Gas in South and 

East Asia is headquartered 

out of Singapore and 

deals with 11 countries 

in the region. We have 

a strong footprint here, 

with two manufacturing 

facilities: one on Jurong 

Island and another in Tuas. 

Our Jurong Island plant is one of the world’s most 

integrated gasification complexes. For the last three 

years we have had an active investment program 

in Singapore and the region, so we see ourselves 

continuing to increase our presence here. 

Q – How does Linde Gas contribute to renewable 

energy? 

A – We actively promote the cause of energy 

sustainability across all the industries we serve, 

and from a renewable energy perspective we are 

the leading player in the region for the development 

of the photovoltaic industry. How we do that is 

by working with original equipment manufacturers 

(OEMs) and our customers to provide gases and 

chemicals into the manufacture of PV cells. We 

are at the back end of the production process, so 

we are less visible, but we are embedded into the 

infrastructure and our technologies play a vital 

role. We work with a large number of customers 

all across the region and we supply leading solar 

manufacturers in Malaysia, India, Philippines, and 

others in the region. 

Q – What is your outlook on Linde’s development 

for the near to medium term? 

A – I see the next five years in Singapore being 

very exciting. I think the government and EDB 

have great plans for the city state, and are very 

focused in execution. That is very important from 

our perspective because it allows us to align our 

strategies to actively promote what happens in 

Singapore, and make sure that we are supporting 

that development through our own investments.” 

52 53



Since its establishment the company 

has been able to diversify its activities 

into several different areas. Working as 

a system integrator, Heng and his team 

work on various projects as consultants, 

investors, project managers, and suppliers 

of renewable energy products. 

EnergyCorp Global markets 1 MW 

wind turbines produced by the Korean 

company Kowintec, which it plans to 

acquire during 2011. 

Last year the company talked to 

prospective Kowintec clients in the 

Philippines, Vietnam, Thailand and China. 

The Kowintec design has two rotors 

– one upwind and one downwind – and a 

vertically mounted generator, and is said 

to be up to 40% more efficient than other 

turbines of similar size. 

EnergyCorp Global is also one of the 

leading companies in a consortium of 

Singaporean SMEs who are co-developing 

and promoting the Hangzhou-Singapore 

Eco-Park currently being constructed in 

China. “When we first started we had 

very little experience in the industry, so 

we started to looking for partnerships with 

similar-sized companies,” Heng explains. 

“We were able to cultivate many contacts 

in the renewable energy industry all across 

Asia Pacific. Nurturing these contacts has 

now led us to develop a new project of 

developing an industrial park in China 

using renewable energies such as wind, 

solar, and biomass.” The eco-park will 

cover an area of 5 km2 and is expected 

to cost up to US $2 billion. 

From R&D to 

Manufacturing 

As demonstrated by SERIS, the success 

of Singapore’s renewable energy sector 

owes a lot to the country’s R&D strength, 

which allows companies to drive 

innovation by finding a place to test their 

products. A major government project 

has been the creation of a “green tech” 

park in Singapore where companies are 

able to test their products. 

One local company, Ecospec, have been 

able to benefit from Singapore’s deep-sea 

port to test and patent a new technology 

which removes SOx, NOx and CO2 from 

thermal power plant exhaust gases. IUT 

Global, which runs Singapore’s only power 

plant to run on food waste, is also at the 

forefront of innovative technologies. 

Edwin Khew, CEO of IUT Global and 

SEAS Chairman, explains the interest 

his company has generated: “When CNN 

showcased our technologies, we received 

over 100 enquiries from all over the 

world within a couple of weeks. Some 

municipalities were keen to learn about 

the operation of the plant and said they 

needed it urgently in their cities,” he 

says. The challenge, of course is finding 

financial support. Although Khew was 

speaking only of his own company, much 

of what he says applies to a broad swathe 

of Singaporean innovators: “There is no 

shortage of interest in our work, and with 

the appropriate funding we can develop a 

lot of helpful and exciting projects around 

the region.” 

When it comes to manufacturing, 

Singapore’s chemical and electronics 

industries make up the majority of 

the country’s exports. In the power 

sector there has been an emergence of 

electrical and power plant component 

manufacturers who supply to the broader 

Asia Pacific region, but as in all other 

sectors, international manufacturers have 

continued to use Singapore as a base for 

their regional exports. Singapore’s shares 

in international markets have also seen a 

boost from the country’s many free trade 

agreements (FTAs). The country currently 

has 18 FTAs with 24 trading partners, 

and more are now being negotiated. 

Even chemical companies and industrial 

gas manufacturers have been playing 

important, if less visible roles, in the 

power sector. Linde Gas, for example, is 

one of the world’s leading manufacturers 

Interview with Michael Heng, CEO, EnergyCorp Global 

Q – How was EnergyCorp 

Global established? 

A – Two years ago we 

were already involved in 

the energy and power 

business mostly through 

our work in the marine 

engine industry. Then an 

opportunity came up from 

Korea, when Kowintec 

company, introduced the 

world’s first dual rotor 

one MW wind turbine. The turbine had already 

been tested by this point and we thought it was 

a great product and innovation. So we decided 

to create a new company to deal with renewable 

energies and market this new line of wind 

turbines. It was during this time that Singapore’s 

government began a push to grow the renewable 

energy industry and our company has been part of 

that growth. 

Q – Other than marketing wind turbines, what 

are the other services that EnergyCorp Global can 

provide to companies? 

A – Even though we are in wind turbine marketing, 

we don’t see ourselves as a technology provider 

but we see ourselves as a value integrator. We 

are a consultant defining a whole range of green 

technologies, and making them available on the 

market. If an investor is interested in a renewable 

energy project, then EnergyCorp Global identifies 

available projects, we find the suppliers, arrange 

deals for our customers, offer project management 

services, and when it comes to finances, our 

company’s partnerships with investors can 

guarantee a project’s financial success. 

Q – How do you see EnergyCorp Global developing 

over the next 5 years? 

A – Looking ahead we will be seeing our revenue 

increasing up to $20 million, from our business in 

the wind turbine industry and we will be engaging 

in further large scale projects like the eco park 

that we are working on in China. We will also be 

diversifying our company’s projects into other 

renewable energy fields. We will continue to 

grow from our Singapore head office because this 

country provides us with all the right resources to 

make our business successful. 

54 55



of industrial gases and has done a lot of 

work in a variety of clean energy areas. As 

a supplier of gases used in the production 

of wind turbines and solar cells, Linde 

Gas is deeply embedded within these 

manufacturing processes. As a producer 

and distributor of LNG, the company has 

also been increasingly active in the pursuit 

of LNG opportunities in the region. Sanjiv 

Lamba, Managing Director of Linde’s 

gases business in South & East Asia, 

predicts many opportunities for LNG in 

Asia: “In this geography, we see many 

remote areas and islands with energy 

needs, as well as stranded gas assets 

where Linde can apply its technology 

to produce LNG. This also aligns closely 

with the interests of these countries to 

leverage LNG to enhance their energy 

security while managing energy costs and 

safeguarding the environment.” 

PRÜFTECHNIK 

A global leader in the shaft alignment 

and condition monitoring systems power 

generators need to keep their turbines and 

alternators running reliably, PRÜFTECHNIK 

has been providing its technologies to 

power plants in south-east Asia since 

1989. 

“This was one of the very first subsidiaries 

that PRÜFTECHNIK established after 

the UK,” says Arun Nair, who currently 

runs PRÜFTECHNIK’s south-east Asia 

operations. “Singapore was the perfect 

place to cover south-east Asia, and at the 

time there were not many companies who 

worked in our field performing alignment 

services in the region. 

“Alignment and condition monitoring 

are very important to keep power plants 

safe,” Nair explains. “When dealing with 

turbines you cannot afford not to have 

alignment done from the very beginning, 

because otherwise it will cause very bad 

damage to the turbine and can cause 

the plant to have unplanned shutdowns. 

We offer services and products that are 

specifically made for turbine alignment.” 

“Power has huge potential for us and we 

see tremendous opportunities to develop 

that sector,” he says. “We see very 

large potential in wind energy as well, 

especially for the condition monitoring 

aspect. I believe we are still only scraping 

the surface in south-east Asia, and we 

have the potential to grow and develop 

even more in the future.” 

Services: from Cranes to 

Banking 

Service industries account for most of 

Singapore’s GDP. A variety of companies 

support the power sector’s growth 

by offering services in construction 

and engineering, financial services, 

professional recruitment, and energy 

efficiency. 

As emerging economies continue to 

develop their infrastructure in the Asia 

Pacific, opportunities for companies to 

offer engineering and construction services 

out of Singapore are endless. With many 

countries lacking adequate infrastructure 

where power plants are needed most, 

engineering and construction firms 

who have the ability to offer innovative 

solutions are well positioned for growth. 

Mammoet 

Power plant components such as 

turbines – including wind turbines – and 

generators are “very expensive, very 

delicate and very heavy”, points out Robin 

Koenis, head of Asia Pacific business for 

heavy lifting contractor Mammoet. The 

power industry accounts for a quarter of 

Mammoet’s revenue, and the company 

has been involved in major power plant 

and renewable energy projects all over 

Asia. 

“For Mammoet, Singapore presents a 

good market in terms of shipping and 

we are close to the shipping industry 

which uses heavy-lift vessels to carry 

various components, including those for 

the power industry,” Koenis says. “We 

ship big modules everywhere from the 

Philippines to Singapore or from Singapore 

to Australia. Our biggest growth market 

in the Asia-Pacific is definitely Australia. 

In the power sector it is also Japan, 

Mammoet employs the largest lifting and 

construction cranes in the world and its 

engineers have a track record of getting 

heavy objects from one place to the next 

safely and efficiently. When it comes 

to the power sector, safety is essential. 

“Make sure that you transport the heart 

of your power plant in a safe and wellmanaged 

way,” is the advice Koenis gives 

to developers. “We do see cases when 

the transport of a generator or turbine 

from one location to the power plant goes 

wrong. For a turbine costing millions of 

dollars, you have to ensure that you are 

transporting it safely and are using the 

best equipment.” 

Singapore is one of the world’s top 

financial centres, and when it comes to 

finance many companies find that the 

Q – When did FM Global 

first establish a presence 

in Singapore and how has 

it developed since? 

DB – FM Global has been 

around for 175 years, 

and we have followed 

our customers around the 

world; from north America 

we expanded into Europe 

and then more recently into 

Asia-Pacific. In Singapore 

we recently celebrated our 25th birthday. We didn’t 

come to Asia solely to develop business within the 

area, but we found that there are indigenous clients 

interested in our risk management philosophy. We’re 

developing our strategy, our infrastructure and our 

partnerships throughout Asia, especially in China and 

India, in order to deliver the idea that the majority of 

loss is preventable. 

PM – FM Global is a company run by engineers and 

we are therefore selling the engineering philosophy 

that losses can be prevented; in the power industry 

this means avoiding power interruptions or creating a 

more sustainable, long-term infrastructure. We have 

found some very supportive clients in the region. As 

a matter of fact, we insure about two-thirds of the 

power generation capacity in Singapore. 

country’s close-knit environment greatly 

facilitates the management of large 

projects. “Singapore is a tremendous 

platform for anyone who wants to be 

in the region,” says Mumtaz Khan, the 

founder of Middle East and Asia Capital 

Partners, which operates a US $500m 

investment fund for renewable energy 

projects in Asia. 

“For people like us in the finance of the 

renewable energy industry, Singapore 

is a very good location. We are in the 

right place because our work is all about 

finding the financing of the clean energy 

projects throughout the region. The other 

main element is that the government of 

Singapore is very supportive of companies 

like ours. Our ability to set up shop here is 

very welcome.” 

Interview with Dennis Bessant (Vice-President) and Peter 

Madeley (Operations Vice President), FM Global 

bring to the insurance 

market? 

DB – It is important to 

understand that many 

insurance companies lack 

sufficient engineering 

expertise. In the insurance 

industry, it is usually 

considered that the 

most important step is 

risk transfer. We handle 

this from a different 

perspective. For us, risk transfer is only the last step, 

preceded by risk identification and risk mitigation. 

We look at the risk from a holistic perspective, 

rather than individual components. This is what has 

attracted prospective clients in Singapore to contact 

us. The fact that many of our customers have been 

with us for at least 25 years, sometimes for more 

than 100 years, shows that our model works in the 

long term. 

Q – How do you see FM Global’s future growth? 

DB – We are very active in south-east Asia, 

particularly in China and India, and we see the 

potential for future long-term mature core markets in 

these territories. At the moment we are building the 

infrastructure for our own activity in these territories, 

and by working with governments we are using our 

engineering credibility to pioneer the future codes and 

standards emerging in these territories. 

While PRÜFTECHNIK’s Singapore office 

now covers eight different countries, most 

of the sales still come through Singapore. 

Nair’s major goal has been to capitalise 

Q – What competitive advantages does FM Global 

on the opportunities in other countries. Indonesia and China.” 

