The Power Interconnection Program Expands the Path of Inter-regional Renewable Energy Development

In just a few years, the surge in investment in international power grid interconnection projects is driven by the growing demand for renewable energy, as well as the need for modern and decarbonized power grids. Some of these investments come from government funds, private investors and international financial institutions. For example, there are internconnector projects being developed from Australia to Singapore and Morocco to the UK. When it comes to the installed budgets, despite the cable for Taiwan spanning 1,200 kilometers compared to Korea's 220 kilometers, it does not necessarily mean the project will be six times as costly.

By Xin-En Wu

In recent years, the global energy landscape has witnessed a significant shift towards renewable sources, driven by the need to mitigate climate change and ensure energy security. One emerging trend in this transition is the development of interconnected offshore grid projects, aimed at linking neighboring countries' energy markets to facilitate the sharing of renewable energy resources.

"There can be no energy transition without transmission," said Oliver Senter, the CEO of Japan Interconnector. "Our primary objective is to establish the infrastructure necessary for efficient energy transmission, akin to the essential backbone of roads or pipelines. This infrastructure primarily comprises High Voltage Direct Current (HVDC) cables, particularly subsea cables. Observing the current trend in Europe, numerous countries are actively constructing subsea cables, moving beyond mere interconnectivity towards the establishment of an offshore grid. This concept entails a shift away from individual export cables for each offshore wind farm towards a more cohesive offshore grid. Such a grid would improve energy security, enable the integration of more renewable energy and ultimately lower the cost of the energy transition for all countries involved. Since there is little experiece of subsea cables in Asia, we have partnered with an experienced company from the UK, Frontier Power, who developed an interconnector called NeuConnect between the UK and Germany with 725km distance and 1.4 GW capacity."

The international interconnector projects have experienced significant growth and development. These projects aim to connect energy markets across borders, facilitating the sharing of renewable resources and enhancing energy security. The past years have seen notable advancements in interconnector technology, particularly in the development of High Voltage Direct Current (HVDC) cables and subsea cables. These technological advancements have enabled more efficient and reliable transmission of electricity over longer distances.

Oliver Senter, the CEO of Japan Interconnector

"3 years ago our company Japan Interconnector started the project of interconnecting submarine cables across borders. We are currently developing submarine cable projects around Japan, Korea, Taiwan and Southeast Asia. Some of our flagship projects include Project EEL, 220km between Kushu and South Korea, and project TUNA, 1200 km between Kyushu, Okinawa and Taiwan." said Senter.

For the South Korean project, the target timeline is to commence construction by 2028, with operations scheduled to begin by 2031. Currently, the team focused on tasks such as design work, permitting, and other necessary preparations to meet our project milestones. It's worth noting that there already exists a subsea cable between Kyushu and South Korea, although it is not designed for electricity transmission. Instead, it serves as a fiber optic cable, a common feature in Northeast Asia's telecommunications infrastructure.

"As we assess the design of our own project, we are examining the routing and challenges encountered by previous projects. From a technical standpoint, the Korean project appears relatively straightforward—it spans a distance of only 220 kilometers with relatively shallow waters of approximately 100 to 200 meters deep, which is conducive to interconnector installation. However, there are various non-technical challenges to address, including government-to-government agreements, considerations for local fishermen, and navigational concerns due to shipping activities,"Senter indicated.

Conversely, the Taiwan project presents more technical complexities. Spanning a distance of 1200 kilometers from Kyushu to Taiwan, with Okinawa situated midway, the project encounters considerable distance challenges. Furthermore, the waters are significantly deeper, reaching depths of around 1000 meters, adding further complexity to the project's technical requirements. However due to Taiwan's strong need of renewable energy for the semi conductor industry, and the excess of solar power in Kyushu, the technical challenges could be overcome and the project could be economically feasible.

"The significant depth of the water poses challenges for the installation of cables due to their considerable weight. When cables are installed, they exert significant pressure and strain on both the cable itself and the vessel involved in the installation process. It is also more difficult to monitor a longer cable. Hence we plan to have a midway landing point in Okinawa, which would have the additional benefit of providing renewable energy and energy security to the people of Okinawa. Our aim is to commence construction on the Taiwan project in the later part of the 2020s, with the goal of achieving Commercial Operation Date (COD) in the early 2030s," said Senter.

