Article
Accelerating Renewable Capacity in South East Asia
Published 06th July 2021
By David Stent, Content Manager, Climate Council
The Asian energy landscape has emerged over the last 20 years to become a driver of trends and a source of demand, all as a result of the rapid economic development among the South-East Asian Tigers (and their neighbours). Such intense demand for energy has led to the unwelcome reality that ASEAN states are among the worst carbon emitters in the world. According to the Global Carbon Project at the University of Oslo, “Asia excluding China and India” accounted for 7.45 billion tonnes of CO2 in 2019″. While South East Asia is distinct region in and of itself, it is the most industrially advanced area across Asia and therefore, the greatest carbon emitter.
However, while these states have strong commitments to fossil fuel provisioned energy, their capacity to undergo evolutions of industrial structures provides a distinct promise for renewable developers. One thing is key to ASEAN governments, that the provision of energy must be affordable and reliable to their citizens – a consistency that has led to the growing strength of domestic markets.
ASEAN Agreement
The Association of South East Asian Nations (ASEAN) has pursued a regional approach to energy supply and demand since the first ASEAN Vision Roadmap was laid out in 2000. Since then the regional bloc has undertaken massive infrastructure investments to improve the interconnectedness of energy supply between the seven ASEAN states. While there are significant hurdles in reducing fossil fuel demand from the region, the inroads into developing a greater share of renewable installation capacity signals there is positive change afoot.
A roadmap laid out in previous years had set out a target of 15% of renewable energy in the ASEAN energy mix, they achieved 13.9% in a reasonably strong attempt. Since then however, the impetus for change has grown and the ASEAN bloc has agreed to deepen their commitment to renewable alternatives. Looking forward, the nations have set the new ‘aspirational’ target of Total Primary Energy Supply (TPES) at 23% and rising to 35% of total installed capacity at 35% by 2025.
To achieve this goal, a total of “approximately 35GW-40GW of renewable energy capacity to be added by 2025” would be required.
A question remains over whether the actions are sufficient to halt the imminent consequences of anthropomorphic climate change. ASEAN states noted how they are particularly vulnerable due to; their proximity to rising sea levels, the reliance on seasonal and subsistence agriculture, a dependence on natural resources and forestry, while also dealing with extensive poverty.
Growth in ASEAN Renewables
The need for a greater share of renewables is a necessity with the 6% year-on-year growth of ASEAN electricity demand. As the regional population steadily grows by 25% to 2050 and enjoys some of the best economic growth prospects in the world (4% on average), the result is a growing demand for energy. The ambitions of 23-35% is admirable considering how the sector had previously failed to embrace these technologies – 20-years ago it occupied just 2% of the energy mix, and that only grew to 3% by 2018 – according to the IEA’s SEA Outlook 2019.
The future looks bright with the reconsideration of renewables targets, so much so that a report by EY indicates that $316 billion will be invested into over 800 clean energy projects in the region – a massive jump from the $26 billion invested between 2006 -2016.
One of the greatest benefits the ASEAN states have is their locality to regional manufacturers of renewable generation technologies and their domestic industrial capacities to rapidly integrate and develop areas of interest. This will have direct affects for the LCoE of regional renewable sources – a 2019 study by USAID and the NREL believes these average regional costs of solar PV at $64-264/MWh, onshore wind $42-$221/MWh.
However, as the ASEAN targets shift local objectives and industrial-scale demand of renewable technologies, the capital expenditure of both solar PV and wind installations will continue to fall.
Barriers to Success
A key element to the pervasive uptake of renewables is to ensure that infrastructure is integrated to balance the load between fossil fuels and renewables generation, including the need for upgraded transmission lines and electricity storage capacity. One barrier to renewables is the high LCoE of electricity storage, currently at $150/MWh. While the generation costs become comparable or better than fossil fuels, the need to develop more effective cost efficiencies in the field of batteries and electricity storage is crucial.
Mini-grids can prove effective in balancing and using electricity across small areas, however the ongoing densification and industrialisation in South East Asia mitigates the use of these for the majority of the population.
Lastly, the costs and access to natural gas make for a difficult pill to swallow for the climate conscious consumers in the region. Yet the shift towards renewables continues, and the ASEAN states’ reconsideration of targets provides hope. Either way, the region is set to influence global energy demand and costs through their interactions with the renewables and gas markets – and the market looks more attractive to investment now than ever before.