56 57



As well as finance, power plant 

projects also need insurance to make 

risks manageable. One specialist in the 

business is FM Global, an insurance 

company whose unique approach to risk 

has distinguished it from other players in 

the field. Boasting a history going back 

almost 200 years, FM Global is run by 

engineers and is the insurance provider 

of choice for most of Singapore’s power 

generation companies. 

FM Global’s hands-on approach toward 

ensuring that power plants will run safely 

is part of the reason why the company 

now insures 7% of all generation capacity 

worldwide. Peter Madeley, who runs the 

company’s operations in Asia Pacific, 

explains: “We spend several days at each 

power plant, in order to physically see 

the facility and the protective devices and 

witness the critical equipment tests. We 

need to conduct a very comprehensive 

review, so that the client knows that when 

the FM consultation has been complete, 

they can be sure that their protective 

devices will work as designed.” 

Actsys 

The service sector also has plenty of room 

for independent engineering consultancies, 

of which one example is Actsys. Starting 

as a one-man company, Actsys has 

grown into the leading energy efficiency 

consultancy for the power industry in 

Singapore and beyond. Celebrating its 

10th anniversary this year, Actsys was 

founded by Norman Lee, a chemical 

engineer who has used his experience in 

the process sector to increase efficiency 

and operating capacity in energy-related 

industries. 

So what we do is create our own very 

detailed thermodynamic model of the 

plant. We are then able to quantify which 

respective parts of the plant are losing 

energy efficiency, and further tell them 

how to do their plant maintenance.” 

Actsys has worked with the all the major 

Singaporean power plants year after year, 

and has now expanded to offer its services 

elsewhere. With many power plants in 

the region experiencing efficiency issues, 

Actsys is well positioned to offer its 

services more broadly. 

“Our track record sells us, and we need 

to be manning up to expand,” Lee says. 

“Unfortunately people taking on our 

services have to overcome the inertia that 

they have built up by operating power 

plants for 30–40 years without ever 

seeing a value in our work. When they 

see the results, then they realise what 

they have been missing out on for such 

a long time. However, to demonstrate 

these results takes time and effort.” 

With a total population of around 5m, one 

of the major challenges facing Singapore 

has been finding the appropriate talent 

to support the country’s industries. As a 

result, Singapore has attracted numerous 

professional recruitment agencies eager 

to become the talent supplier of choice 

for the region. 

Recent steps taken by the government, 

such as relaxing the visa regime to allow 

contractors to sponsor themselves for a 

five-year stay, have also improved the 

situation. Mark Sparrow, the head of 

ASEAN for recruitment company Kelly 

Services, explains the result of this 

change: “Professionals in the energy 

industry whose contracts run out, but 

who want to stay in Singapore, are now 

able to search for another job here. While 

this may sound like an insubstantial 

tweak, it made a massive difference in 

retaining intellectual property within the 

country. It’s something the government 

has done to retain a lot of good talent 

within Singapore’s shores.” 

personnel in the power industry increases. 

Companies like Robert Walters, which now 

has a strong presence over south-east 

Asia and 100 people in Singapore, has 

specific teams targeting the engineering 

and energy sectors. While competition 

between professional recruitment agencies 

has been particularly fierce, it has not 

stopped others from entering the market. 

EarthStream was established in Singapore 

less than two years ago and already has 70 

people, nine global offices and a database 

of over 160,000 energy specialists. 

Founder and CEO Kevin Gibson thinks 

that increased specialisation in the energy 

sphere makes EarthStream different. “As 

a recruitment firm we are not focused on 

finding very general skill levels – rather 

we like to find very specialised skills sets 

on the engineering and technical side of 

things,” he says. “We are also looking at 

enhancing the skill transference process, 

so that individuals who have good 

experience in generation or transmission 

in one industry, like oil and gas, are able 

to transfer their skills to other industries 

like clean energy.” 

Industry Outlook 

After a record GDP growth year in 2010, 

Singapore is well placed to strengthen 

its position in the energy sector. With 

the domestic power market growing 

and expanding, Singapore continues to 

showcase its liberalised market structure 

and influence its neighbours to open 

up their power sectors as well. A rising 

star in the renewable energy sector, the 

country’s R&D sector continues to attract 

companies from many areas within clean 

tech. The incoming LNG terminal will see 

Singapore continuing to establish itself as 

a trading centre for all of south-east Asia 

over the course of the decade. Singapore’s 

track record demonstrates that it is well 

positioned for investment in a variety 

of spheres, and much of the incoming 

investment trickles down to Singapore’s 

regional neighbours. Singapore is never 

more than a five-hour flight from Asia 

Pacific’s most prosperous economic 

centres, underlining its central location. 

Areas for improvement remain: Singapore 

will have to address further the efficiencies 

of its plants as well as the never-ending 

struggle to locate suitable talent, a task 

the country’s small population makes 

especially difficult. The regulatory and 

legal framework is important, but not 

the most significant factor. Instead, as 

Ng Quek Peng of GMR puts it: “I cannot 

overemphasise Singapore as a society 

positioned for investment. When Chinese, 

Indians, Malaysians and even Caucasians 

come here they feel at home, and this 

creates a very conducive environment 

for everybody to invest in Singapore. We 

come and invest here not because of the 

legal or economic system, but because of 

Singapore’s society’s ability to make us 

feel very much at home.” 

“The main area facing the power sector 

where we can help is by doing energy 

audits and performance management,” 

Lee says. “What this means is if a 

power plant is going for an inspection or 

maintenance shutdown, they would like 

to know which parts of their plant are 

not performing well, especially in terms 

of efficiency. Power producers often do 

not have this capability themselves. They 

understand that they might not be running In an effort to remain competitive, 

at full efficiency but they are not able to professional recruitment agencies have 

put a finger on which respective parts also been increasing their focus on energy 

of the plant are losing their efficiency. and engineering as demand for specialised 

58 59


F o c u s : H y d r o a n d M a r i n e P o w e r 

Hydro & Marine Power 

From the water mills of Imperial Rome and Han Dynasty China 

to the hydraulic mining systems of the California gold rush, 

the harnessing of energy from water has been one of the most 

enduring and universal means of generating energy throughout 

human history. 

Article by: 

Joseph Hincks 

Above: 

Hydro power 

electric dam on 

Colorado River, 

Arizona 

Today, hydropower provides onethird 

of the world’s nations with 

more than half of their electricity, 

according to the World Commission on 

Dams, while in Norway, the Democratic 

Republic of Congo, Paraguay and Brazil 

the proportion of hydropower is over 

85 percent. And in the international arena 

of climate change discussion, in the minds 

of the world’s decision-makers, this most 

ancient of resources is again rising in 

prominence. 

the world. Labour costs for operation 

are usually low, as plants are automated 

and require few personnel on site; and 

hydroelectric facilities have a longer 

economic lifespan than conventional 

thermal power plants: many plants built 

50–100 years ago are still in operation 

today. Hydroelectricity is a proven and 

efficient technology and the most modern 

plants have energy conversion efficiencies 

of 90 percent and above. 

Dinorwig (1.7 GW) in Wales. Most of these 

installations are pumped-storage plants 

whose job is to support the operation 

of the grid rather than to generate net 

power. 

Despite the global prevalence of 

hydropower, large schemes are not 

without their drawbacks. “Large dams 

have significant environmental impact,” 

explains Ashwani Kumar, Head of 

Business Development at Reliance Power, 

an Indian generator with around 5 GW 

of hydro projects in its portfolio. “Our 

projects are ‘run-of-the-river’ schemes. 

This mitigates the erosion associated 

with hydro projects.” Up to 48,000 large 

dams now obstruct 60 percent percent 

of the world’s 227 largest rivers, most 

of which were built in the past 50 years. 

The world’s largest impoundment, the 

8,500 km2 Volta Reservoir behind Ghana’s 

Akasombo Dam, flooded 4 percent of the 

country’s land mass. Dam construction 

can damage ecosystems and has displaced 

an estimated 40–80m people from their 

homes, according to figures published by 

the WWF. 

A 1990 World Bank internal survey of 

hydroelectric dam projects showed that 

58 percent were planned and built without 

any consideration of downstream impacts, 

even when they could be predicted to 

cause massive coastal erosion, pollution 

and other problems. Twenty years later, 

legislation has toughened and more 

care is exercised in the construction of 

large dams. While numerous projects are 

currently under construction – the vast 

majority in China, which already had 

an installed hydro capacity of 197 GW 

in 2009 – greater awareness of the 

potentially detrimental implications of 

large dams, political will, and the limited 

number of remaining viable sites means 

that the scope for new hydro builds is 

severely restricted. 

which could generate enough electricity 

to power 850,000 homes and cater for 

1.5 percent of the UK’s electricity needs. 

The agency identified almost 26,000 

energy hotspots in English and Welsh 

rivers where turbines could be installed. 

Limited access to local electricity grids 

and the potential to harm migratory fish 

or cause other damage to river ecology 

limits the number of these sites that can 

actually be developed. However, more 

than 4,000 sites could provide a “winwin” 

situation, generating electricity and 

benefiting the local environment, the 

Agency says. 

The limited new build sites and the 

problems associated with hydropower 

have meant that – in the UK at least – 

the focus has shifted away from rivers, 

dams and reservoirs and out toward the 

oceans surrounding the country. The UK 

has some of the world’s most ambitious 

plans for carbon reduction, and also the 

best wave and tidal resources in Europe. 

While new wind energy is expected to 

make the greatest contribution to meeting 

the 2020 targets, marine energy – from 

waves, tidal streams and ocean currents 

– will not be far behind. 

According to RenewableUK, the UK’s 

largest renewables association, marine 

renewable technologies are at the same 

stage wind was at 10–15 years ago. While 

the UK may lead in terms of technological 

development, breakthroughs in the marine 

sector will have global implications – in 

principle, marine energy is ideally suited 

for distributed generation and the majority 

of the world’s population live near 

reasonably energetic seas. The worldwide 

wave power resource potential is massive. 

Future Energy Solutions, a unit of UK 

consultancy AEA Technology, indicates 

that the global ocean power potential has 

been estimated at 8,000–80,000 TWh/ 

y (1–10 TW), which is the same order 

of magnitude as world electrical energy 

consumption. Tidal energy is very sitespecific, 

however. The World Offshore 

Renewable Energy Report 2002–2007, 

released by the DTI, suggests that while 

3 TW of tidal energy is estimated to be 

available, less than 3 percent of this 

(90 GW) is located in areas suitable for 

Hydropower forms only a small part of 

In addition to reducing CO2 emissions, the UK’s current energy generation mix. 

Smaller run-of-the-river schemes abound 

hydropower has a number of advantages According to figures published by the 

throughout the UK. While providing 

over fossil fuel-fired generation. Water National Archives, the UK generated 

much less power than large dams, runof 

is exempt from the cost fluctuations about 0.8 percent of its electricity from 

the river schemes cause significantly 

that oil, gas and coal are subject to, and hydro schemes in 2009. UK hydro plants 

less ecological disruption. In April 2010 

hydroelectricity requires no imports – a include Ben Cruachan, Foyers, Lochaber, 

an Environment Agency study identified 

key factor as energy security concerns Mossford and Sloy (all 400 MW and 

the potential for thousands of new smallscale 

60 

become increasingly prevalent around below) in the Scottish Highlands and 

hydroelectric schemes in the UK, power generation. 

61



Epiphany at Sea 

Michele Grassi was midway through the Columbus route 

when the idea hit him. Some sailors get an anchor tattoo 

to commemorate their voyage across the Atlantic, but for 

mathematician Grassi the memento was more cerebral. 

“I sometimes think of it in terms of how flight was 

invented,” says Grassi. 

“There were many crazy aircraft projects out there, and in 

the end only one succeeded because only one got the idea 

that you didn’t need a huge amount of power, but that 

you needed to find the right way to move the air around 

the wing. We think that we’ve got the idea, our approach 

is completely different: to move with the wave, not to 

fight it.” 

On 11 August 2010, Grassi’s London-based company 

40South Energy – a name inspired by the scope of 

applications for its product – installed its prototype D100t 

machine in a bid to tap the enormous energy potential of 

waves. The D100t is one of a series of machines 40 South 

Energy has designed to operate below the water’s surface. 

Each has a “lower member” at a depth of 15–25 m and 

one or more “upper members” at a depth of 1–12 m (the 

depths in each case depending on the type of machine 

and the nature of the site). The relative motion between 

the upper and lower members is converted directly into 

electricity. 

Previous generations of devices designed to extract energy 

from waves have bobbed on the surface of the water, not 

only limiting the amount of energy they are ultimately able 

to capture but rendering them vulnerable to storm damage. 

In contrast, 40South Energy’s machines have the capacity 

to autonomously vary their operating depth in response 

to changes in sea state. This means that they are able to 

operate within the same limits wherever they are installed 

and whatever the weather. 

“Wave energy is primed to become an 

important part of the world’s renewable 

energy portfolio,” said Brice Koch, head 

of ABB Marketing and Customer Solutions 

in November 2010, following a large 

investment by the Swedish-Swiss giant 

in Edinburgh-based marine technology 

company Aquamarine Power. 

