At the Side Event – A Conduit for Low Carbon Southeast Asia, Asia Clean Energy Forum 2022 – Dr Twarath Sutabutr, Chief Inspector General, Ministry of Energy Thailand and Ex-Chairman of ASEAN Power Grid Consultative Committee, spoke about the progress and challenges of the Association of Southeast Asian Nations (ASEAN) power grid and its development plan. Excerpts…
Story so far
It is a known fact that countries across the world are devising plans to become carbon neutral and less dependent on fossil fuels. Most of these countries have already committed to becoming carbon neutral by 2060. ASEAN member countries – Singapore, Vietnam, Indonesia and Thailand – already have plans and commitment to make sure that renewable energy will progressively enter their energy mix and, in the next decade, the power grid will replace fossil fuel. In order to adhere to this commitment, infrastructure development in the ASEAN Power Grid is required. The ASEAN region is endowed with fossil fuels including coal and natural gas, which have catered to the increase in demand for power over the past 20 years. However, with the outbreak of the pandemic in 2020, power demand in the region dried up.
Countries like Thailand were left with many stranded plans and contracts which created a barrier for renewable energy to get into the system. ASEAN has a strong plan for decarbonisation. The power sector will be the key driver for ASEAN to achieve its renewable energy goal. At present, fossil fuels cater to nearly 60-65 per cent of the region’s demand for power, including 31 per cent from coal and another 31 per cent from gas; the rest comes from renewable energy sources including 21 per cent from hydropower. Solar and wind power have also advanced progressively in the past few years especially in Vietnam and Thailand.
As per plans, ASEAN has a vision to increase the share of renewable energy in the fuel mix to at least 23 per cent by 2025.As of 2019, it has progressed to a renewable share of about 14 per cent. In a notable development, the ASEAN Plan of Action for Energy Co-operation [APAEC] 2016-2025 has been launched, which focuses on enhancing energy connectivity and market integration in ASEAN to achieve energy security, accessibility, affordability and sustainability for all. The continuing efforts of the ASEAN Power Grid to expand multilateral electricity trading in the region, which will strengthen grid resilience and modernisation and promote clean and renewable energy integration, have been appreciated. The ASEAN region is also endowed with a key renewable energy resource, i.e., hydropower, which is one of the cheapest renewable energy sources in the region.
Similarly, the region also has an abundance of solar and wind power. There has been a downward trend in the price of solar power; however, the price of wind installations in the Southeast Asian region has increased. The region also has potential for power from biomass and biogases. Even though ASEAN has a good source bank and has the potential to cater to the demand in the region, lack of appropriate infrastructure becomes a challenge. This leads to the need for integration of infrastructure and a market mechanism to ensure that the surplus supply in one region can be used in big markets where there is a deficit. The ASEAN Power Grid plans to enhance bilateral power connectivity among ASEAN countries. For example, Thailand has good bilateral connectivity with its neighbouring countries such as Lao PDR and Malaysia. It is also connected to Cambodia and Myanmar and, therefore, can become the backbone of the APG at least in mainland ASEAN in the next few years.
The APG faces some stagnations and challenges that need to be overcome. One of the key issues is the lack of supply connectivity. Vietnam has huge supply potential and, in the past few years, a lot of renewable energy projects have been taken up there. However, the rules and regulations in Vietnam are such that this energy has to be consumed domestically. If provisions can be made to supply the surplus from Vietnam to Cambodia, Thailand, Malaysia and Singapore, the demand in these countries can be met. Another key issue is the cost factor. Even though the cost of renewable energy is decreasing (especially solar power and hopefully wind and biomass power could also be decreased soon in the future, once we get the economy of scale), the actual costs still remain high. In the case of Thailand, even though the technology is getting cheaper, the actual cost is not decreasing on account of some stranded assets. The cost of these stranded fossil fuel power plants is embedded in the system, which makes renewable energy slightly more expensive than it is supposed to be. It is imperative that these issues are sorted so that stranded assets are not a barrier to the entry of renewable power in the future.
The road ahead
In order to move forward, the APG needs three important interventions in the form of political, technological and institutional push. Political will is required to push interconnection and locations of the market operator. Secondly, the APG needs a technical push to make sure that relevant data such as grid code, third-party access, wheeling charges and data sharing, especially on contested transmission capacity, is captured and shared. Lastly, the ASEAN Power Grid needs an institutional push for clearances and approvals. Further, a process needs to be put into place for easy resolution of disputes. If these three factors are resolved in the coming three to five years, then the dream of seeing the APG in the operational world will become a reality.
ASEAN is ready for energy transition and the region has the resources to ensure decarbonisation. The APG is the key infrastructure that is required to accelerate the decarbonisation process. The region is blessed with a good endowment of cost-effective fuels for power generation, has fundamentals in place, especially the legal and technical part in terms of bilateral power purchase arrangements and has a good action plan on APAEC. However, the long-term plan is vague and there is no consensus on the institution to drive the multilateral power trade agenda. It is only with strong political will that long-term developments can be achieved.