The Transition to Green Energy in China, Japan and Korea a Window of Opportunity for Norwegian Business
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The transition to green energy in China, Japan and Korea A window of opportunity for Norwegian business Contributors to this report Supported by 1 Foreword The mandate for the Energy and Environmental technology sector in Innovation Norway is to help develop Norwegian renewable energy and Cleantech companies. This is done by assisting the companies in Norway through business development and reducing risk in new projects by providing funding. In addition Innovation Norway’s large network of offices abroad is actively used to promote and assist the companies identify partners and customers in various countries abroad. The Energy and Environmental technology sector works to promote environmental friendly innovative technologies and services in all industries, as everybody need to take the environmental impact from their activities into account (Offshore Oil and Gas, Maritime industry, Marine industry to name but a few large sectors). We are also focusing on clean water solutions and waste management. Within Energy we have a special focus on offshore wind and ocean energy, metallurgy within the solar industry, and smart use of ICT within the electrical grid (smart grids). As Asia is a very fast growing emerging market for clean solutions we work close with our local offices in Beijing, Japan and Korea to investigate market opportunities for Norwegian companies and assist mature companies to enter these markets. This report aims to lower the threshold for Norwegian companies wishing to enter the dynamic North East Asian Market. Karl Christian Strømsem Sector Head Energy & Environment Innovation Norway 2 Authors China Pål Arne Kastmann Anders Hove Innovation Norway, Beijing Azure Internatinoal, Beijing [email protected] [email protected] Korea Doo Seok Kim Young Ho LEE Innovation Norway, Seoul Korea Maritime University, Seoul [email protected] [email protected] Japan Per Christer Lund Innovation Norway, Tokyo [email protected] 3 TABLE OF CONTENT Korea 1 PRIMARY ENERGY OVERVIEW 8 1.1 OIL 10 1.2 NATURAL GAS 11 1.3 COAL 11 1.4 NUCLEAR POWER 12 2 ELECTRICITY 12 3 RENEWABLE ENERGIES 13 3.1 STATUS OF NRE DEPLOYMENT 14 3.2 LONG TERM DEPLOYMENT PLAN 15 3.3 POLITICAL CLIMATE (CHANGE FROM FIT TO RPS) 17 3.4 OVERVIEW ON NRE R&DS 19 4 OFFSHORE WIND ENERGY 20 4.1 OVERVIEW ON WIND ENERGY 20 4.2 LIST OF WIND FARM PROJECTS 25 4.3 GOVERNMENT INITIATIVE ON THE SOUTH WEST 2.5GW PROJECT 27 4.4 R&DS ON OFFSHORE WIND TECHNOLOGY 29 4.4.1 R&Ds on farm operation and infrastructure 30 4.4.2 R&Ds on structure & installation 32 4.4.3 R&Ds on grid Connection 35 4.4.4 R&Ds on components 37 4.5 KEY PLAYERS 39 5 TIDAL AND WAVE ENERGY 43 5.1 TIDAL BARRIER 43 5.1.1 Sihwa Tidal Power Plant 44 5.1.2 Garolim Bay project 46 5.1.3 Ganghwa project 47 5.2 TIDAL CURRENT 48 5.3 WAVE 50 5.4 KEY PLAYERS 51 6 SUMMARY AND OPPORTUNITIES FOR NORWEGIAN COMPANIES 52 Japan 1 EXECUTIVE SUMMARY 54 2 THE JAPANESE ENERGY SITUATION BEFORE AND AFTER “MARCH-11” 55 2.1.1 Reversal of the nuclear energy strategy. 57 2.1.2 Energy saving and smart systems 59 2.1.3 Renewable energy 59 2.1.4 Public incentives for renewable energy. 61 2.1.5 Hurdles and challenges to deployment of renewable energy in Japan 63 4 2.1.6 Investment in transmission and distribution infrastructure 64 3 WIND ENERGY 66 3.1 CHALLENGES FOR OFFSHORE WIND IN JAPAN 68 3.2 MAJOR STAKE HOLDERS IN OFFSHORE WIND ENERGY IN JAPAN 69 3.3 OFFSHORE WIND PROJECTS IN JAPAN 72 3.3.1 Chosi and Hibikinada project 74 3.3.2 Fukushima Floating Offshore Wind Farm Demonstration Project (Forward) 74 3.3.3 Goto Island projects. 76 3.3.4 Ibaraki wind 76 3.4 OTHER OCEAN ENERGY INITIATIVES. 77 4 RESTRUCTURING OF THE ELECTRICITY SYSTEM IN JAPAN. 79 4.1 CURRENT SITUATION 79 4.1.1 Electric system reform 79 5 OPPORTUNITIES FOR NORWEGIAN COMPANIES IN THE JAPANESE ENERGY MARKET. 83 5.1 RENEWABLE ENERGY SECTOR 83 5.2 OFFSHORE WIND ENERGY. 83 5.3 ELECTRICITY SYSTEM SECTOR 86 System and market design 87 Market participants 88 Norwegian Environmental Technology Center - NETC. 88 DNV KEMA Energy & Sustainability 89 Governmental cooperation. 