A Drop in the Ocean 

The marine energy sector has long had 

a reputation for a kind of Jules Verne 

whimsicality. Bad press resulting from 

previous failures has made attracting the 

right audience for new inventions difficult 

for some companies, according to Michele 

Grassi of 40South Energy (see Box). “The 

first wave devices encountered many 

problems, especially in terms of cost and 

survivability. That gave the sector a very 

bad press,” he says. Martin McAdam, 

CEO of Aquamarine Power – the company 

responsible for creating the Oyster wave 

power technology – supports Grassi’s 

assessment and concedes that there have 

been plenty of failures in the past: “This 

industry hasn’t necessarily covered itself 

in glory. I think the industry needs fewer 

failures; it needs to be more professional 

in its approach. We are happy to share 

and work with other developers in the 

space. The sooner more of that begins to 

happen in this industry the better.” 

“At this point technology is not our 

main problem,” Grassi says. “Our main 

problem is the misconceptions burdening 

the sector. When we are able to bring 

people in front of our machine and explain 

the schematics they understand that 

this is a different product to any of its 

predecessors. The problem is that because 

of the negative perception of wave 

energy, people won’t even connect to us 

initially.” But the difficulty in marketing 

new wave and tidal devices should not be 

wholly attributed to a negative perception 

of the industry. “It’s very difficult to bring 

equity into a business from investors at 

the early stages when you’re developing 

unproven technologies,” says McAdam. 

“The government has a role to play in 

this.” 

“When you can mix grant funding with 

equity you can raise in the market or from 

investors, it’s very attractive, because 

investors can see that their effort is being 

supported by the government.” In addition 

to private-sector investment, Aquamarine 

Power’s Oyster and Oyster 2 devices have 

received financial backing from both the 

Scottish and UK Governments. Following 

the success of their prototype technology, 

these are some of the industry’s most 

While the proven success of machines 

installed by companies such as Aquamarine 

Power and Pelamis Wave Power has 

gone a long way to assuaging concerns 

about a sector once perceived as “pie 

in the sky”, the backing of associations 

such as RenewableUK has also helped to 

bolster the reputation of wave and tidal. 

“Because of the similarities in the policy 

challenges between offshore wind and 

tidal, from 2004 onwards we made a firm 

commitment that we would represent 

wave and tidal as well [as onshore and 

offshore wind],” says Maria McCaffery, 

CEO of RenewableUK. “We saw offshore 

wind as paving the way and making 

the case for big investments into grid 

infrastructure to bring electricity ashore; 

we thought wave and tidal devices would 

be seriously impeded if they had grid 

infrastructure as an additional challenge, 

whereas if we succeeded in getting 

offshore wind – because the quantities of 

electricity are so much greater – it would 

justify the investment in the grid. When 

wave and tidal followed the infrastructure 

would already be in place.” 

It is essential that the appropriate support 

mechanisms are in place if the UK is to 

ensure that its most innovative companies 

remain in the country. “I think that when 

we look historically at the UK, we have 

been great at inventing technologies, but 

not necessarily the best at taking full 

commercial advantage of them,” says 

Martin McAdam of Aquamarine Power. 

Charles Hendry, Minister of State for 

the Department of Energy and Climate 

Change, concedes that the migration of 

start-up companies is a concern: “We are 

looking at how we encourage people to 

develop their technologies in the UK. It is 

disturbing that some of the lead players in 

the UK have already looked to take their 

projects to the next stage of development 

elsewhere. We want to encourage them 

to stay here, and indeed to be a beacon 

for other inventors and developers around 

the world to come here.” 

technology, according to RenewableUK. 

“The UK is now fully committed to 

developing the next generation of 

commercial renewable energy technologies 

in the emerging wave and tidal energy 

market,” says the organisation. 

The opening of a collection of world-class 

wave and tidal testing centres is testament 

to how seriously the UK, and particularly 

Scotland, is taking the contribution the 

marine sector could make to its future 

energy mix. The largest of these, the 

European Marine Energy Centre (EMEC) 

in Orkney, is a “plug and play” facility 

– the first of its kind in the world – that 

allows companies to test wave devices at 

a site outside Stromness on the mainland, 

and tidal devices off the island of Eday. 

The National Renewable Energy Centre 

(Narec) in Northumberland boasts dry 

docks converted to enable the testing of 

smaller prototype wave and tidal devices. 

Wave Hub, installed off the Cornish coast 

in September 2010, is a grid-connected 

offshore facility which leases space to 

developers for the large-scale testing of 

wave power devices. 

Scotland is offering an additional 

incentive for the development of wave 

and tidal devices. The £10m Saltire 

Prize will be awarded to the team that 

can demonstrate, in Scottish waters, 

a commercially viable wave or tidal 

stream energy technology that achieves 

the greatest electrical output, above a 

threshold of 100 GWh, over a two-year 

period. The prize has attracted interest 

from around 131 different projects from 

31 different countries and is being run 

in conjunction with National Geographic 

magazine. “National Geographic are able 

to broadcast this, so they’re making 

Scotland synonymous with clean energy, 

synonymous with green-tech, and 

synonymous with the cutting edge on 

wave and tidal devices,” says Jim Mather, 

Scottish Minister for Energy, Enterprise 

and Tourism. 

Ian Marchant, Chief Executive of Scottish 

and Southern Energy – who has also 

In the same way that Denmark and One of the world’s richest sites for wave 

invested substantially in Aquamarine 

Germany have been able to dominate the energy generation is the Pentland Firth, 

Power – echoed Koch’s sentiments: 

manufacturing market for wind energy, the stretch of water between Caithness 

“Wave energy can play a very important 

supporting innovation early is the key in the north of Scotland and the Orkney 

part in meeting our electricity needs over 

to developing a globally competitive islands. Owned by the Crown Estate, the 

the long term.” 

promising prospects. 

manufacturing industry in marine Pentland Firth has been described as the 

62 63



Saudi Arabia of wave and tidal power. 

It hosts some of the most energetic sea 

currents in the world – the Merry Men of 

Mey, the Swelkie, the Duncansby Race 

and the Liddel Eddy, some with speeds of 

up to 16 knots – and may be capable of 

accommodating up to 10 GW of installed 

generating capacity, representing up to 

25 percent of the estimated total capacity 

of the whole of the EU. In October 2010 

the Crown Estate granted a 25-year lease 

to MeyGen, a consortium of Morgan 

Stanley, Atlantis Resources Corporation 

and International Power, allowing them to 

develop a 400 MW project in the Firth. 

The Rise of the Machines 

At the European Marine Energy Centre 

off the coast of Orkney, the giant flap of 

Aquamarine Power’s prototype Oyster 1 

rises from its fixed base on the seabed to 

oscillate in the waves. At present, only 

a few devices in the marine sector have 

progressed as far as Oyster 1, to full-scale 

testing. However, several companies 

with operations in the UK, backed by 

private investors and in many cases also 

with government funding, are currently 

constructing devices suitable for such 

deployment. 

through hydraulic motors via smoothing 

accumulators. The hydraulic motors 

drive electrical generators to produce 

electricity. Power from all the joints is 

fed down a single umbilical cable to a 

junction on the seabed. Several devices 

can be connected together and linked 

to shore through a single seabed cable. 

Current production machines are 180 m 

long and 4 m in diameter, with four power 

conversion modules per machine. Each 

machine is rated at 750 kW. 

In September 2008, Pelamis Wave Power 

subsequently installed three 750 kW 

devices to create the world’s first wave 

farm at Aguçadoura, 50 km off the Atlantic 

coast of northern Portugal. Pelamis has 

recently completed construction of its P2 

machines, in conjunction with E.ON, and 

is currently pursuing a joint venture with 

power company Vattenfall to explore 

opportunities off the Shetland coast. 

Companies such as Aqua Energy Group, 

Marine Current Turbines, Ocean Power 

Technologies, Open Hydro Group, 

WaveDragon and Wavegen have all 

made inroads in the burgeoning UK 

marine sector in the hope of exploiting 

the country’s abundant resources. “We 

should have a vision whereby we should 

be able to generate lots of wave power on 

the coasts, particularly off northern and 

western Scotland, and export that power 

into Europe,” says Martin McAdam. “We 

should then be focused on exporting the 

technology and know-how right around 

the world. If we look at countries like 

Denmark, they became very successful in 

developing wind turbines and now they 

export their technology globally. There 

is every possibility the UK can get and 

maintain manufacturing leadership.” 

David Maxwell, Managing Director and 

Co-Owner of Steel Engineering, struck 

a multimillion-pound deal to produce 

a second P2 Pelamis Wave Power for 

Scottish Power Renewables in May 2010. 

He sees the wave and tidal industry 

advancing in the coming years. “I think 

there’s a genuine sway away from wind 

towers. I think they’ve got too excited 

about it, but when you look at the cost 

involved – you’re going into deeper water, 

it’s costing more, it’s more expensive to 

actually deploy them, install them, then 

it’s costly to maintain them. There are a 

lot of negatives starting to creep through, 

and this is where I think wave and tidal 

will move forward,” says Maxwell, 

whose company is also involved in the 

fabrication of jackets for wind turbines. “I 

think wave and tidal will become more in 

vogue, purely because of the maintenance 

aspect of it. There’s eight or nine tidal 

and wave devices that I know about, and 

I think all the big companies – the likes of 

E.ON and Scottish and Southern Energy 

– are waiting to see which of them will 

work. That’s when the big guys will move 

in and say: ‘I want fifty of them, I want 

one hundred of them’.” 

Wave is the New Wind? 

wind. Secondly, wind energy requires 

concentration in remote locations, 

especially offshore, but wave power 

devices can be distributed more evenly. 

“We can’t make an offshore wind park in 

front of Lands End, for example, but you 

can with wave – it’s already there,” says 

Michele Grassi. 

Though a relatively new technology, 

according to Aquamarine Power wave 

devices can become cost-competitive 

with offshore wind as they progress up 

the learning curve in the next three to four 

years. David Maxwell of Steel Engineering 

argues that in time wave devices will 

become even cheaper: “I think that wave 

and tidal will steal a march on wind towers 

because they’re far cheaper to produce, 

far easier to deploy and maintain. They 

might not produce 5 MW or 10 MW, 

but for the capital expenditure involved 

they’re still worth it.” 

But it’s not just in relation to offshore 

wind that the cost of wave machines 

should be calculated. “Consider small 

coastal Indian or African villages that are 

not grid-connected: they produce their 

energy by burning diesel or by using 

small-scale photovoltaics, and it’s very 

expensive,” says Michele Grassi. “A 

wave machine would bring the cost of 

electricity to almost on par with London, 

and then you could initiate a whole new 

level of economic activity. When you bring 

power, you also bring water (through 

desalination), and in many of these places 

water is a factor that changes lives.” 

Submerged 

beneath the 

water’s surface, 

40 South Energy’s 

machines are 

resistant to much 

of the weather 

damage that has 

plagued previous 

generations of 

wave-energy 

converters; Photo 

courtesy of 

40South Energy 

Aquamarine Power’s Oyster generates 

With both requiring similar resources and 

energy through a simple mechanical hinged 

government investment, is it correct to 

flap connected to the seabed at a depth 

see wave and tidal energy as being in 

of around 10 m. The movement of the 

direct competition with the offshore wind 

flap in the waves drives hydraulic pistons 

industry? “It’s best to think of wave as 

which deliver high-pressure water – via a 

a very strong complementary technology 

pipeline – to an onshore electrical turbine. 

to wind,” argues Martin McAdam. Wave 

Multiple Oyster devices are designed to 

energy is correlated to wind energy 

be deployed in utility-scale wave farms of 

in that waves are caused by wind in 

100 MW or more. Following the success 

the mid-oceans, he explains. The wind 

of the original Oyster, a 315 kW machine 

arrives at the coast far quicker than the 

installed in November 2009, Aquamarine 

waves do, so when the wind begins to 

Power is now developing Oyster 2, in 

die down, its common to see the biggest 

which three linked devices power a 

waves dashing against the coastline. 

single onshore generator. Before Oyster John Robertson is CEO of BiFab, a large 

A combination of energy derived from 

was deployed, Pelamis Wave Power fabrication company based in Burntisland 

offshore wind and wave could produce 

generated the first offshore wave energy in Scotland that Aquamarine Power chose 

a much more constant energy output 

to be exported into the UK electricity to construct Oyster 2. Robertson attests 

than from offshore wind alone, mitigating 

system when its Pelamis Wave Energy to the UK’s potential as a manufacturing 

many of the problems associated with the 

Converter was installed at EMEC. The base: “The renewables sector has the 

intermittence of wind power. 

Pelamis Wave Energy Converter is a potential to create many employment 

semi-submerged, articulated “sea snake” opportunities, and it’s products like the 

Wave power is different from wind power 

composed of cylindrical sections linked by Oyster 2 that will be key. This is a good 

in two fundamental ways. First, waves 

hinged joints. The wave-induced motion opportunity for UK manufacturing and 

are statistically more evenly distributed, 

of these joints is resisted by hydraulic supply industries, and an opportunity not 

so they have fewer peaks and troughs 

64 

rams, which pump high-pressure fluid to be missed.” 

than the gusts and lulls which characterise 

65




United Kingdom 

66 67


C o u n t r y P r o f i l e : U n i t e d K i n g d o m 

United Kingdom in Focus 

As the UK Power Sector undergoes its biggest reforms since 

market liberalization, an industry once considered “dull, almost risk 

free, the sort of place people might put their pensions” now leads 

the charge towards “a pivotal turning point in human history. 

