Renewable Integration from Financial and System Perspective

by

Lin Tun MD – Quasar Resources

May 12, 2017 Nay Pyi Daw

Quick Overview of Quasar Resources • Quasar was established in 2013 to pursue energy infrastructure

opportunities in Myanmar. • Current project pipeline includes over 300MW of grid scale

generation in Myanmar • US Management Team/Advisors - Senior executives from GE

Capital (EFS), FERC (Gov. regulator), Engie/Suez/ Tractebel, Williams, BG Group, NextEra, and Macquarie Bank.

• We have built over 2000MW of wind and solar and over 5000MW of dual fuel & natural gas generation development.

• Lin Tun: 30 year US Power experience BSEE Drexel University MBA NYU Stern

Extensive Experience in Power Operations

Solar thermal, Solar PV, Natural gas SC & CC, Wind,

All parts of the power system is stressed but they can be addressed with external help

• Load is growing 15% per year. • Supply can’t keep with load growth resulting in brownouts

(euphemistically known as load balancing) • Extra demand also causes stress on the system and sometimes

lead to blackout (or system breakdown) • National grid needs additional supply immediately from every

resource Gas, LNG, HFO, solar, hydro, wind, and even coal

• We also need to address Transmission and Distribution (but that’s for discussion another day)

• IPP model is proven and willing and able investors (foreign and domestic) exist

Renewable Energy benefits outweigh costs • Solar and Wind are intermittent but they are predictable and can

successfully integrate into any grid • Solar Wind and some hydro can be implemented very quickly (1-

2 years) • Obviously, renewables use no external fuel and don’t have to be

imported (i.e. no logistic issues) and not subject to commodity price risk (crude and coal price can fluctuate)

• Financing is readily available from multi laterals and/or commercial banks

• Project execution risks are significantly less as equipment is modular and only simple “assembly” is done at the site –> less project risk premium

Intermittent power (w/80-90% availability) is better than No Power

• There are two types of demand Seasonal demand - highest in the summer time vs. rainy

season Solar generation is highly correlated with demand.

There is very little rain in Upper Myanmar – e.g. only 1-2 days between Nov-May

Daily demand – peak demand during the day vs. at night • Solar can help address both types of demand

Solar in up-country has very high productivity factor during dry/hot season – over 90% ( 7 months of Nov-May)

Even if solar productivity decreases during the day, system is no worse off than current situation

Solar can also help save water for hydro generation

Load Curve – Highest Demand is from Industrial and Commercial Activities

• Peak load ~3000MW • Load driven by

commercial and factory demand

• Aircon load is one of

the biggest drivers of power demand – NOT lighting

• There is lighting

demand but only for a few hours in the evening

Peak is during the day!!

Solar can be used to replace/save water or serve additional load

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Water Saving from Solar - 400MW addition

water saving load hydro+solar

gas hydro solar -400MW

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Serve additional load with Solar

solar help load-org hydro

gas new load solar -400MW

Prediction from 2015 – Yes we are installing Solar for less than $1.00 per Watt

FSLR market cap - $4.0 Billion

Myth vs. Reality – Solar is expensive and Coal is cheap Unsubsidized Levelized Cost of Energy (LCOE)

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Conventional

Lazard – Dec, 2016 Report. 60/40 debt/equity @ 8%/12%

Note – Coal Ultra Super Critical

Large scale solar LCOE is now less than 5 cents/kwh

Drastic decrease in price of solar (and wind)

How much renewable can the Myanmar grid handle?

• Common belief within MOEE is 10% (300MW based on 3000MW load) Not based on actual study Extremely conservative Not based on a technical study

• USTDA completed the study with nearly 20% renewable penetration possible. Performed by international consultant (Tractebel Engineering) Computer modeling. Will be made public soon

Real World Example 1 – Texas (USA)

Wind 15,000 MW Traditional 17,000 MW Total 32,000MW

Isolated Grid not connected to external areas

Real World Example 2 – California (USA)

Real World Example 3 – Solar Hydro Hybrid Solution - China

1280 MW Hydro 320MW Solar

Myanmar is uniquely positioned to accommodate a lot of renewable energy

• Currently 2/3rd (2000MW) generated from hydro and 1/3rd (1000MW) generated from gas

• A large portion of the current generation fleet is suitable to work with RE (solar or wind) All 2000 MW of hydro is suitable – fast response, reservoir

system the best batteries!! Approximately 500 MW of gas fleet is gas engines highly

suitable for ramping – very fast response, currently incorrectly used as baseload but they are designed for peaking

• Make RE’s pay for control upgrades and additional costs associated with load following Integrate controls of existing hydro and gas engines for load

following

Contact Lin Tun 09 2503 67787 (Myanmar) +1 713 392 8580 (US, Viber) Tunl928 (Skype) Lin.Tun@Quasar-Resources.com TunL928@Gmail.com