Collaboration is currently a focal point in the southeast Asian energy industry, with multiple partnerships launched at the Singapore International Energy Week conference this week underscoring the importance of co-operation in achieving energy transition goals.
Southeast Asia's energy demand is expected to account for 25pc of global energy demand growth to 2050, said Paris-based energy watchdog IEA's executive director Fatih Birol, adding that this raises serious implications for energy security, affordability and emissions. "Fortunately, the region has powerful levers for change, particularly through closer regional co-ordination and stronger international partnerships," he said.
Significant investment and collaboration is necessary for the region to achieve its energy transition goals. The Association of Southeast Asian Nations (Asean) needs an estimated $6-7 trillion in investments by 2050 to achieve decarbonisation across the power, transport, buildings and industry sectors, said Singapore's minister-in-charge of energy Tan See Leng at the conference. "No single government can shoulder this burden alone," said Tan.
Some of the solutions to make renewables bankable include mobilising both public and private capital for the energy transition, as well as ensuring credible policy frameworks, stable regulations, and regional co-operation to increase investors' and offtakers' confidence to commit for the long term, said Tan.
Singapore's Energy Market Authority (EMA) and the Australian Energy Regulator on 28 October signed an agreement to promote energy co-operation between the countries. The agreement provides a framework to share regulatory practices on gas and electricity markets, facilitate greater knowledge exchange on low-carbon technologies, and enhance co-operation on multilateral platforms in support of the region's energy transition, the EMA said.
Irena on the same day launched the Accelerated Partnership for Renewables in Southeast Asia (Apresa) initiative, which is aimed at providing a platform to drive national and regional energy transitions. Apresa consists of four pillars of co-operation — infrastructure, enabling policies, local value chains, and the mobilisation of private sector investment.
Meanwhile, the Singapore government and the IEA over 28-29 October also convened the first IEA governing board meeting held in Asia. Singapore and the IEA aim to bring together policymakers from Asean and IEA member countries to discuss key energy issues affecting the region and opportunities to strengthen energy security in southeast Asia, such as the Asean power grid, and southeast Asia's role in critical mineral supply chains.
The need for harmonisation
The IEA estimates that southeast Asia has the technical potential for 20TW of untapped variable renewable energy — solar and wind power — which is about 55 times the region's current total generation capacity. A crucial component to harness this is cross-border energy corridors, such as the Asean power grid, which is one of the most commonly-discussed regional initiatives currently.
Peak demand rarely occurs at the same time in countries across the region, so greater interconnectivity allows for resources to be shared, and reduces the necessity of standby generation.
The biggest roadblock for interconnectivity is that there are multiple jurisdictions through which projects have to pass through, said Australian firm SunCable's chief operating officer Mitesh Patel, and agreement over regulation is essential. This requires political alignment and political will, he said.
The most critical factor in improving interconnectivity is harmonised standards linked to "ecosystem thinking", said Norwegian assurance and risk management firm DNV's regional sales director James Laybourn. In markets like China, the US and Europe, there have been projects in the renewables markets and power grids that have been "developed in silos," he said, "and this has led to systemic risks and potentially critical failures." In China, for example, developing offshore wind in silos led to a huge overcapacity and challenges, with up to 40pc of wind power in provinces being wasted until they had market policy alignment, Laybourn said.
Countries need to consider enabling policies to facilitate power connection projects, said Malaysian renewables firm Gentari's chief executive Sushil Purohit. This involves looking at how to harmonise grid codes and tariffs, and how to co-ordinate the scheduling and dispatch of power, he added.
But there has been notable progress in this aspect. "We are shifting from aspirations and targets towards implementation and execution," said the Asean Centre for Energy's executive director Abdul Razib Dawood.
Asean ministers earlier this month signed an enhanced memorandum of understanding (MoU) on the Asean power grid to accelerate its development, shortly after the Asian Development Bank and World Bank formalised previous commitments of up to $10bn in investments for the Asean power grid, and a $2.5bn financing programme, respectively.
Asean is next "going to focus on setting up task forces looking especially at harmonising regulatory, policy and legal aspects," Razib said, as well harmonising technical standards.