Article by: 

Joseph Hincks and 

Vanessa Acuna 

Above: 

Vattenfall attests 

to the success 

of the offshore 

wind programs 

of the UK; Photo 

courtesy of 

Vattenfall 

On 17 October 1956, Queen 

Elizabeth II pulled the lever that 

would direct power from Calder 

Hall, the world’s first nuclear power 

station, into the National Grid. Under the 

shadows of the Windscale plant’s vast 

chimneys, where plutonium was made for 

Britain’s first atomic bomb, Her Majesty 

addressed the thousands in attendance 

– members of the public come to see the 

making of history, scientists, ministers and 

dignitaries from more than 40 countries. 

“This new power,” she said, “which 

has proved itself to be such a terrifying 

weapon of destruction, is harnessed for 

the first time for the common good of our 

community.” 

facilitated mass production and helped 

end the age of post-war austerity; a 

power cut on 7 December 1970 plunged 

Britain into darkness and revealed the 

extent of the nation’s dependence on 

electricity; through the 1970s and 1980s, 

coal miners’ picket lines and pitched 

battles outside power stations redefined 

our political landscape. At a time when 

global warming is all but universally 

acknowledged, and as it prepares to 

undergo its biggest reforms since market 

liberalisation, the UK power sector is 

again at the forefront of its ontological 

condition: simultaneously a “terrifying 

weapon of destruction” and a force for the 

common good. We are poised, according 

to Scottish First Minister Alex Salmond, 

at “a turning point in human history, on a 

par with the move from hunter-gathering 

to settled agricultural communities or the 

In a bid to mitigate the environmental 

damage caused by, among other things, 

the UK power sector, the UK’s Climate 

Change Act 2008 set a target of cutting 

greenhouse gas emissions by 80 percent 

by 2050, with an interim target for carbon 

dioxide reduction of at least 26 percent 

by 2020. The European Union has signed 

up to reduce greenhouse gas emissions 

by at least 20 percent by 2020. The 

implications of these targets on the way 

the country generates, distributes and 

uses power are immense. 

The UK Government and the European 

Union have set a number of targets 

to advance the decarbonisation of the 

economy. These targets are already 

shaping the electricity market. 

The Large Combustion Plants Directive 

effectively requires Britain to close a 

third of its existing generating capacity 

by 2016. The new Industrial Emissions 

Directive is likely to result by 2022 in the 

closure of all the UK’s coal-fired power 

stations, some of its gas-fired plants, and 

the nuclear stations built in the 1970s. 

Perhaps the most significant piece of 

legislation with regard to climate change, 

the Renewables Obligation, came 

into effect on 1 April 2002. Its initial 

target for public electricity suppliers to 

source 3 percent of their supplies from 

renewable energy sources in 2003 has 

risen by 0.7–1.3 percent each year, to 

reach 10.4 percent by 2010–11. “We 

have to rebuild the energy infrastructure 

of this country in the next 10–15 years,” 

says Charles Hendry, Minister of State 

for the Department of Energy and the 

Environment. “We will have to have 

a much greater focus on building new 

plants, and on the network of wires and 

pipes that connect them. We have to sort 

out the need for energy security. We are 

in a situation where we have an absolute 

mountain to climb for new energies.” 

“The good fortune is that at a time when 

we have to rebuild our infrastructure, 

we also have the need to move to lowcarbon 

technologies, so there’s a real 

opportunity for us to build a truly lowcarbon 

energy structure in this country,” 

Lifting the Anchor 

The reform of the energy sector has a 

vital role to play in Britain’s economic 

rejuvenation in the wake of the global 

financial crisis. Chris Huhne, Secretary of 

State for the Department of Energy and the 

Environment, has said that the UK could 

undergo a third industrial revolution, one 

that will “lift the drag-anchor of budget 

cuts”. 

Achieving its 2020 targets could provide 

Britain with £100bn in investment 

opportunities and up to half a million 

jobs in the renewable energy sector by 

2020, according to statistics from the 

Department of Energy and Climate Change. 

“On a medium- and long-term view, 

countries which have decarbonised their 

economies through electricity, transport 

and the built environment will be at an 

advantage,” says Tim Yeo, chairman of 

the Energy and Climate Change Select 

Committee that monitors the work of 

the UK Government’s Department of 

Energy and Climate Change. “Countries 

that fail to do so now may find the costs 

and the disruption caused by the need to 

do it very quickly and more expensively 

will put them at a big disadvantage in 

15 years’ time. My view is that Britain 

should do this not only because it is right 

environmentally but because it is right 

economically.” 

In Scotland, the potential for job creation 

is vast. In the 1970s, Scotland began 

a process of de-industrialisation and 

moved from a manufacturing to a more 

service-orientated economy. Average 

unemployment in the country is slightly 

lower than in the UK as a whole, but in 

areas such as Barrowfield in Glasgow, 

and in Shettleston and North Ayrshire, 

the closure of much of the country’s 

manufacturing industry scarred the local 

economy: relics of the old shipbuilding 

industry still haunt the banks of the river 

Clyde. 

If progress continues according to the 

Scottish Government’s plans, the Scottish 

renewable energy industry could help 

to revive the country’s role as a hub for 

manufacturing. In 2008, the low-carbon 

energy industry supported over 70,000 

The capacity of the power sector to bring 

about social and economic change has 

been demonstrated throughout the UK’s 

68 

history. The creation of the National Grid discovery of the New World in 1492.” 

Hendry concludes. 

jobs in Scotland. This has almost doubled 

69



in the last two years, according to Jim 

Mather, Scotland’s Minister for Enterprise, 

Energy and Tourism. “We reckon that the 

increase could be at least up to 130,00 

now, which would be approximately 

5 percent of the Scottish workforce,” 

Mather says. 

Since Scotland began to address the 

climate change agenda, a totally new 

employment sector has emerged. Charlie 

Silverton, CEO of Edinburgh’s Renewable 

Devices – the engineering, design 

and consultancy company behind the 

Swift wind turbine – explains how the 

renewables sector has opened up job 

prospects for graduates. Ten years ago, 

engineering graduates had the choice 

of working in military technology, for 

companies such as BAE Systems, or in 

the oil and gas industry, according to 

Silverton; now graduates have a wealth 

of options in the renewables sector. 

In April 2005 the UK Energy Research 

Centre (UKERC) Marine Energy Network 

was launched at the University of Edinburgh 

to research into marine renewable energy 

and increase collaboration between 

academics and the private sector. 

In 2010 Carnegie College in Dunfermline 

opened the UK’s first Modern 

Apprenticeship for the renewables 

industry. Carnegie’s Wind Turbine 

Technician Modern Apprenticeship 

is currently training apprentices from 

Siemens, REpower and Weir Group. 

Employment opportunities are opening up 

across the board as the country rebuilds 

its ports, infrastructure and supply chains 

in an effort to stimulate further foreign 

investment in the energy sector. 

Scotland’s Ducks in a Row 

Mather. “There’s also another dimension: 

do we want to write a big cheque to 

France or some other country for nuclear 

technology, or do we want to see that 

money invested in Scotland – in Scottish 

technology, Scottish skills, Scottish 

intellectual property, Scottish-generated 

energy – that we can sell on to other 

markets?” 

To maximise Scotland’s potential as 

a green energy generator the Scottish 

Government has created an Energy 

Advisory Board, the members of which 

represent leading energy companies and 

academic institutions. 

The Energy Advisory Board liaises with a 

similar Oil and Gas Advisory Board and 

a Thermal and Carbon Capture Advisory 

Board, reporting directly to the First 

Minister. “We’re really beginning to 

redefine energy in Scotland as being this 

new totality,” Mather says. “We’re lining 

up all our ducks in a row: the renewable 

resources, government policy, planning 

policy, grid strategy, our engineering 

capability, our North Sea oil capability, 

our academic capability, our Scottish- 

European Energy Centre up in Aberdeen, 

the European Green Energy Centre up 

in Orkney that can ‘plug-and-play’ to 

test wave and tidal devices, and our 

connections to the UK Government and 

the European government.” Many of 

Scotland’s most successful renewables 

companies have received additional 

support from Scottish Enterprise, 

Scotland’s economic development 

agency set up in 1991 from similar preexisting 

organisations. “Essentially we’re 

looking at the commercialisation of good 

ideas,” says Andy McDonald, Director 

of Renewable Energy & Low Carbon 

Technologies with Scottish Enterprise. 

“That could be a fresh-start business out 

of a university or a spin-out, a division of 

a technology company with a new idea, 

or an existing business.” 

The grants provided by Scottish 

Enterprise – ranging from hundreds of 

thousands of pounds to £10m – come in 

the form of co-investments with privatesector 

investment funds. “It’s the private 

sector that does the decision-making,” 

says Andy McDonald. In this way, while 

Scottish Enterprise shares the investment 

risk, the organisation can be assured of 

the commercial potential of a technology 

through private-sector due diligence. 

In addition to promoting the development 

of Scottish companies, both domestically 

and overseas, Scottish Enterprise has 

been instrumental in bringing foreign 

investment into the country. Much of 

its recent focus has been on developing 

the local infrastructure and supply chains 

to improve efficiency and entice foreign 

companies by reducing the costs of 

operating in Scotland. 

The Government in the 

Marketplace 

“Historically, we’ve had a very open 

market approach in the UK. It has served 

us well over 30 years,” says Charles 

Hendry. But on the back of UK energy 

regulator Ofgem’s Project Discovery, an 

examination of the options for secure and 

sustainable energy supplies over the next 

10–15 years, this situation is soon to 

change. 

“We’ll be seeing much more intervention. 

We’re now in a very different situation – we 

have to appeal to international companies, 

we’re looking at global opportunities, we 

are dependent on imported sources of 

gas and oil, we’re becoming increasingly 

dependent – therefore, we’ve got to make 

a much stronger pitch for why people 

should invest here,” Hendry says. 

their CO2 emissions. They are obliged to 

return an amount of emission allowances 

to the government equivalent to their 

CO2 emissions for that year. EU ETS 

put a price on carbon emissions that is 

supposed to increase gradually, creating 

an incentive to invest in low-carbon 

energy and penalising pollution. 

“We were very pleased when the scheme 

was set up,” says David Porter, CEO of 

the Association of Electricity Producers. 

“We thought it was a neat mechanism 

that would enable the industry to remain 

liberalised and competitive. It got off to a 

good start; it’s remarkable that you can 

bring together 27 countries with different 

interests, and it works.” 

EU ETS might have worked in the 

administrative sense but in the wider 

sense, of reducing emissions, it was less 

effective. “The scheme only works to the 

extent that politicians want it to,” says 

Porter. “If they don’t push the limit down 

hard enough, you have a situation we 

have today where the price of emitting 

carbon is very low. So the scheme is there 

and it works, but the economic signal it 

is sending is: you’re doing everything fine 

now, you don’t need to change.” 

The 2009 EU Renewables Directive cast 

further doubt on the effectiveness of EU 

ETS. Instead of placing the emphasis on 

low-carbon technology as EU ETS had 

done, the Renewables Directive laid down 

mandatory targets for the percentage of 

energy obtained from renewable sources, 

country by country. In the case of the UK, 

the target is for 15 percent of all energy 

to come from renewables by 2020. 

Electricity producers will take on much of 

this responsibility; the 15 percent target 

equates to 30 percent of electricity being 

produced from renewables. 

An abundance of natural resources 

combined with a growing feeling that 

Long before Project Discovery was 

Scotland can become a global exemplar 

commissioned, the emergence of a global “This immediately cut across the way that 

and technology leader in renewables has 

climate change agenda meant that both the EU ETS would work,” says Porter. 

led the Scottish Government to exclude 

European and British legislation was “You were supposed to have carbon 

nuclear energy from its future generation Particularly valuable for emerging 

already heavily vested in the market. emission limits that would come down, 

mix – in contrast to UK Government technology companies is Scottish 

One of the most enduring pieces of and you were supposed to make your 

policy. “We’ve got real misgivings about Enterprise’s “proof-of-concept” funding. 

EU regulation on climate change is own judgements about which technology 

nuclear from the standpoint of the cost This puts money forward to enable 

the European Union Emissions Trading to use to achieve those targets. The 

of decommissioning, and of waste, and companies with promising technology to 

Scheme (EU ETS). Under the EU ETS, Renewables Directive says: don’t think 

the fact that the taxpayer historically has move from bench to commercial scale 

large emitters of carbon dioxide within about that, just build renewable energy 

70 

picked up the tab on that,” explains Jim and prepare for the marketplace. 

the EU must monitor and annually report – which may or may not be the answer.” 