89 China 1 CHINA-NORWAY RENEWABLE ENERGY COLLABORATION BACKGROUND 90 2 ENERGY SUPPLY AND DEMAND 91 2.1 SUMMARY 91 2.2 COAL 92 2.3 OIL 93 2.4 NATURAL GAS 94 2.5 NUCLEAR 95 2.6 ELECTRICITY 96 2.7 ENVIRONMENTAL GOALS 98 3 RENEWABLE ENERGY 100 3.1 STATUS AND DEPLOYMENT 100 3.1.1 Summary 100 3.1.2 Hydroelectricity 100 3.1.3 Wind 101 3.1.4 Solar 102 3.1.5 Bio-energy 102 3.1.6 Smart grid, distributed energy and energy storage 103 3.2 POLITICAL CLIMATE FOR RENEWABLE ENERGY 104 3.2.1 Government targets 104 5 3.2.2 Subsides: Feed-in tariffs 106 3.2.3 Other subsidies 108 3.2.4 Low-cost loans 108 3.2.5 Strategic industrial policy 109 3.2.6 Renewable energy curtailment 109 3.2.7 Subsidy payment delays 109 3.2.8 Interconnection delays 110 3.3 CONCLUSION 110 4 OFFSHORE WIND 111 4.1 STATUS 111 4.2 PROJECTS 112 4.2.1 Donghai Bridge 100 MW Offshore Wind Farm 114 4.2.2 Rudong 182 MW Inter-tidal Wind Farm 114 4.2.3 Other projects 115 4.3 KEY STAKEHOLDERS 120 4.3.1 Developers & EPC contractors 120 4.3.2 Turbine manufacturers 122 4.3.3 Supporting industry 124 Design institutes 124 Foundation design 125 Installation vessels 125 4.4 FUTURE STRATEGY AND POTENTIAL COOPERATION 126 5 TIDAL, CURRENT AND WAVE ENERGY 128 5.1 STATUS 128 5.2 PROJECTS 130 5.3 KEY PLAYERS 132 5.4 FUTURE STRATEGY AND POTENTIAL COOPERATION 133 6 SOLAR PHOTOVOLTAIC (PV) 134 6.1 STATUS 134 6.2 PROJECTS 134 6.3 KEY PLAYERS 136 6.4 FUTURE STRATEGY AND POTENTIAL COOPERATION 140 7 HYDRO 143 7.1 STATUS 143 7.2 PROJECTS 144 7.3 KEY PLAYERS 146 7.4 FUTURE STRATEGY AND POTENTIAL COOPERATION 148 8 ENERGY SYSTEMS & SMART GRID 150 8.1 STATUS 150 8.2 PROJECTS 154 8.2.1 Zhangbei National Wind Solar and Energy Storage Demonstration Project 155 8.2.2 Jindongnan-Jingmen UHV AC 1000-kV Demonstration 156 8.2.3 Smart Substation Project 157 8.2.4 Distribution Automation 157 6 8.2.5 Nationwide Smart Meter Deployment 157 8.2.6 Intelligent Communities Projects 157 8.2.7 Micro-grid Deployments 158 8.2.8 Pumped Hydroelectric Energy Storage 158 8.3 KEY PLAYERS 159 8.3.1 Domestic 159 8.3.2 International 159 8.3.3 Joint Ventures 160 8.4 FUTURE STRATEGY AND POTENTIAL COOPERATION 160 9 CONCLUSION AND RECOMMENDATION ON MARKET ENTRY 162 Tidal 162 PV 162 Hydro 162 Smart grid 162 Offshore wind 163 10 APPENDIX 164 7 Korea Preface South Korea is one of largest energy consumers in the world and this pattern of energy consumption will be continued because country’s economy development led by large energy consuming industries. With poor indigenous natural energy resources, Korea imports almost entire energies (crude oil, natural gas, coal and nuclear power). In order to increase nation’s energy security and sustainable green growth for the future, South Korean government is making various efforts in undertaking aggressive R&D investments and deployment policies in New and Renewable Energy (NRE) sector having a goal of supplying 11 percent of total primary energy supply with NRE by 2030. This report (part one) provides an overview of Korea’s primary energy and some of renewable energies to show a wide range of activities on national initiatives, projects, research & developments with relevant key players. Other parts of renewable energies (PV and smart grid) will be released in the second half of this year. However this report is not designed to give in- depth information on company level, but it will give Norwegian readers general market opportunity in South Korea. 1 Primary energy overview The U.S. Energy Information Administration (EIA) estimated that South Korea was the world's tenth largest energy consumer in 2011, and with its lack of domestic reserves, Korea was one of the top energy importers in the world. In 2011, the country was the second largest importer of liquefied natural gas (LNG), the third largest importer of coal, and the sixth largest importer of crude oil. South Korea has no international oil or natural gas pipelines, and relies exclusively on tanker shipments of LNG and crude oil. Because of rapid economic growth propelled by the heavy and chemical industries, Korea’s energy consumption has sharply increased since the mid-1970s. Total Primary Energy Consumption was reached to 275.7 million toe1 in 2011, which was increased more than six-fold in 1980. Energy consumption per capita also increased rapidly from 1.1 toe in 1980 to 5.1 toe in 2011. 1 TOE: Ton of Oil Equivalent 8 FIGURE 1: TREND OF PRIMARY ENERGY CONSUMPTION2 [Unit: 1,000 toe] 300 000 250 000 Others 200 000 Hydro 150 000 Nuclear LNG 100 000 Oil 50 000 Coal - 2003 2004 2005 2006 2007 2008 2009 2010 2011 With poor indigenous natural energy resources, Korea relies on almost entire energy demand from imports. In 2011, the dependency rate on imported energy, including nuclear energy, was 96.4 percent. The cost for imported energy amounted to USD 172.5 billion, which accounted for 32.9 percent of total inbound shipments.