Building Resilience: Is ASEAN’s Power Grid Ready to Deliver on Green Promises

By Rachel Kong | 4Q 2024 | IN-7601

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In October 2024, during Singapore International Energy Week (SIEW), companies and organizations underscored the Association of Southeast Asian Nations (ASEAN) power grid's crucial role in achieving regional net-zero targets and lower emissions. Earlier in 2022, the ASEAN Power Grid (APG) initiative gained momentum with the launch of the Lao PDR-Thailand-Malaysia-Singapore Power Integration Project (LTMS-PIP). This project transmits 100 Megawatts (MW) of hydropower from Laos to Singapore, which was recently extended to include an additional 100 MW from Malaysia's grid in October 2024. While the power grid still includes coal and natural gas, a regional grid enables countries to meet growing electricity demands and strengthen energy security. The LTMS-PIP plays a vital role in furthering the initiatives aimed at advancing the APG and ASEAN Economic Community, and it can provide valuable insights for other multilateral initiatives, such as the Brunei-Indonesia-Malaysia-Philippines Power Integration Project (BIMP-PIP).

Despite the benefits of a shared ASEAN power grid, significant challenges remain. Achieving this vision requires not only the development of renewable energy projects, but also extensive grid infrastructure. However, transmission infrastructure often struggles to attract private sector investments, unlike renewable energy projects. Moreover, government control over grid development limits private sector involvement, posing financial and infrastructural hurdles to generating clean electricity across the region. The International Energy Agency (IEA) estimates that electricity grid upgrades will require approximately US$21 billion annually from 2026 to 2030.

Connecting the national power systems of all 10 ASEAN countries has also encountered many technical and financial obstacles, delaying the progress and establishment of the shared power grid. Additionally, each country has its individual concerns. In July 2024, there were disagreements over how the energy will be transmitted through Thailand and Malaysia, the quantity of power to be purchased, and cross-border transmission costs. These challenges add layers of complexity to successfully establishing a unified regional grid.

To make substantial progress on the APG and accelerate decarbonization efforts in SEA, several strategic steps can be implemented to boost development:

• Regulatory Harmonization and Frameworks: A unified ASEAN power trade framework and clear operational protocols for cross-border energy trade are essential to ensure all countries and stakeholders understand the procedures, with mechanisms for dispute resolution or mediation included. Furthermore, the framework should align with international laws to ensure compliance. A data sharing framework is currently in place for the APG, and similar frameworks could be developed for other aspects of the project.
• Fostering Public-Private Partnerships (PPP): Private sector involvement is currently limited due to national control over the grid. However, through public-private partnerships, energy-related companies in the private sector can bring their expertise to the table and collaborate with official organizations for comprehensive planning. Regulators should consider how they can encourage the cooperation and participation of private sector companies as well to accelerate grid development.
• Facilitating the Transition to Green Energy: Regulators should also consider how they can support the region's transition to a green energy grid. On this front, there have been some positive developments. For example, a solar farm (Sun Cable) in Australia has received conditional approval to supply electricity to Singapore in the future. Electricity generated at the solar farm in Darwin will be transmitted to Singapore via 4,300 Kilometers (km) of subsea cables. Additionally, Singapore will issue conditional approval to import an additional 1.4 Gigawatts (GW) of electricity from two solar projects in Indonesia. These projects involve companies such as TotalEnergies-RGE and Shell-Vena Energy consortia, Pacific Medco Solar Energy, Adaro Solar International, and Keppel Corp Ltd. Encouraging the participation of more renewable energy companies in the APG could be a viable strategy to support the region's objective of achieving net-zero status.

Although the APG has been in development for decades, progress continues with strong collaborative efforts from participating countries. With a growing commitment to cleaner energy and energy stability in the Southeast Asian region, ABI Research anticipates that investments and initiatives to expand APG capacity and diversify energy sources for the region will continue to increase over the next few years.