71



The UK is already the world leader in 

offshore wind power, and the amount of 

energy the UK generates from wind will 

continue to rise dramatically: according 

to some proposals, offshore wind alone 

could eventually provide up to 40 GW of 

installed capacity. The speed with which 

wind energy can be deployed is vital to 

the UK’s chances of realising its energy 

targets for 2020. “If you want to build 

and commission a nuclear plant, you are 

looking at 10 years,” explains Anders 

Søe-Jensen, President of wind turbine 

manufacturer Vestas Offshore. “You can 

deploy wind energy much more quickly.” 

The UK’s Crown Estate has developed 

a three-round leasing strategy for UK 

offshore sites with the aim of installing 

25 GW of offshore wind capacity by 

2020. Round 1, which catered to 

demonstration-scale projects of up to 30 

turbines, began in December 2000. and 

show respectively the existing Rounds 1 

and 2 sites and the proposals for Round 

3. 

David Hodkinson is UK Business 

Development Manager at Swedish power 

company Vattenfall, which acquired 

Thanet, currently the world’s largest 

offshore wind farm, in 2008. He attests to 

the success of the offshore wind programs 

of the UK Government and the Crown 

Estate. “UK Round 3 is a cornerstone 

for the development of offshore wind in 

Europe and perhaps beyond,” he says. “It 

is an excellent and very well conceived 

program of activity by the Government 

and the Crown Estate. Round 3 is already 

stimulating interest and commitment 

from other European countries. Vattenfall 

is a European operator, and in the end 

we will go where the investment returns 

are the strongest. I think our involvement 

in Round 3 will strengthen the offshore 

wind industry.” 

The default is that one ROC is issued for 

each megawatt-hour (MWh) of eligible 

renewable output. Some technologies get 

more, some less. For instance, offshore 

wind installations receive two ROCs per 

MWh; onshore wind gets one ROC per 

MWh, and plants fired by biogas receive 

half a ROC per MWh. 

Anders Søe-Jensen attests to the success 

of ROCs: “Business case certainty has 

been created through the ROC system. 

The UK politicians have put in some 

systems at a very early stage to give 

you business case certainty. That’s very 

important in our industry: that the guys 

who put the money on the table can see 

they will get richer.” 

The UK’s plan to decarbonise its 

economy also includes building new 

nuclear power plants, yet this could be 

inhibited by incentives weighted towards 

the development of wind resources. New 

nuclear was proposed at a time when EU 

ETS was the prominent legislation and 

carbon prices were expected to rise. “The 

nuclear sector needs a high carbon price 

in order to be profitable,” explains David 

Porter. 

Why then does the UK need either 

traditional generation or new nuclear? 

Cannot it simply dispense with these 

for ever, given the huge potential wind 

generating capacity around the British 

Isles? Here we run into the issue of 

intermittence. When consumers press a 

switch they expect electricity to flow – 

they pay not only for the power they use, 

but also for reliability. 

Because wind varies from place to place, 

putting wind power plants all around the 

UK increases reliability. Yet no matter 

how much wind capacity we install, there 

will always be times – for example on a 

calm day in mid-winter – when demand 

will exceed supply from wind. 

“The sort of place people might 

put their pensions” 

Ofgem’s Project Discovery states that 

the British energy infrastructure requires 

a total investment of £200bn for the UK 

to realise its 2020 targets. 

Figure1:(top) UK electricity generation 

“There’s this financing challenge because 

from renewable sources from 2000 

the Government has chosen to say that 

to 2010, and Renewables Obligation A series of incentives under the 

nuclear is possible – yet each nuclear 

targets. Figure2:(above) Forecast 

Renewables Obligation encourages the 

power station costs £5–7bn,” explains 

growth in UK renewable power up to development of green energy generation. 

Ofgem CEO Alasdair Buchanan. “On top 

2020 offsets a steep decline in nuclear The UK’s electricity regulator Ofgem 

How will the market manage this? There of that, we would like large offshore wind 

capacity. We see that wind power, incentivises renewable technology by 

will have to be other modes of generation farms – London Array, for example, will 

which currently accounts for about issuing Renewables Obligation Certificates 

able to pick up the slack when the wind cost £2bn; and we would like clean coal 

half of the renewable electricity total, (ROCs) to accredited renewable 

is not blowing. Exactly how to incentivise – the Longannet scheme in Scotland is 

is forecast to grow threefold by 2020 generators; companies which fail to meet 

the building of generation facilities that £2–3bn.” With a conventional gas-fired 

to provide around three-quarters of our the Renewables Obligation by amassing 

will only be used occasionally is by no power plant costing just £300m, Buchanan 

72 

renewable electricity. 

sufficient ROCs are subject to charges. 

means clear, however. 

points out, “the scale is completely 

73



Wind turbines 

located at Kentish 

Flats; Photo 

courtesy of Vestas 

Wind Systems A/S 

different, and so the investors have got to 

find the money.” The UK government has 

accepted Ofgem’s findings and concedes 

that a large proportion of the investment 

will have to come from overseas. “To 

achieve [our targets] requires a substantial 

amount of investment in renewables 

across the whole of the EU – billions and 

billions,” says Tim Yeo. “Everything we 

do,” says David Porter, “is connected 

with the scope for investment. This is our 

message to the government: whatever 

you do, don’t take any risks; if this money 

doesn’t come forward, you’re not going 

to achieve what you want to achieve.” 

The UK energy sector has already seen 

significant foreign investment. To cite 

two recent examples, the Thanet wind 

farm off the coast of Kent has been 

owned by Sweden’s Vattenfall since 

2008, and London Array – expected 

to surpass Thanet in size when it is 

completed in 2012 – is owned 50 percent 

by Denmark’s DONG Energy, 30 percent 

by E.ON UK Renewables and 20 percent 

by Abu Dhabi’s Masdar. 

There may be an upside to this uncertainty, 

however, and the potential benefits for 

investors could be well worth the risk. “If 

everything comes right, you might have 

a situation where instead of having just 

enough electricity production, you have 

ample,” says David Porter. “Electricity will 

be in higher demand. One day we have 

to address transport, and the electric car 

remains a serious frontrunner; there’s a 

big possibility that heating will be more 

electric and less gas; air conditioning has 

become an expectation; and then there’s 

the electrification of the UK’s railways. 

You could move from a very conventional 

position, through this uncomfortable 

period at the moment, into a world where 

far more things are electric and we have 

far more production.” 

“An industry that used to be very dull and 

almost risk free, the sort of place people 

might put their pensions – although it’s 

different today and we’re coming up with 

lots of new technologies that haven’t yet 

been tested – could potentially be very 

exciting and profitable.” 

David Porter’s hopes for the industry are 

supported by sound theory. In his 1865 

book The Coal Question, economist 

William Stanley Jevons argued that 

improvements in fuel efficiency tend to 

increase, rather than decrease, fuel use: 

“It is a confusion of ideas to suppose that 

the economical use of fuel is equivalent 

to diminished consumption. The very 

contrary is the truth.” 

Jevons observed that after the introduction 

of James Watt’s coal-fired steam engine – 

which greatly improved on the efficiency 

of Thomas Newcomen’s earlier design 

– consumption of coal soared in England. 

Watt’s innovations made coal a more 

cost-effective power source, leading to 

the increased use of the steam engine in 

a wide range of industries. This in turn 

increased total coal consumption, even 

as the amount of coal required for any 

particular application fell. 

efficacy of an approach to decarbonising 

the economy that is primarily based on 

energy efficiency. Organisations such as 

the Carbon Trust, the National Energy 

Foundation and academic bodies such 

as UCL’s Energy Institute look to take a 

more holistic approach to environmental 

protection. 

Government and Private Sector: a 

Symbiotic Relationship? 

For many enterprises, the level of support 

available from the UK Government is 

a motivating factor in their decision 

to invest in the country. “The UK is at 

least 20–30 years ahead of every other 

country in their energy policy,” says Akio 

Fukui, CEO of Mitsubishi Power Systems 

Europe. 

Last February the UK Government granted 

Mitsubishi a £30m offshore wind turbine 

research and development budget. “Our 

reason for being here is simple: the product 

is here,” says Fukui. “The UK started 

talking about offshore about three or four 

years ago. These days, influenced by the 

UK, China, Japan and the United States 

now talk about offshore. Technically the 

UK is a leader.” 

“I admire the strategy. The politicians 

include a number of private-sector 

companies in their discussions so that 

policy is harmonised amongst the people 

concerned: manufacturer, technology 

holder, government, universities and 

others. That’s why we decided to follow 

through with our investments here, 

because we trust the UK Government and 

its policy.” 

Despite his approval of Government 

strategy, Fukui acknowledges that there 

remain areas of uncertainty in energy 

policy. The Government is focused on 

targets 10 or 20 years in the future, Fukui 

explains, but there are few guidelines as 

to which energy sources to proceed with 

in the immediate future. “Energy policy 

should be balanced amongst offshore and 

onshore wind, nuclear, coal-fired plants, 

gas-fired plants and other technologies,” 

he says, “with a precise breakdown for 

each for five years, 10 years, 15 years 

from now. People are always talking 

should be much more detail on how we 

get there along the way.” And as much 

as it is necessary for the Government to 

support private industry, according to 

David Hodkinson of Vattenfall it is equally 

necessary that the private sector continues 

to justify the support it receives. When 

Vattenfall took over the Thanet wind farm 

in 2008, the project was behind schedule 

and many contracts were expiring. The 

opening of Thanet by Chris Huhne in 

2010 went some way towards restoring 

confidence in offshore wind. “It has been 

absolutely essential for continuing UK 

support for renewables that we provide 

tangible evidence of supporting the UK 

economy,” says Hodkinson. 

The All-pervasive Grid 

In the BBC Four programme “The Secret 

History of the National Grid”, writer and 

critic Will Self discusses the nature of 

Britain’s dependence on electricity as 

a sort of amniotic fluid surrounding us: 

“the grid becomes effectively a mesh: it 

becomes finer and finer and it contours 

itself around our lives more and more. 

…We become more and more effectively 

divorced from how we heat and power 

our domestic working lives; we’re more 

and more disconnected by the fact of our 

massive levels of connectivity.” 

Can consumers remain estranged from 

the energy they use, feeding off an 

amorphous grid? As the prominent modes 

of energy generation change in the UK, 

both its transmission and ultimately also 

the nature of energy use must change 

accordingly. The UK’s national grid is 

undergoing total reform: existing cables 

are being replaced, and new networks 

installed to connect burgeoning energy 

centres. 

“There are three drivers for the change,” 

says David Smith of the Electricity 

Networks Association. “One is that the 

kit itself is getting old. It was put in 

with an expected life span of about 30 

years. It’s now lasted up to 60 years, 

it’s served its time and needs replacing. 

The second reason is that generation is 

changing: we’re seeing coal-fired and 

nuclear power stations coming to the end 

of their lives. We’re seeing the prospect 

Despite the confidence demonstrated by 

these investors, some scepticism remains 

in the private sector as to whether the UK 

will achieve its targets, and how it will 

manage an electricity market that relies “Jevons’s paradox” may bode well 

heavily on wind energy. Some enterprises for the balance sheets of companies 

in both traditional and renewable investing in cleaner, more efficient 

generation are still reticent to invest in an technology, but it throws into question 

74 

industry riddled with uncertainty. 

– from an environmental standpoint – the 

about percentages and 2020, but there of offshore wind, onshore wind, and new 

75



The UK’s 

national grid is 

undergoing total 

reform: existing 

cables are being 

replaced, and new 

networks installed 

to connect 

burgeoning energy 

centres. 

nuclear. The third reason is the arrival, at 

some stage, of smart networks. Smart 

networks will do something that we’ve 

never done before: they will allow twoway 

power flows.” 

panels or bio-generation facilities on their 

land. The UK’s system of feed-in tariffs 

– which work alongside the Renewables 

Obligation – was introduced on 1 April 

2010 to promote low-carbon electricity 

generation, particularly by organisations, 

businesses, communities and individuals 

who are not traditionally engaged in the 

electricity market. 

Interview with Rt Hon Alex Salmond MSP, 

First Minister of Scotland 

Q – Why have you 

replaced the Scottish 

Government’s previous 

target of producing half 

of Scotland’s electricity 

from renewable sources 

by 2020, with a new 

target of 80%? 

A – The Scottish 

Government is aiming to 

deliver a transformation 

in how we generate 

and use energy - making full use of our natural 

resources to bring economic and environmental 

benefits to our people. When we came to office 

in 2007 our renewables targets were widely held 

to be ambitious, testing, and tough – generating 

40% of electricity demand from renewables by 

2020. One of our first actions was to raise this 

from 40% to 50%. 

Our National Renewables Infrastructure Plan 

(N-RIP) estimates £223 million of investment is 

needed in Scotland’s port and harbour facilities 

and governments need to stimulate private 

finance through a certain level of strategic 

public investment. That’s the purpose of our 

National Renewables Infrastructure Fund (N-RIF), 

established initially with £70 million to strengthen 

our ports and harbours infrastructure. The initial 

call aims to strengthen ports and manufacturing 

facilities for offshore wind turbines and related 

components and to leverage significant private 

sector investment over the next four years. 

Q – What are Scotland’s current advantages with 

regard to attracting foreign investment? 