Development Potential of Offshore Grid Interconnection Projects

Many countries have started to expand their power interconnection projects, especially in areas with abundant renewable energy resources. The expansion of this industry has also led to the creation of new interconnection mechanisms between neighboring countries and regions. With a growing focus on the development of an offshore power grid, which also connects offshore wind farms and other renewable energy sources to the onshore grid. Offshore grids offer great potential for large-scale renewable energy generation projects.

In just a few years, the surge in investment in international power grid interconnection projects is driven by the growing demand for renewable energy, as well as the need for modern and decarbonized power grids. Some of these investments come from government funds, private investors and international financial institutions. For example, there are internconnector projects being developed from Australia to Singapore and Morocco to the UK.

It also means that governments and regulators must build regulatory frameworks that support the development of international electricity interconnection projects, including streamlining the licensing process, facilitating cross-border energy transactions, and ensuring fair and transparent market mechanisms.

"Our team consists of approximately 20 members, with a diverse presence across Japan, mainland, Okinawa, Taiwan, South Korea, and the UK. We strategically leverage the expertise found in Europe, particularly in countries such as the UKd, where HVDC cable knowledge is abundant. The team also has experience in a variety of disciplines, including engineering expertise, politics and diplomacy, finance, stakeholder communications, and local development," Senter mentioned.

Inspiration: Masayoshi Son's Supergrid Plan

When it comes to cross-regional submarine cables, one has to mention Masayoshi Son's super grid plan, also known as the Asian super grid. The idea was to build an extensive network of interconnected transmission lines across multiple countries in Asia. Its goal is to promote the efficient transmission of renewable energy, especially solar and wind energy, to meet the growing energy demand between regions and reduce dependence on fossil fuels. The plan is pre-planned to connect different types of renewable energy in different regions through high-voltage direct current (HVDC) cables, such as solar farms in Mongolia and wind farms in Japan. This ambitious project has the potential to transform Asia's energy landscape, which in turn will foster and enhance regional cooperation and sustainable development in the long term.

"We are aware that Masayoshi-san is interested in proposing the concept of the Asia Super Grid. We draw inspiration from Son San, who is introducing the idea over a decade ago, which is truly inspiring. However, his project faces significant challenges, one of which is its complexity. He aims to transport energy from Mongolia, which adds to the intricacy of the project," Senter indicated.

The proposed route involves passing through China, then possibly traversing South Korea to reach Japan. Additionally, there's a desire to establish a connection with Russia. However, this route presents significant political challenges and involves numerous stakeholders, making negotiations complex. "In contrast, our approach is more streamlined, focusing on bilateral projects between friendly neighbouring countries," said Senter.

"It's more pragmatic. That's one aspect. I believe a couple of other factors have also shifted. A decade ago, Japan had relatively limited renewable energy infrastructure. Frankly, the solar market was just beginning, with only a small presence of wind energy," said Senter.

Senter further indicated that, nowadays, Japan boasts a significant amount of installed solar power, and the figure exceeds 80 GW. However, with the proliferation of renewable energy installations, particularly those that are non-dispatchable and uncontrollable, such as solar, Japan anticipates periods of excess electricity and consequent curtailment. In fact, Japan experienced substantial curtailment last year, with approximately 10% of solar energy in Kyushu left unused.

This marks a clear difference from the spatial-temporal context in which the Asian super grid was proposed. "Another significant difference is that 10 years ago, the subsea HVDC projects were not as common. There are only a handful of projects in the world. But now, there are many projects installed, under construction or being developed. We can see more and more projects coming up, such as the UK-Germany, Australia-Singapore[1], and the even Morocco-UK[2]- power interconnection scheme," said Senter.

Challenges, Development Budgets, and Political Factors

Even with international power interconnection projects, whether onshore or offshore, there are many projects that have already been built or are even being developed, and cross-regional power interconnection grid plans need to take into account the legal framework. Under the laws of Japan and South Korea, as well as laws that may apply to Taiwan, the concept of importing electricity does not currently exist.

"We must redefine certain aspects of electricity-related regulations. This has been addressed in other countries before, such as in Europe, where it is a common practice. We need to adopt similar regulatory concepts in Asia to ensure the success of such projects," Senter indicated.

