A minimum of US$100 billion would be required to build transmission lines to integrate the power grids of Southeast Asian nations by 2045, according to the Asian Development Bank (ADB).
“The amount stems from the need for interconnectors in domestic power grids. We have 10 nations in Asean and each country requires a substantial amount of investment in their own transmission line systems,” Keiju Mitsuhashi, energy director of ADB, told Eco-Business on the sidelines of the Asia Clean Energy Forum (ACEF) at the multilateral’s headquarters in Mandaluyong City, Philippines.
The Philippines alone will need at least US$10 billion for transmission lines, with larger countries like Indonesia, Vietnam and Malaysia demanding even more financing, said Mitsuhashi, whose expertise covers the energy sector in Southeast Asia and the Pacific.
The investment in transmission lines is essential because renewable energy power plants usually operate in remote areas outside load centres, and need to be connected to new power lines, added the Japanese national who has been an energy specialist for 25 years.
“Unless you have a strong domestic power plant, the grid would not be able to accommodate intermittent and variable energy. Electricity needs to be stable, to match the demand, which is why it is important that grid infrastructure is improved,” he said.
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The amount stems from the need for interconnectors in domestic power grids. We have 10 nations in Asean and each country requires a substantial amount of investment in their own transmission lines.
Keiju Mitsuhashi, energy director, Asian Development Bank
Most transmission lines in the region are owned by state-controlled enterprises, which means that the bulk of funds would need to be invested through them in respective countries, said Mitsuhashi.
Brunei, Cambodia, Lao PDR and Mynamar rely mostly on government-controlled utilities. Indonesia, Malaysia, Thailand and Vietnam have introduced some level of competition through private independent power producers, yet transmission and distribution remain under state control. Philippines and Singapore are the exceptions in the region, where electricity markets thrive in wholesale competition.
The power grid plan, which has languished for almost three decades as an idea that would allow for cross-border electricity trade in the bloc, was finally made into a formal commitment at the Asean Informal Summit in Malaysia in 2020.
Two years later, the Lao PDR-Thailand-Malaysia-Singapore Power Integration Project (LTMS-PIP) became operational, ushering the first multilateral cross-border electricity trade involving Asean countries. It showed that cross-border trade was technically and commercially feasible, with about 100 megawatts (MW) of renewable hydropower imported from Lao PDR to Singapore through Thailand and Malaysia using existing interconnections, according to a report released in May by energy think tank Ember.
Other upcoming interconnection projects include the Brunei Darussalam-Indonesia-Malaysia-Philippines Power Integration Project (BIMP PIP), the connection between Peninsular Malaysia, Sumatra, and Singapore, the grid between Sarawak and Brunei, and the lines connecting Lao PDR, Viet Nam, Cambodia and Myanmar.
The Nam Theun 2 hydroelectric dam in Laos. In 2022, Singapore announced it will be importing up to 100 megawatts of electricity from Laos through Malaysia and Thailand. Image: Asian Development Bank
Rapidly growing electricity demand in the region, spurred by surging demand for energy-intensive data centres to support artificial intelligence (AI) growth have also fast-tracked the initiative. If fully-realised, it could unlock projects that can deliver up to 25 gigawatts (GW) of renewable power and energy storage, based on recent studies.
Although the intention for the regional grid is for countries to trade renewable energy, the mix will largely depend on the energy plan of each member state, said Mitsuhashi.
For instance, the Philippines still sources 60 per cent of its energy from coal, so if it exports electricity to other countries, it would likely be from fossil fuel-based power, he noted.
Philippines to tap offshore wind for Asean power grid
The Philippines aims to utilise offshore wind to contribute to the regional grid, as the nation prepares to become chair of the Asean Summit in 2026, said a Philippine energy official during a panel at ACEF.
“The Philippines is well-positioned to chair the regional power integration project in the Asean power grid. In the clean energy scenario of the Philippines’ energy plan, we have two scenarios, one being 19 gigawatts (GW) and 50 GW of offshore wind by 2050. With that, we can benefit from being a clean energy hub and export excess renewable energy to Asean,” said Dennis Umlas, senior science research specialist, for the Electric Power Industry Management Bureau at the Department of Energy.
Although the Philippines remains reliant on coal for its energy needs, its latest energy development plan shows that the government is anticipating an increase of 19 to 50GW of offshore wind capacity by 2050, drawing from the current awarded offshore wind service contracts totalling 67.26GW.
The Philippines has set its sights on offshore wind based on the immense potential of the renewable energy resource presented in a 2022 World Bank study, Umlas told Eco-Business. The report estimates that the Philippines has over 178GW of technical offshore wind potential.
The Southeast Asian nation is hoping to generate its first output from offshore wind by 2028 as it bids to diversify its energy mix and reduce its dependence on fossil fuels.