A – Scotland is one of the most attractive inward 

investment destinations for the global renewable 

energy industry for a number of key reasons. 

Building on our unrivalled natural resources and 

supportive Government policies, we and our 

agencies aim to attract the best technologies and 

global best practice and to share our experience 

and knowledge with the rest of the world, as we 

have done more than once with other industries in 

Scotland. 

The rate of progress and sense of purpose in 

The smart grid will work with smart meters 

Scotland’s renewables industry now gives us 

– which the Department of Energy and 

greater optimism that our higher 80% target 

Climate Change has announced it would 

can be achieved. Since coming to power, 

like to see in all homes by 2020 – to 

the Scottish Government has consistently 

inform customers of their real-time energy “Clean energy cashback” will allow many 

demonstrated our political commitment to this 

use. Smart meters can also communicate people to invest in small-scale low-carbon 

endeavour. For example, we have consented We have a rich and thriving oil and gas sector and 

information to connected devices and electricity, in return for guaranteed 

36 major renewables projects (more than double several indigenous Scottish companies with a high 

consumers about grid condition, making payments for the electricity they generate 

the figure for previous administrations) and now level of technological advance, knowledge and 

it possible for customers to use energy and export. “We’re looking at how we can 

have some 7 Giga Watts of renewables capacity expertise in renewables. And we boast top-end 

at more economic times and to reduce mobilise people to think of themselves 

now operating, in construction or consented. research and development centres, some very 

the size of demand peaks. For instance, a not just as consumers but as generators 

So we are well on course to exceed the interim unique expertise in wind, tidal and wave areas. 

user can program a smart meter to turn on as well,” says Charles Hendry. 

31% target for 2011. And given the scale of Through the Scottish European Green Energy 

selected home appliances that can run at 

lease agreements now in place to develop more Centre, we are collaborating with a range of 

arbitrary hours, such as washing machines, Contrary to Will Self’s presentation of an 

offshore wind, wave and tidal projects totalling organisations on the continent to help accelerate 

at times when power is at least expensive. era in which people are divorced from the 

some 12 Giga Watts over the next decade, it was the development and deployment of low carbon 

At peak times the grid could turn off energy that surrounds them, the arrival of 

clear that we should aim higher and go further energy technologies at home and further afield. 

selected appliances to reduce demand. smart grids means that, in theory, energy 

with our target for 2020. 

Two of Europe’s largest developers of renewable 

The emergence of smart grids and meters, users will be far more involved in how their 

energy, based in Scotland – Scottish Power and 

combined with increased availability of electricity is generated, transmitted and 

Q – The UK requires £200 billion of investment SSE Renewables – act as a major catalyst for 

renewable generating equipment, also ultimately used. “The whole relationship 

to achieve its 2020 targets, what is the Scottish inward investment to Scotland as they continue 

makes small-scale generation a much between consumers and suppliers will 

government doing to help promote investment in to gather strategic partners to deliver their major 

more feasible proposition for private and change,” says David Smith. 

Scotland? 

renewable energy projects along with developing 

public institutions. According to Maria 

A – That level of investment undoubtedly poses Smart Grid and Carbon Capture and Storage 

McCaffery, CEO of industry association While not exactly a Promethean wresting 

a challenge, particularly in this economic climate. technologies. The radical upgrade of the grid 

RenewableUK, seven of the world’s top of power from the gods, it seems that the 

Yet, as the world moves into the economic infrastructure in Scotland required to deliver 

ten small wind turbine manufacturers are burden of responsibility for ensuring power 

recovery phase, it is clear that investment in the over 22GW of wind and marine energy by 2025 

now British. A slew of small installation, continues to be a force for good instead 

green economy – creating new wealth, a new will trigger major investments in transmission 

engineering and consultancy firms has of a terrifying weapon of destruction falls 

industry with new assets – can play a hugely assets by both Scottish Power and SSE. This too 

sprung up to cater for households, not only at the feet of the government and 

important role in building a strong, sustainable represents a significant opportunity for inward 

businesses and independent generators private sector, but rests on the shoulders 

recovery. 

investment. 

who wish to put turbines, photovoltaic of our entire society. 

76 77


F o c u s : S o l a r P o w e r 

Solar Power 

Of all our current energy technologies, solar power boasts perhaps 

the greatest mass appeal. Existing solar panels have excellent green 

credentials thanks to their proven effectiveness and comparative 

lack of visual intrusion, and all forms of solar technology are 

developing fast. The world’s roofs seem ripe for solar energy. 

Article by: 

Tom Willatt 

Above: 

TÛRANOR 

PlanetSolar, the 

world’s largest 

solar-powered boat 

travels around the 

world to advocate 

for green energy; 


cleantechnica.com 

The untapped resource is 

unquestionable. According to the 

International Energy Agency, the 

amount of energy absorbed by the planet in 

one hour is more than the world consumes 

in an entire year. Despite this enormous 

potential, however, solar technology is 

currently an expensive choice. Under the 

best-case scenario in sunny locations, the 

cost of solar-powered electricity is about 

$0.17/kWh, compared with about $0.15/ 

kWh for offshore wind, $0.07/kWh for 

coal and nuclear, and $0.06/kWh for gas. 

Overview 

Solar generation falls into three main 

technologies. Two of these – photovoltaic 

(PV) solar cells based respectively on 

silicon wafers and polymer films – 

produce electricity directly and are ideal 

for distributed generation. 

The third technology, concentrated 

solar thermal power, uses sunlight as an 

energy source but is otherwise more akin 

to conventional thermal generation. 

“Solar will not replace all other generation 

– a generation mix is vital,” believes 

Jason Gray, Vice President & Country 

Manager, Canada at SunEdison, a pioneer 

in solar systems. “Getting that right 

balance is what regulators now need to 

struggle with. We continue to see the 

price of solar come down. We challenge 

regulators to appreciate the full benefits 

of solar in terms of generating right at the 

load,” Gray continues. 

One of solar energy’s great advantages 

is that it often allows for electricity to be 

produced cleanly at the point of use. This 

distributed generation reduces losses 

and negates the need for expensive and 

unpopular transmission investment. 

“Due to the ageing transmission and 

distribution infrastructure, the question 

is whether to go for big centralised 

generation or create generation close to 

where the load is being consumed. Also, 

the power that solar can produce matches 

the peak. Instead of having idle baseload 

capacity solar is at its maximum output 

during those peaks,” Jason Gray notes. 

Another benefit of solar, in a world 

of diminishing fossil fuel reserves 

and unstable prices, is the absolute 

consistency and security of supply. “The 

biggest benefit to investors of solar 

projects, that people often overlook, is 

that fuel cost for your generator is zero 

and absolutely without volatility. Your 

power purchase agreement is 15–20 

years long and even beyond that you 

have a long, perhaps infinite, continuity 

to that solar project,” says Lewis Reford, 

CEO of Schneider Power, a Canadian firm 

developing renewable energy projects 

across North America. Such predictability 

is valuable to investors. 

Subsidy Catalysts 

The solar industry is still in its infancy 

relative to other energy generation, 

so although it only contributes around 

0.5 percent to global installed generating 

capacity, its phenomenal growth means 

that this share is rising rapidly. According 

to the European Photovoltaic Industries 

Association, global installed solar power 

capacity grew by 6.4 GW in 2009 to 

To date, the solar-cell boom has been 

a mostly European phenomenon driven 

by generous feed-in tariffs in Spain and 

Germany, with the rationale that costs 

will decline as volumes increase and 

manufacturers gain experience. Solar 

power now produces up to a tenth of 

Germany’s electricity on sunny days. 

Without such policies, the high cost of 

generating solar power would prevent 

it from competing with electricity from 

traditional fossil-fuel sources in most 

regions. 

However, across Europe, subsidies are 

now being scaled back and most of the 

growth in demand will be elsewhere. 

China is expected to become a big user, as 

well as maker and exporter, of solar cells. 

America is likely to build lots of large-scale 

solar plants. Unsurprisingly, however, the 

greatest opportunities lie in the nations 

that combine the most sunshine with high 

prices for conventional power. 

Reaching Parity 

The holy grail of renewable energy is 

to reach grid parity, the point at which 

alternative energies can compete in 

price with conventional grid power. 

Once solar achieves this, many experts 

believe that its adoption will increase 

exponentially. “We’re getting there,” 

says Jon Kieran, Director of Solar at 

EDF EN, the renewable energy spinoff of 

French utility giant EDF. 

“The price of inputs is going down and the 

knowledge of installation, efficiency of 

panels and new technologies is improving. 

This has meant that the price of solar has 

come down dramatically over the past 

two years. If we continue this rate we’re 

going to be competitive with peak grid 

energy in parts of North America within 

the next two to four years. That would 

have been unheard of four years ago.” 

“We now have an obligation in the solar 

industry to lower the cost of solar and 

make it a more compelling proposition for 

customers, stakeholders, governments, 

power systems and utilities,” Kieran 

continues. “We cannot simply scoop 

these incentives. In the process of 

investing in these plants, and enjoying a 

However, the price of solar is falling and Silicon PV is by far the commonest 

policy-makers around the world are taking technology, today accounting for 

the solar option far more seriously. This 90 percent of installed solar capacity. 

section explores the rate of solar adoption Production has been increasing by an 

around the world, the options currently average of 48 percent each year since 

available, and the newest developments 2002, making it the world’s fastestgrowing 

78 

in solar technology. 

energy technology. 

22 GW, an increase of 41 percent. commercial return from these production 

79


F o c u s : W i n d P o w e r 

incentives, over time that investment 

should generate declining pricing for the 

inputs to solar and should make solar 

more competitive with conventional 

power and other renewable energies.” 

Japan is already on the brink of grid parity, 

having one of the highest retail electricity 

prices in the world as well as plenty of 

sun. It also has a government which has 

been prepared to encourage the use of 

solar power with incentives; over more 

than five years these have enabled the 

buildup of a very large installed base of 

solar power. By next year Japanese solar 

power will be close to competitive with 

retail electricity. 

Consulting company McKinsey suggests 

that by 2020 solar power will have 

reached grid parity in at least ten regions 

worldwide. This expectation is based 

on the rapid drop in solar costs over 

the past two years, which some claim 

to be as great as 50 percent, combined 

with the enormous amounts currently 

being invested in R&D in this globally hot 

topic. 

R&D Game Changers 

There are two technological routes to 

widespread grid parity. One is incremental, 

with existing silicon-based photovoltaic 

technologies steadily improved by, for 

instance, the use of cheaper forms of 

silicon and more cost-effective methods 

of production. 

now being employed in the development 

of silicon photovoltaic cells may halve 

the cost of production. Nanotechnology 

involves engineering materials at the 

atomic level to deliver a required set of 

material properties – in this case the ability 

to produce and conduct electricity. 

Organic photovoltaics are another potential 

game changer. Current technologies 

have low efficiencies, in the region of 

3–4 percent, but their theoretical limit 

is in the region of 50–60 percent. The 

manufacturing processes could be much 

cheaper than those for silicon-based 

cells. The physical flexibility of polymerbased 

organic solar cells, in contrast to 

their rigid silicon counterparts, opens up 

new possibilities for their use. 

A Sunny Future 

The combination of incremental 

improvements and the promise of 

potentially game-changing R&D 

developments creates an optimistic future 

for the solar industry. However, the solar 

business needs to feel confident that 

financial incentives will remain in place 

until the technology is mature. 

This leaves a fair amount of political risk 

associated with any major investment 

in manufacturing solar cells or installing 

them on a large scale. 

As with many green industries, 

jurisdictions around the world are keen 

to highlight their commitment to the 

cause but temper this enthusiasm with 

measures to ensure the creation of green 

jobs. This trend has caused protectionist 

policies to creep in, which may eventually 

undermine the global efficiency of global 

solar supply chains. 

Wind Power 

The world’s first offshore windfarm, consisting of 11 450kw 

turbines was created in Vindeby, Denmark in 1991. Twenty 

years on, work has already started on London Array, a 1,000MW 

project that could eventually power up to 750,000 homes. 

Onshore and offshore, the rapid rise of wind turbines is a portent 

of change in the global generation mix. 

Back in 2006 British economist Royal Society. If the world is to prevent Article by: 

Incremental improvements are already 

Nicholas Stern, chair of the a surface temperature rise of more than Joseph Hincks 

cutting costs by around 10 percent a year. 

Grantham Research Institute on 2°C – the so-called safe limit – then it is 

Efficiencies, at present between 14 and 

Climate Change and the Environment clear that time is of the essence. 

Above: Wind 

17 percent for commercial silicon-based 

at the London School of Economics, 

turbines located 

solar cells, are also increasing, though the 

predicted that a 4°C rise in global surface “No single technology will get us there. at Bockingharde 

maximum theoretical efficiency is in the 

temperature would place 300m more We have to hit the problem from every Germany; Photo 

region of 30 percent. 

people at risk of coastal flooding every angle,” says Paul Aston, CEO of Proven courtesy of Vestas 

Despite these concerns, the future still 

year, induce a 30–50 percent reduction Energy, the UK’s leading manufacturer Wind Systems A/S 

Incremental improvements are also seems bright for cheap solar energy. The 

being achieved in many manufacturing lowest-cost producers should soon be 

in water availability in southern Africa and of small wind turbines. “There’s an old 

aspects that are being accompanied able to compete without subsidy against 

the Mediterranean, cut African agricultural manufacturing truism: it’s simpler to get 

by significant reductions in system and high-priced competition in sunny regions. 

yields by 15–35 percent, and place 20– better by a little bit at lots of things than 

installation costs. 