When it comes to the installed budgets, Senter indicated that for the initial stages of the South Korea project, we estimate a budget of approximately $70 million to carry the project forward until financial close. Following that, an estimated $2 billion will be required for construction. Funds are raised through project financing and infrastructure investors (e.g. pension funds). As for the Taiwan project, although no exact estimate yet, it is expected to be more expensive due to the longer cable length. Despite the cable for Taiwan spanning 1,200 kilometers compared to Korea's 220 kilometers, it does not necessarily mean the project will be six times as costly. Approximately 40% of the South Korea project's expenses are attributed to the substation, and 40% the cost is cable.

"High Voltage Direct Current (HVDC) cables are essential for our project. This technology is highly efficient, allowing us to transmit large amounts of energy over long distances with minimal losses. Typically, we anticipate around a 3% loss for every 1,000 kilometers of cable. However, HVDC cables used for underwater transmission are more complex than those used on land due to the insulation required and the challenges associated with maintenance. We expect these cables to have a lifespan of at least 40 years. The insulation, known as XLPE (Cross-linked Polyethylene), is a crucial component. Additionally, vessels are another key technology required for our project," Senter indicated.

The larger the cable hull, the better, as the 600 km distance cannot fit all the cables on a single ship due to weight and size constraints, so cable laying involves segmentation and splicing, which adds complexity and risk. The large cable-laying vessels capable of handling longer cables are now available to help address these challenges.

In order to build a comprehensive offshore power grid, it is not just about laying cables, but the most important goal is to connect offshore networks from country to country, or between regions and regions. "This requires special substations, such as floating or offshore substations, which introduce further technical complexity. Significant progress has been made in these areas over the past decade, but they are still cutting-edge technologies," said Senter. According to Senter, If there are islands available, considering placing the substation on one of those islands is an optional idea. However, securing the necessary land for such substations can be quite challenging, particularly in regions like Okinawa where land availability may be limited. While placing substations on islands is a simpler, cheaper, and easier option, having offshore substations—whether fixed-bottom or floating—would offer more flexibility and scalability, making the offshore grid more modular and easier to expand, as you rightly pointed out.

The power interconnection plan further expands the path of inter-regional renewable energy development

The development of an electricity interconnection network may involve the development of some cutting-edge technologies, as well as political and financial considerations, but one of the main benefits is lower electricity prices. For example, by connecting the two separate markets of Japan and Taiwan, the government can take advantage of the price difference and import electricity from one market when the price of electricity in one market is higher, thereby reducing the average cost of electricity in both countries.

From an environmental point of view, the main advantage is the ability to integrate more renewable energy into the grid. Currently, Japan is facing energy curtailment due to excess solar power, while Taiwan is trying to increase its renewable energy capacity. By connecting the two inter-regional power networks, excess renewable energy in one region can be harnessed during periods of high productivity in the other. This helps to maximize the use of renewable resources and reduce waste. In addition, enhanced grid connectivity can help improve energy security. A more robust interconnected grid provides backup support in times of peak demand or supply disruptions, enhancing the overall resilience of the energy system.

With the interconnected project spanning from Taiwan to Japan and extending to Korea, we are effectively integrating different markets and leveraging various offshore wind sites. This initiative serves to accelerate the development of renewable energy by offering flexibility in site selection. Instead of being confined to specific local areas for offshore wind farm development, we can now explore opportunities in Japanese and Korean waters while transmitting power to Taiwan. This concept aligns with the pressing need to advance renewable energy initiatives, particularly in Taiwan, and potentially in Japan and South Korea as well,” said Senter.

Note:
[1] On August 21 this year, the Australian government approved the Australia-Asia Power Link (AAPowerLink) project, which will invest approximately $20 billion to lay a 4,300-kilometer subsea cable between Australia and Singapore. This project will transmit electricity generated from solar photovoltaic installations with a capacity of around 20 GW, located in Australia's Northern Territory, to Singapore. The goal is to address Singapore's challenge of limited land area, which restricts large-scale solar power installations.
[2] The Xlinks Morocco-UK Power Project is a proposal to create 10.5 GW of renewable generation, 20 GWh of battery storage and a 3.6 GW high-voltage direct current interconnector to carry solar and wind-generated electricity from the Morocco to the United Kingdom. Morocco has far more consistent weather, and so should provide consistent solar power even in midwinter.