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Southeast Asia's Path to Climate-Friendly Power Sharing
Environmental Business Review | Wednesday, October 18, 2023
Summary: Discusses the Southeast Asia’s shifting from fossil fuels to renewable energy sources as a transition towards more sustainable and clean energy for the future.
FREMONT, CA
In a renewed effort to combat climate change, Southeast Asian nations are revisiting a 20-year-old plan to collaborate on clean energy.
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Malaysia and Indonesia recently signed an agreement to investigate 18 potential locations for cross-border transmission lines, which could generate an amount of power roughly equivalent to 33 nuclear power plant's annual production. These projects are now considered both economically and technically viable, with strong support from regional governments. The Association of Southeast Asian Nations (ASEAN), comprising ten countries across a wide spectrum of economic and political backgrounds, is driving this initiative.
Singapore's import of hydroelectric-generated power from Laos, transmitted through Thailand and Malaysia, is considered a groundbreaking project, representing the first-ever agreement between four regional countries to engage in electricity trade. In 2017, cross-border power purchases accounted for only 2.7 per cent of the region's capacity, typically occurring between pairs of countries. However, as nations seek to transition away from coal and other fossil fuels, more are exploring power-sharing initiatives. For example, Vietnam aims to establish a regional grid to export clean energy like offshore wind power, while Malaysia's Sarawak province is interested in selling its hydropower to neighbouring Indonesia.
The concept of a regional grid among the members of ASEAN was initially formulated twenty years ago. However, advancements have been hindered by a range of issues, encompassing technical challenges and political apprehension. Today, the region acknowledges the need for swifter action. A report unveiled at the 2021 UN Climate Conference in Glasgow, Scotland, cautioned that climate change could curtail the region's economic prospects by over a third by the mid-21st century.
Historically, countries in the region prioritised energy security, heavily relying on fossil fuels and often overbuilding their energy capacity. However, the decreasing costs of renewable energy, including hydroelectric, solar, and wind power, have made them more economically viable. Additionally, all ASEAN nations, except the Philippines, have committed to halting carbon emissions by 2050. Consequently, the arguments in favour of an interconnected grid are gaining ground. Laos, a small, landlocked country with a population of seven million, has constructed over 50 dams in the past 15 years. It leverages its status as the battery of Southeast Asia to profit from power sales to Thailand, Vietnam, and China.
Laos still has excess power available for sale to other regional countries. Singapore, a small city-state with minimal natural resources and a population of six million, must import clean energy to meet its renewable energy targets. Regional grids serve as a solution to bridge the gap between power demand and generation locations, enabling countries to adapt to external disruptions such as significant oil price hikes. They can also lead to cost savings; for example, European regulators estimated that Europe saved $36 billion by trading power. Interconnected grids are essential for delivering reliable electricity to remote communities.
Malaysia currently sources only one per cent of its annual electricity from clean energy. It prohibited the export of renewables to foster a domestic clean energy industry. Although the ban was lifted this year, Indonesia still maintains its ban on clean energy exports. The region faces challenges, including the absence of a regulatory framework for tasks like installing submarine power cables. Technical obstacles persist, including variations in voltage and grid capacities among countries. Even nations with cross-border grids, such as Thailand, must invest in grid upgrades.
Projections for future power demand, including power-hungry data centres, need to be considered. Ensuring a substantial supply of green electricity for these data centres poses challenges for some countries. The required investments in the power sector are substantial, estimated at a minimum of $280 billion by the ASEAN Center for Energy.
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