50 percent of the world’s animal and hugely by one thing.” Nuclear, biomass, 

In the very near future there may be no 

plant species at risk of extinction. Revised marine, and traditional hydro may all 

80 

The second, revolutionary, route will 

involve completely new technologies, the 

“game changers” that would bring about 

a paradigm shift in the economics of solar 

power. For example, nanotechnology 

need for any need for green justification 

for a solar investment. If solar cells’ 

manufacturing costs keep falling as 

anticipated, the geographic spread of 

grid-parity solar will become ever larger. 

predictions in the run up to 2010’s Mexico 

climate conference described even direr 

consequences. A 4°C rise could occur as 

early as 2060 in a worst-case scenario, 

according to research published by the 

have a part to play in creating a lowcarbon 

world but, truisms aside, solar 

and wind energy are increasingly being 

mooted as the most viable solutions for 

the immediate future. 

81



Vattenfall invests 

heavily in offshore 

wind farms; 


Vattenfall 

Wind energy, in particular, can be 

deployed very quickly. “If you want to 

build and commission a nuclear plant, for 

example, you are looking at 10 years,” 

says Anders Søe-Jensen, President of 

Vestas Offshore, a division of the world’s 

leading wind turbine manufacturer. “Wind 

is predictable and wind is competitive. If 

you could tell me the oil and gas price 

going forward, you would be very rich 

– the one sure thing is that it’s going to 

be more expensive. But I can tell you the 

price of wind ten years from now: it’s 

still free!” 

The future offshore 

Opening the Thanet wind farm in 

September 2010, a windswept Chris 

Huhne, the UK’s Secretary of State for 

the Department of Energy and Climate 

Change, barked into the microphone: “If 

Kent is the Garden of England, then this is 

its most magnificent water feature.” 

The £780m Thanet project is currently 

the world’s largest offshore wind farm. 

It hosts 100 turbines over an area of 

more than 35 km2 and has a nameplate 

capacity of 300 MW – enough to power 

around 200,000 homes. “This is the 

future,” said Huhne. 

While lagging behind most of Europe 

in terms of overall renewable energy 

production, the UK has the most extensive 

experience in offshore wind. “The UK is 

by far the most mature and interesting 

market,” says Anders Søe-Jensen of 

Vestas Offshore, which has built six 

offshore wind farms in the UK. The latest 

of these is Thanet, which is owned by 

Swedish power company Vattenfall. 

Vestas currently employ more than 500 

people in the UK and expect to have 

an additional 400 engineers working on 

blade development when it opens an R&D 

facility on the Isle of Wight in 2011. 

While the UK has a natural abundance 

of wind suitable for power generation, 

political will has been instrumental in 

moving the sector forward. “We look at 

how much better we could be doing and 

feel that the level of ambition should be 

higher,” says Charles Hendry, UK Minister 

of State for the Department of Energy and 

Climate Change. Given the scale of the 

task at hand, it is vital that political will – 

and indeed financing capacity – remains 

behind the industry. 

total development pipeline to 49 GW. 

According to Maria McCaffery, CEO 

of RenewableUK, the offshore sector 

currently has the potential to deliver 

150 TWh of electricity annually, or just 

under half of the UK’s net consumption. 

With the exception of 63 MW in China, 

all commercial offshore wind is in Europe 

at present, with the UK and Denmark 

responsible for two-thirds of that. 

Internationally, progress in development is 

still modest. While the 689 MW installed 

in 2009 was twice that of 2008, and 

cumulative installations passed the 2 GW 

mark, this still represents only about 

1.25 percent of the world’s total wind 

capacity. 

The existence of relatively few offshore 

turbine manufacturers, combined with 

pockets of upward pressure on turbine 

prices, has meant that supply constraints 

have continued to inhibit the development 

of the global offshore wind industry. With 

many new projects planned, however, 

worldwide offshore wind is expected 

to grow to about 15.5 GW by 2014, 

representing some 3 percent of total 

installed wind capacity. 

Infrastructure Challenges: When 

the Wind Blows 

The UK may be pioneering in its approach 

to offshore wind, but there remain large 

holes in the plan. Akio Fukio of Mitsubishi 

Power Systems, one of the UK’s leading 

turbine developers, says: “Even though 

the renewable opportunity is there, what 

about the supply chain? What about port 

facilities? What about transportation 

and accessibility? What about transport 

vessels? There is still a big shortage of 

infrastructure.” 

stream of projects is critical,” he says. 

Sound port setups are vital to facilitating 

an increase in installed offshore wind 

capacity. Across Europe, governments 

and the private sector are revitalising tired 

ports with fresh investment. Den Helder at 

the northern tip of Holland, for example, is 

undergoing massive expansion. “We want 

to be a strong base in the Netherlands 

for maintenance and inspection activities 

for wind turbines and for the assembly of 

turbines and blades,” says Kees Visser, 

Den Helder’s Port Alderman. In the UK, 

the ports of Blyth in the north-east and 

Lowestoft in the east are undergoing 

similar refurbishment. 

One of the biggest infrastructure challenges 

facing wind generators in Scotland 

concerns transmission charging. The UK 

maintains a system of charging according 

to distance from demand. It was designed 

decades ago, when fossil fuel power plants 

could be sited close to demand centres. 

“This leads to the absurd situation where 

Scottish renewable generators must pay 

many times more than coal-fired plants in 

the south of England – £20.16 per MWh 

in the north of Scotland, compared to a 

subsidy of £6.68 per MWh in Cornwall,” 

explains Scottish First Minister Alex 

Salmond. “The disparities could be even 

greater in offshore or island generation. 

For example it could be up to £97 per 

MWh in the Western Isles once the costs 

of the vital cable link to the islands are 

factored in.” 

Moving to a generation mix that is heavily 

reliant on a volatile wind supply inevitably 

poses infrastructure challenges the world 

over: the wind is not always blowing, and 

there may well be occasions when supply 

either far exceeds or falls far below 

demand. According to David Hodkinson, 

UK Business Development Manager at 

Vattenfall, this issue may be overblown. 

“Management systems are already in 

place. In many respects, wind is easy to 

predict: it can be seen days in advance, 

so steps can be taken then to prepare 

alternate generation to take over when 

necessary.” 

From tiny community projects in Nepalese 

villages and Scottish farms to the massive 

offshore installations off the coasts of 

the UK and Denmark, from the foothills 

Infrastructure for offshore wind, in fact, 

of the Pyrenees to the sprawling prairies 

is almost universally lacking as the 

of North America, wind turbines are an Ambitions for new wind capacity, which 

world gets to grips with changing power 

increasingly visible presence in the global could create tens of thousands of jobs, 

sources. Peter Clibbon, Vice President 

generation mix. “Wind is no longer just will require investment of around £100bn 

of RES in Canada, claims that Canadian 

a green credential for companies or over the next ten years, a figure similar 

infrastructure too requires significant 

governments, but a legitimate and serious in scale to the investment needed to 

investment to accommodate greater wind 

power generation option that meets a establish the North Sea oil and gas 

capacity. “There are quite a number of 

significant proportion of energy demand industry in the 1970s. This investment 

constraints that need to be resolved with 

in a clean and sustainable manner,” says is already underway. In January 2010 

heavy investment. The government has 

Helmut Herold, Regional Manager for the Crown Estate leased 32 GW worth 

stated that they do have a plan for that Even if wind is somewhat predictable, 

REpower Systems in Quebec and East of sites as part of its UK Offshore Round 

and we’re optimistic that they will deliver. though, the problem of supplying energy 

Canada. 

3 development program, bringing the 

Delivering on time to enable a steady when the wind isn’t blowing still exists. 

82 83



AltaGas’s 102-MW 

Bear Mount wind 

project in British 

Columbia is the 

first wind power 

generating station 

to be connected to 

the BC Hydro grid; 


Hatch Canada 

It is likely that wind energy will have to 

work in conjunction with other modes 

of generation. This poses entirely new 

legislative challenges to governments, 

for example the history of controversy 

surrounding capacity payment mechanisms 

in the UK. 

In the meantime, facilities such as the 

Hydrogen Office in Fife, which leads 

research into hydrogen storage, give 

hope that wind energy may come to be 

less reliant on support from other means 

of generation. 

Small-scale Generation 

“The best thing about having electricity 

from the wind turbines,” says Kamala 

Pakharin, “is that now there is no smoke 

from the lighting and we don’t have to 

spend any more money on kerosene.” The 

three wind turbines in her village of Phakel 

in the Kathmandu valley, Nepal, were 

installed by Renewable World (formerly the 

Koru Foundation). They provide energy to 

local schools, enabling them to stay open 

through the winter months when it would 

usually be too cold and dark to continue 

teaching, plus power and lighting for the 

homes of several families. 

Objections and Obstacles 

The benefit of having energy derived 

from wind may, for some people, still 

appear remote, whilst the actual physical 

appearance of a cluster of giant white 

turbines rotating in front of one’s line 

of sight, whirring and booming – as 

common perception would have it – is 

more immediate. Though it may sound 

oxymoronic, there are widespread 

objections to the impact of wind turbines 

on the environment. 

RenewableUK is engaged in bridging the 

gap between government, the private 

sector and industry. “We respect that 

some people are vehemently opposed 

to the visual impact of a wind turbine,” 

concedes Maria McCaffery. “What we 

will not tolerate, and are becoming 

increasingly aggressive about, is having 

the case against wind energy based on 

complete myths and misrepresentation.” 

“When between a quarter and a third of 

our generating capacity is about to be 

decommissioned and our neighbouring 

countries have suffered severe disruptions 

to the supply of fossil fuels and horrendous 

volatility in its price, while we have an 

enviably abundant natural resource, does 

it not just make excellent common sense 

to deploy it? To use it to secure our energy 

independence and to protect ourselves 

from volatility of supply and prices, and 

the ongoing pollution and damage we’re 

doing to our atmosphere?” 

A number of companies have attempted to 

tackle the problem of noise pollution from 

turbines, with varying success. Edinburgh 

based engineering and consultancy firm 

Renewable Devices has pioneered an 

innovative solution. Renewable Devices’ 

Swift turbine incorporates a circular 

diffuser ring surrounding the turbine 

blades. By removing violent blade tip 

vortices, this makes the turbine virtually 

inaudible, the company says. 

Alex Woodward, Business Development 

Manager of UK-based consultancy 

Natural Power. This engagement can 

extend to various community benefit 

schemes. “There are a number of sites 

that we’ve helped develop where we’ve 

put in place funds that can be used for 

building community centres or sponsoring 

people to go to university in the local 

community.” 

Offshore wind poses fewer problems to 

people concerned about the visual and 

audible impact of turbines, but there 

remain concerns about the impact of 

turbines on the marine environment. 

Offshore installations do not have to 

have a detrimental affect on the marine 

environment, however, provided adequate 

site assessment is performed beforehand. 

Companies such as Glasgow-based 

marine surveyors Partrac not only provide 

coastal oceanographic and water quality 

surveys to establish the optimum sites 

for offshore installation, but also analyse 

for a wide range of parameters including 

bacteria, dissolved oxygen, nutrients, 

metals, hydrocarbons and other toxic 

substances, and conduct marine mammal 

surveys in order to reduce the risk of 

disturbance and injury to marine mammals 

from excessive noise. 

“There is a school of thinking that offshore 

wind farms could help to restore habitats,” 

Annie Linley, Business Development 

Manager at Plymouth Marine Laboratory 

told RealPower magazine recently. 

“Currently, some forms of dredging and 

trawling really churn up the sea, whist 

our fisheries are in a pretty perilous 

state. The thinking is that offshore 

wind farms provide an opportunity for 

habitats to restore and for other lowerimpact 

activities to take place at the wind 

farms.” 

Another concern is that the volatile 

While people may not like the visual 

nature of wind energy may exert an 

Wind energy is ideal for distributed 

impact of wind turbines, one can argue 

unacceptable level of stress on the grid. 

generation and its small-scale application 

Many objections to onshore wind that this comprises the lesser of two 

David Hodkinson argues that this may not 

can make a significant contribution to a 

installations can be overcome through evils. “The alternative is to face the sort 

be the case: “Wind may be intermittent 

diverse range of communities. Seven of 

good communication during the planning of industrial landscapes that we saw in 

but at the same time, large power stations 

the world’s top ten small wind system 

stage. “It’s a question of engaging with the 1930s, 1940s, 1950s and 1960s, 

can be too. In the past it has happened 

manufacturers are British. “Small wind is 

the community as soon as you can to and more recently in parts of the Soviet 

that thousands of megawatts have gone 

an important export and international trade 

see if there are any issues, and being Union,” says Jim Mather, the Scottish 

offline instantly, and the system is capable 

opportunity for the United Kingdom,” says 

very open, and doing public exhibitions Minister for Environment, Energy and 

of dealing with that.” 