The Asian energy landscape has emerged over the last 20 years to become a driver of trends and a source of demand, all as a result of the rapid economic development among the South-East Asian Tigers (and their neighbours). Such intense demand for energy has led to the unwelcome reality that ASEAN states are among the worst carbon emitters in the world. According to the Global Carbon Project at the University of Oslo, “Asia excluding China and India” accounted for 7.45 billion tonnes of CO2 in 2019″. While South East Asia is distinct region in and of itself, it is the most industrially advanced area across Asia and therefore, the greatest carbon emitter.
However, while these states have strong commitments to fossil fuel provisioned energy, their capacity to undergo evolutions of industrial structures provides a distinct promise for renewable developers. One thing is key to ASEAN governments, that the provision of energy must be affordable and reliable to their citizens – a consistency that has led to the growing strength of domestic markets.
ASEAN Agreement
The Association of South East Asian Nations (ASEAN) has pursued a regional approach to energy supply and demand since the first ASEAN Vision Roadmap was laid out in 2000. Since then the regional bloc has undertaken massive infrastructure investments to improve the interconnectedness of energy supply between the seven ASEAN states. While there are significant hurdles in reducing fossil fuel demand from the region, the inroads into developing a greater share of renewable installation capacity signals there is positive change afoot.
A roadmap laid out in previous years had set out a target of 15% of renewable energy in the ASEAN energy mix, they achieved 13.9% in a reasonably strong attempt. Since then however, the impetus for change has grown and the ASEAN bloc has agreed to deepen their commitment to renewable alternatives. Looking forward, the nations have set the new ‘aspirational’ target of Total Primary Energy Supply (TPES) at 23% and rising to 35% of total installed capacity at 35% by 2025.
To achieve this goal, a total of “approximately 35GW-40GW of renewable energy capacity to be added by 2025” would be required.
A question remains over whether the actions are sufficient to halt the imminent consequences of anthropomorphic climate change. ASEAN states noted how they are particularly vulnerable due to; their proximity to rising sea levels, the reliance on seasonal and subsistence agriculture, a dependence on natural resources and forestry, while also dealing with extensive poverty.
Growth in ASEAN Renewables
The need for a greater share of renewables is a necessity with the 6% year-on-year growth of ASEAN electricity demand. As the regional population steadily grows by 25% to 2050 and enjoys some of the best economic growth prospects in the world (4% on average), the result is a growing demand for energy. The ambitions of 23-35% is admirable considering how the sector had previously failed to embrace these technologies – 20-years ago it occupied just 2% of the energy mix, and that only grew to 3% by 2018 – according to the IEA’s SEA Outlook 2019.
The future looks bright with the reconsideration of renewables targets, so much so that a report by EY indicates that $316 billion will be invested into over 800 clean energy projects in the region – a massive jump from the $26 billion invested between 2006 -2016.
One of the greatest benefits the ASEAN states have is their locality to regional manufacturers of renewable generation technologies and their domestic industrial capacities to rapidly integrate and develop areas of interest. This will have direct affects for the LCoE of regional renewable sources – a 2019 study by USAID and the NREL believes these average regional costs of solar PV at $64-264/MWh, onshore wind $42-$221/MWh.
However, as the ASEAN targets shift local objectives and industrial-scale demand of renewable technologies, the capital expenditure of both solar PV and wind installations will continue to fall.
Barriers to Success
A key element to the pervasive uptake of renewables is to ensure that infrastructure is integrated to balance the load between fossil fuels and renewables generation, including the need for upgraded transmission lines and electricity storage capacity. One barrier to renewables is the high LCoE of electricity storage, currently at $150/MWh. While the generation costs become comparable or better than fossil fuels, the need to develop more effective cost efficiencies in the field of batteries and electricity storage is crucial.
Mini-grids can prove effective in balancing and using electricity across small areas, however the ongoing densification and industrialisation in South East Asia mitigates the use of these for the majority of the population.
Lastly, the costs and access to natural gas make for a difficult pill to swallow for the climate conscious consumers in the region. Yet the shift towards renewables continues, and the ASEAN states’ reconsideration of targets provides hope. Either way, the region is set to influence global energy demand and costs through their interactions with the renewables and gas markets – and the market looks more attractive to investment now than ever before.