Renewable energy can be a big contributor to meeting the growing energy demand in the Southeast Asia (SEA) region. Countries in the region are likely to rely more on renewable energy sources because of their limited indigenous fossil fuel reserves and the decreasing cost of ownership of renewable energy assets.
Present energy scenario
As of December 2018, SEA had around 67 GW of total installed renewable energy capacity, contributing just 10 per cent to the total primary energy requirement of the region. The Association of Southeast Asian Nations (ASEAN) has targeted the generation of at least 23 per cent of its primary energy needs from renewable energy by 2025 and 55 per cent of its primary energy needs from renewable energy by 2040.
Investments by multilateral organisations – Several multilateral organisations have been investing in the renewable energy sector over the years with maximum funding of around $1.75 billion from the World Bank until December 2019.
Investment by the private sector – The Dam Nai wind project in Vietnam is being developed by a Singapore-based company, the Blue Circle. It is Vietnam’s first foreign-owned wind power plant.
In November 2018, the Blue Circle partnered with Philippines-based Ayala Group’s AC Energy to jointly develop and construct about 1,500 MW of wind power projects in the region. Of this, at least 700 MW of capacity is planned in Vietnam, while the rest is distributed in Laos, Indonesia and the Philippines.
In 2018, a Singapore-based company, Sindicatum, signed a deal with Guarant Co. Limited for $60 million worth of green bonds. This will be used to fund the construction and acquisition of solar and wind power projects in Asian countries including the Philippines.
Another company called Infraco, in a joint venture (JV) with Singapore’s Sunseap International, is planning to invest in the region in a 168 MWp utility-scale solar photovoltaic project in Vietnam.
In 2019, one of the oldest private players in the region, Armstrong Asset Management had 20 renewable energy projects in operation across SEA. Most of these projects were set up under the company’s Clean Energy Fund for SEA, constituted mainly through international funding.
In the 2020 post-pandemic era, international support for renewable energy initiatives has become important. A new JV from Japan plans to enter the renewable energy market in Cambodia, focusing on solar-biomass hybrid power generation, utilising rice husk. In Laos, the Sanakham dam hydropower plant will be developed by one of China’s state-owned companies at an estimated cost of $2.073 billion.
In the 2020 postpandemic era, international support for renewable energy initiatives has become important.
ASEAN’s Renewable Energy Plan
According to the “Energy Transformation Regional Analysis”, published by the International Renewable Energy Agency (IREA), the share of renewables in the energy mix is likely to increase to 75 per cent for the SEA region by 2050.
Floating solar panel projects
Thailand’s master plan includes the installation of floating solar panels in eight hydropower plants with a total capacity of 1,000 MW over the next two decades.
The Sunseap Group is developing one of the world’s largest floating solar arrays along the Straits of Johor in Singapore with a total installed capacity of 1,000 MW.
In March 2019, the first phase of one of the Philippines’ largest floating solar test beds was completed. In June 2019, a 200 KW floating solar project was commissioned on the 1,170 hectare reservoir on the island of Luzon.
In Vietnam, US clean energy firm Vasari Energy is planning two floating solar projects over the next two years, with each projected to reach a cumulative capacity of between 180 MW and 200 MW. In 2019, ADB signed a $37 million loan to finance the 47.5 MW facility, making it Vietnam’s first large-scale floating solar power plant on a hydropower reservoir.
The Sidrap-I wind farm project, the largest wind power project in Indonesia, was commissioned in March 2018. In addition, there are 22 wind power projects in the pipeline. These include Sidrap-II (50 MW), Jeneponto (72 MW), Tanah Laut (70 MW) and Selayar (5 MW). The Indonesian energy ministry has also identified a number of areas to establish wind farms – East Nusa Tenggara (10.2 MW), East Java (7.9 MW), West Java (7MW), Central Java (5.2 MW) and South Sulawesi (4.2 MW).
Thailand, where the uptake of wind power has risen the fastest in the SEA region, is targeting 3 GW of wind energy by 2036.
Vietnam is also emerging as a popular destination for wind power projects. The 50 MW Dam Nai wind project, being developed by the Blue Circle, is Vietnam’s first foreign-owned wind plant.
The hydroelectric power potential in the Greater Mekong Region is estimated to be between 175 GW and 250 GW. About 71 hydroelectric dams are proposed to be completed in the SEA countries by 2030, centred round the Mekong river and its tributaries.
According to Vietnam’s Power Developent Plan, hydroelectric generation is expected to increase from 17 GW to 27.8 GW by 2030 with the setting up of new hydro power projects.
From only 134 MW in 2018, Vietnam’s cumulative installed solar PV capacity reached 5.5 GW by the end of 2019, comprising 44 per cent of SEA’s total PV capacity. Vietnam added 4.45 GW of new solar PV capacity from June 2018 to June 2019.
Thailand, with about 2.8 GW, has currently more solar power cumulatively installed than all other ASEAN countries combined.
In early 2019, a 2.8 MW floatovoltaic system was commissioned at the Chip Mong Insee Cement Corporation pond in Cambodia by Cleantech Solar.
Indonesia has the highest geothermal potential of more than 27 GW in the world. The Indonesian government plans to increase its geothermal capacity to 6 GW by the end of this decade.
The Philippines currently has seven geothermal fields, which supply about 12 per cent of the nation’s energy, with a long-term plan to achieve 1,371 MW geothermal-based grid capacity connections by 2030.
Covid-19 impact on ASEAN renewable energy market
SEA’s renewable energy transition is likely to take a hit because of the Covid-19 pandemic. The collapse in oil and gas prices and decline in coal prices together will undermine support for renewable energy in most countries, at least in the short term.
Renewable energy supply chains have been disrupted. The weakened fiscal position of governments that makes it difficult to provide direct financial support to renewable energy projects and the consequent postponement of funding poses a risk to the completion of new renewable energy projects over the medium term.
Work on most ongoing solar projects (for example, a 135 MW solar project in the Philippines) has been suspended due to shortage of imported materials and PV module equipment from Chinese manufacturers following the Covid-19 outbreak.
The Lao PDR government decided to suspend all ongoing hydropower construction while the Cambodian government shelved two potential hydropower projects in April 2020.
In Indonesia, demand for commercial PV panels dropped by around 70 per cent from the previous year in the March-April period as construction plans have been curtailed.
The lack of a policy and regulatory framework to regulate the proper use of land and the consequential environmental impact is a growing concern when large-scale renewable energy projects are carried out.
Specific to Indonesia and the Philippines is the challenge of limited electricity transmission infrastructure that hinders effective renewable energy deployment. This is because both countries are archipelagic in nature, resulting in fragmented electricity grids.
Renewable energy supply chains have been disrupted. The weakened fiscal position of governments that makes it difficult to provide direct financial support to renewable energy projects.
Despite the disruption of renewable energy projects due to the pandemic, countries are promoting energy transition with fiscal measures such as green recovery packages and international assistance as reported in Malaysia and Thailand.
Financial incentives for clean energy industry are also being offered by the Philippines Central Bank to improve the country’s resilience against future shocks. Vietnam plans to resume its incentives for solar and wind power through the launch of new feed-in tariffs and removal of fossil fuel subsidies, hoping that this will keep the investment climate positive for renewable energy once the pandemic passes.
The ASEAN Plan of Action for Energy Co-operation (APAEC) Phase 2, to be released in 2020, is likely to include policy measures to promote smart grids* and renewable energy grid integration.
Further, ASEAN member countries must develop their own national policy and strategy for renewable power. Only then can the policies be harmonised at a regional level towards the advancement of an ASEAN regional energy agenda.