Maria McCaffery of RenewableUK. 

and getting communities on board,” says Tourism. 

84 85


F o c u s : T r a n s m i s s i o n a n d D i s t r i b u t i o n 

Transmission & Distribution 

The transport of electricity from generator to user is perhaps 

the least glamorous part of the power sector. However, T&D 

infrastructure is clearly vital to the provision of electricity and 

the management of its development, and the design of efficient 

private-sector markets to ensure the provision of effective T&D 

has often lagged behind that of its big cousin, generation. 

The relationship between T&D and 

generation is symbiotic: without 

one, the other is useless. The 

distribution of T&D infrastructure dictates 

who in a country has access to electricity, 

and the management of the grid has a 

very real effect on the efficiency of the 

overall electricity system. 

and often the most financially attractive, 

option is to build power plants next to 

major energy consumers, and invest little 

in T&D infrastructure. Taking this route 

means that only very limited numbers of 

citizens share in the benefits of a new 

power plant. 

Article by: 

Oliver Cushing 

Electrification of rural and poorer urban 

In the developed West the issue of T&D communities is one of the most tangible 

distribution may seem irrelevant – after signs a government can make of its 

all, every house is plugged into the grid commitment to development, and can have 

– but in developing markets the way in a substantial impact on the prosperity of a 

which power is distributed has major nation. China, for instance, has connected 

political and economic ramifications. a staggering 450m people to the grid in 

Across the world, it is estimated that the past 15 years. This spectacular rate 

1.5bn people have no access to electricity, of electrification has doubtless been a 

and many more are connected but suffer key driving factor in China’s economic 

86 

from extremely limited supply. The easy, success, and has played a role in ensuring 

87


F o c u s : T r a n s m i s s i o n a n d D i s t r i b u t i o n 

political stability. Electricity can have 

a major impact of the lives of the poor, 

for it reduces the amount of time spent 

collecting primary fuels, alleviates the 

health problems associated with open 

fires and facilitates education by allowing 

people to better use dark nights. When 

only the urban rich have access to 

electricity, or farmers have high-voltage 

cables running through the their fields but 

not the power to run a light bulb in their 

own homes, political discontent will be 

fermented. 

Public versus Private 

Electricity distribution is inherently a natural 

monopoly, since it makes little sense to 

build two or three identical power lines to 

the same home. Distribution, and often 

transmission, has therefore traditionally 

been the preserve of government-owned 

companies. An additional complicating 

factor is that electricity is very easy to 

steal, and doing so is often socially and 

politically acceptable. However, the 

private sector has regularly proven itself 

a far more efficient operator of power 

grids and, compared to governments in 

the developing world, often has better 

access to much-needed capital. 

considerable growth and investment in the 

sector. Between 1982 and 2008 installed 

capacity grew from 3.1 GW to 13.8 GW, 

and 99.4 percent of the population had 

access to electricity by 2003. 

Designing a free market might sound like 

an oxymoron, but a natural monopoly such 

as power cannot be opened to the private 

sector without a clear understanding 

of how competition is to be facilitated, 

tariffs set and payments made. The 

market cannot function without a wellresourced 

and respected regulator with a 

clear mandate from government. 

Environmental Contribution 

Improving the performance of T&D 

networks may be one of the simplest ways 

of managing greenhouse gas emissions. 

Transmission of electricity necessarily 

results in losses. 

The global average is 15 percent, but 

better-performing networks can keep 

losses as low as 10 percent, while in India, 

for example, T&D losses are estimated at 

30–37 percent. If India, with an installed 

generating capacity of 150 GW, were to 

cut its loses to the global average, this 

would be equivalent to adding 22–33 GW 

of additional capacity. The country is 

looking to grow its installed capacity to 

800 GW in the next 15 years, so unless 

T&D loss rates are cut the country could 

be wasting 176 GW by 2025. 

In large and climatically diverse countries 

such as India, a comprehensive national 

UHV grid allows best use of locationspecific 

assets such as hydro plants 

and ensures the efficient allocation of 

energy across regions that may have very 

different usage patterns. 

The government-controlled National Grid 

Corporation of India is nearing the end 

of a five-year plan which involves the 

construction of a national grid of 765 kV 

AC lines providing an inter-regional 

transmission capacity of 37 GW at a cost 

of some $12bn. The NGCI is now testing 

even higher-voltage equipment with a 

view to constructing a 2,000 km line 

operating at 1,200 kV. 

Towards the Smart Grid 

While most generating and T&D 

technology has developed steadily over 

the years, one piece of technology that 

has remained essentially unchanged is the 

electricity meter. The role of the meter in 

now being reappraised and the instrument 

is being used as a tool in the battle to 

manage greenhouse gas emissions. Smart 

meters measure consumption and relay 

the data in real time or near real time to 

T&D management centres. The smartest 

of smart meters are able to measure 

power quality and provide notification of 

power cuts. 

number of central locations and then 

routed to end-user through expensive and 

inefficient T&D networks. Smart grids 

could facilitate distributed energy, placing 

the source of power at, or close to, the 

point of consumption. A true smart grid 

requires the complete digitisation of the 

power network to allow monitoring and 

control at every point in the system. The 

result is better management and improved 

efficiencies. 

Using power generated at local level, even 

down to individual properties – typically 

from renewables or combined heat and 

power (CHP) thermal systems – can cut 

T&D losses, typically by half. 

Combining smart grids with distributed 

power systems allows end-users, who are 

now also producers, to sell their excess 

energy as well. Most types of distributed 

generation have either essentially zero 

carbon emissions or a high overall 

thermal efficiency (up to 80 percent for 

CHP systems, compared to a maximum 

of around 45 percent for conventional 

generation). As a result, smart grids could 

be a relatively cheap, low-impact and 

uncontroversial way to reduce greenhouse 

gas emissions. 

Privatisation of the power sector was 

led by the UK in the 1980s, while Chile 

In contrast to power generation, 

provides perhaps the best case study for 

T&D is often neglected. However, 

how a smaller developing country can 

mismanagement of T&D can severely 

successfully privatise its power market. 

The rationale behind smart metering limit a country’s potential for economic 

Renato Agurto, one of the architects of 

(aside from removing the need for costly growth and create discontent amongst 

the Chilean energy sector, argues: “I The use of direct current (DC) rather than 

door-to-door meter readers) is that it significant portions of the population. T&D 

believe that this process of privatisation the conventional alternating current (AC) 

can help match consumption patterns to networks require central planning, but the 

and liberalisation in Chile was successful. can reduce transmission losses in long 

generating capacity and create a liquid execution and operation of these plans 

From the very beginning, in the lines. The conversion from AC to DC and 

power market: energy providers can need not be carried out by public-sector 

1980s, the government was involved then back to AC carries its own energy 

charge more at times of high electricity agencies. Some of the developing world’s 

almost 100 percent in generation and penalty, but over long distances – notably 

cost, and less when demand is low and greatest power success stories have been 

transmission, while it had 80 percent of in undersea cables – DC transmission can 

supply high. 

the result of a well-designed and properly 

the distribution market. Almost the entire be cheaper. 

supervised free market system in which 

power sector was state-owned.” One 

Consumers will be able to lower their private-sector companies provide the 

of the primary steps in the privatisation T&D power losses increase with current, 

consumption when prices are high, capital and expertise to build and operate 

process was to separate the generation, and for the same amount of power 

and increase it when they are low, so T&D systems. 

transmission, and distribution sectors. transmitted, higher voltages require 

flattening the load cycle and reducing the 

ENDESA, the former state monopoly, lower currents. If power has to be moved 

need for “peak-shaving” capacity, which Transmission lines and switchgear have 

was split into 14 different companies, over long distances, therefore, it makes 

is typically less efficient than baseload none of the green allure of wind turbines 

including six generation companies sense to do this at very high voltages. 

capacity. 

or tidal barges, but new technology, good 

and six distribution companies. These The highest typical transmission voltage 

management of existing infrastructure, 

privatisations earned hard capital for the is normally 440 kV, but ultra high voltage 

Smart meters could also be the first step and a potential paradigm shift to 

government, and Agurto – now working (UHV) networks operating at above 

in a development that would revolutionise distributed energy could combine to yield 

for Synex, an energy consultancy – argues 1,000 kV (AC) or 800 kV (DC) are now 

how energy is provided to end-users. At cheaper and less controversial ways to 

88 

that these reforms were the basis for starting to appear. 

present, power is generated in a small reduce man’s impact on the climate. 

89


A c k n o w l e d g e m e n t s 

Acknowledgements 

GBR would like to thank the following institutions for the time and 

efforts dedicated to helping us to produce this report 

Singapore 

The Government of 

Singapore: 

Energy Market Authority 

MEACP, Middle East& Asia 

Capital Partners PTE LTD 

Meggitt Control Systems 

Mitsubishi Power Systems 

United Kingdom 

Government: 

First Minister of Scotland 

Minister for Enterprise, Energy & 

Tourism, Scotland 

NUS-National University of 

Canada 

India 

Singapore 

MTU Asia 

Minister of State for Department 

SEAS-Sustainable Energy of MWM Asia Pacific 

of Energy and Climate Change 

Government of Ontario 

The Government of India: HPP Energy (India) Pvt. Ltd. 

Climate Change Committee 

Ministry of Power 

IDBI Bank 

Companies: 

Pesko Engineering 

Associations: 

Ministry of New and Renewable IEX 

Actis 

Phoenix Solar 

Associations: 

Canadian Energy Association Energy 

Jindal Power 

Actsys 

Platts 

Association of Electricity Producers 

Energy Council of Canada 

Ministry of Petroleum and Natural 

JSW Energy Ltd. 

Apac 

Power Seraya 

Edinburgh University 

Gas 

Lanco 

Asia Renewables 

Pramac 

Energy Networks Association 

Companies: 

Government of Delhi 

Larsen &Tourbo Ltd 

Asiatic Group Engineering PTE 

Pruftechnik 

Imperial University 

ABB 

LTD 

Rittmeyer 

Invest in Fife 

AECOM 

Associations: 

Mohan Energy Corporation Pvt. 

Ltd. 

Colben System 

SEAS-Sustainable Energy of National Energy Foundation 

Areva 

IEEMA 

Patel Engineering Ltd. 

Conergy Renewable Energy 

Singapore 

OFGEM 

Atlas Copco 

Council of Power Utilities 

Singapore 

Sembcorp 

PTC India Limited 

Renewables Energy Association 

Babcox & Wilcox 

Confederation of Indian Industry 

Cyclect 

Senoko Energy 

Pragati Power Corporation Ltd. 

RenewablesUK 

BMO 

Project Exports Promotion 

Danfoss 

SERIS 

Council of India 

Raychem RPG Ltd. 

University College London 

BPR 

DBS Bank 

Singapore LNG Corporation 

Rural Electrfication Corporation 

Bridgepoint Group 

Companies: 

Ltd. 

DLRE 

Singapore Power 

Companies: 

Singapore 

Navigat 

UK Parliament, Environment & 

Canadian Solar 

A2Z Group 

Reliance Industries Ltd. 

Earth Stream 

Sunlight 

40South Energy 

CIBC 

Astonfield 

Reliance Power 

Ecospec 

Tuas Power 

Alstom 

Competitive Power Venture Anu Solar Power 

Rohini Industrial Electricals Ltd. 

Energy Corp Global PTE LTD Underwriter Laboratories 

Aquamarine 

EDF EN Canada 

Bharat Forge 

Stelmec Ltd. 

Energy Market Company 

Union Energy Corporation Pte Ltd Argent Energy 

Emera 

BFL, A Fouress Group Company Sterling &Wilson 

FM Global 

Vestas Asia Pacific 

Davis Langdon 

Energy Solutions Canada 

Bhilwara Energy Ltd. 

Shirke Construction Technology 

G-Energy 

VSL 

Dong Energy 

Pvt. Ltd . 

Hatch 

Gazprom 

Wartsila 

Intelligent Energy 

CLP Power India Private Ltd. 

Suzlon Energy Ltd. 

MWH Canada 

GCL 

Wood Holmes 

Intergen 

Centronic 

TATA 

Northland Power 

GEA PHE Systems 

Worley Parsons 

Mitsubishi Power Systems 

C&S Electric Ltd.Delhi Transco 

TATA Power 

PCL Construction 

IHI Corporation 

Morgan Cole Lawyers 

Essar Projects Ltd. 

Veer Energy &Infrastructure 

RER 

Invensys 

Natural Power 

Emmvee Solar Systems Pvt. Ltd. 

RES Canada 

Engineers India Limited 

Island Power 

NGentec 

Siemens 

Era Group 

IUT Global 

Renewable Devices 

Stikeman Elliott LLP 

Finolex Cable Ltd 

Kandenko 

Repower 

TransAlta 

Gail (India) Limited 

Kelly Services 

Steel Engineering 

Trillium Power 

Hythro Power Corporation Ltd. 

Keppel Energy 

Vattenfall 

90 

Mammoet 

Vestas 

91

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