The pressing need for Southeast Asian nations to transition to clean energy as a response to climate change is reigniting a 20-year-old plan for regional power sharing.
Last month, Malaysia and Indonesia sealed an agreement in Bali, Indonesia, to assess 18 potential locations suitable for cross-border transmission lines.
These connections have the potential to generate an amount of power roughly equivalent to the annual output of 33 nuclear power plants. They are both economically and technically viable and have gained support from regional governments. Beni Suryadi, a power expert at the ASEAN Centre for Energy in Jakarta, Indonesia, emphasized their feasibility.
The Association of Southeast Asian Nations (ASEAN) consists of 10 countries spanning from small nations like Brunei and Singapore to larger economies such as Myanmar and Vietnam. The recent import of hydroelectric-generated power by Singapore from Laos, transmitted through Thailand and Malaysia, is seen as a groundbreaking project. It marks the first time four countries in the region have agreed to trade electricity.
In 2017, cross-border power purchases accounted for a mere 2.7% of the region’s capacity, primarily between two countries like Thailand and Laos. However, more nations are now exploring power sharing to reduce their dependence on coal and other fossil fuels. Vietnam aims to establish a regional grid to sell clean energy, including offshore wind power, to neighboring countries, while Malaysia’s Sarawak province intends to export its hydropower to Indonesia.
The concept of a regional grid among ASEAN’s 10 member states was conceived two decades ago but has faced obstacles such as technical challenges and political distrust, impeding progress. However, the region now recognizes the urgency of moving swiftly, driven by the realization that climate change could diminish its economic potential by over a third by mid-century. Rising electricity demand has underscored the need for an interconnected grid.
In the past, countries in the region focused primarily on energy security, heavily relying on fossil fuels and overbuilding capacity. However, the decreasing costs of renewable energy sources like hydroelectric, solar, and wind power have made them more affordable. All ASEAN countries, except the Philippines, have pledged to achieve carbon neutrality by 2050.
Consequently, arguments in favor of an interconnected grid are gaining traction. Laos, despite its small population of 7 million, has constructed more than 50 dams in the last 15 years, positioning itself as the “battery of Southeast Asia” by selling power to Thailand, Vietnam, and China. It still has surplus power to export to other regional partners.
Singapore, a small city-state with limited natural resources and a population of 6 million, must import clean energy to meet its renewable energy targets. Regional grids can bridge the gap between power demand and generation, helping countries adapt to external shocks like spikes in oil prices. They also offer cost savings; in 2021, Europe saved $36 billion through power trading, according to European regulators.
Interconnected grids can also provide reliable electricity to remote areas, such as West Kalimantan on the island of Borneo, which previously experienced frequent blackouts but was transformed by a cross-border power line from Malaysia’s Sarawak province in 2016.
Nevertheless, challenges persist. One of ASEAN’s core policies, non-interference, often discourages members from engaging in joint projects. Domestic energy priorities sometimes clash with the potential benefits of an interconnected grid. Malaysia, for instance, derives only 1% of its electricity from clean sources and had imposed a ban on renewable energy exports in 2021 to nurture a domestic clean energy industry. While the ban has been lifted this year, Indonesia’s ban on clean energy exports remains in place.
The absence of a regulatory framework for installing submarine power cables in the region is another obstacle. Technical issues also remain, with varying voltages and grid capacities among member countries, even in those with grids spanning borders like Thailand. Predicting power demand, especially for energy-intensive data centers, must be factored in.
The costs are substantial, requiring a minimum of around $280 billion in power sector investments, according to the ASEAN Centre for Energy. China’s involvement in building much of the region’s energy infrastructure through its Belt and Road Initiative raises concerns, as seen when Laos granted a 25-year concession for operating its power grid to a predominantly Chinese-owned company in 2021.
However, despite occasional tensions between China and some ASEAN nations over territorial disputes, both parties generally cooperate based on mutual interests and benefits. Private financing plays a significant role in influencing where and how projects are executed, but national priorities ultimately have a greater impact on how electricity is transmitted.
In conclusion, ASEAN countries are poised to collaborate on regional power sharing to address the challenges posed by climate change and transition to cleaner energy sources, despite the complex hurdles they face.
