As energy needs change, so must the service

Two main issues are dominating the discussions in Asia: first is China’s feed-in tariff (FIT) reduction from June 2015 onwards; the second is operational cost reduction and pollution control in marine.

If we take a look from a different perspective at China’s FIT reduction, it is not the end of the world. It is a new, bright and fresh opportunity for growth.

The renewable energy market is still increasing, but it is no longer the same as it was during the 2006-2009 gold rush. There are still a lot of issues related to energy storage and energy transportation that must be addressed.

The industry is plagued with overcapacity and overproduction. Independent power producers (IPP) are still waiting for overdue provincial subsidized payments from the past 1.5 years. Too many wind turbine OEMs exist only for the domestic market, especially when considering that only 22 OEMs had 9 active orders in 2013. And quality is still not up to par. This means that LCOE is a nice concept that doesn’t yet fit an industry driven without any look at tomorrow’s assets.

Given this scenario, it is normal that the National Development and Reform Commission (NDRC) is trying with all means to push IPPs and wind turbine OEMs to look for fresh opportunities overseas. But how is it possible to make this happen? Eyeing the West was tried earlier in 2010 with poor results in terms of finalized deals.

To make this happen, here would be a good rule of thumb to follow:

1)    Change the mindset of both the IPPs and wind turbine OEMs. This means making a shift in technology to PMG and forgetting the old-school thinking that paying less now for double-fed induction generator technology is better than producing more energy tomorrow.

PMG technology is capable of attracting fresh capital and non-institutional investors who are ready to place their bets. Investment banks are now including an extra risk fee for DFIG technology. The PMG solution is a real bankable asset that is able to pass any form of technological assessment.

2)    Choose the right partner that is able to drive the design from scratch into an energy-optimized drive train – and one who is able to replace the obsolete vertically integrated solution with a partnership agreement.

Energy is a service that meets a need. As technical needs change, so must the service.
This is not only the situation in wind, but also in the marine sector. Operational costs and pollution control are quite hot issues right now in Hong Kong due to extremely busy harbor activity.

Here, we are seeing ship owners trying to solve the problem with radical means. This includes moving their business to places with less strict rules or hiding the problem behind energy efficiency, which means switching off the vessel’s lights or air conditioning to reduce fuel consumption and emissions.

As cost pressures mount and environmental regulations become more stringent, the need for a smarter approach now is becoming ever more apparent.

Using permanent magnet (PM) motors and generators as key elements in advanced drive trains allows ship owners to take advantage of a more flexible, modular, efficient and lightweight propulsion system.

As a bonus, PM technology helps future-proof ships when it comes to even the strictest environmental legislation. The technology enables ships to lower their operational costs by optimizing fuel consumption through superior efficiency, reliability and design flexibility.

The simple advantages of more power (5% higher than traditional electrical drive trains) and lower fuel consumption (around 5-7%) add up to fast ROI and less pollution, as well as higher reliability.

To tackle and solve the problem, the clear choice must be a company capable of providing such advantages. The Switch with its 11 GW of installed PM-based drive train technology has already proven to be the intelligent choice to cope with the new rules in the wind and marine markets.

Carlo Cecchi
Business Development Director