The Southeast Asian region is facing the challenge of feeding its rapid economic growth with clean and secure energy. The need to modernise energy production inline with the threat of climate change demands that the region invest in decarbonising its grids. Issues of geography and a lack of capacity mean that one solution to this issue may lay in transnationalising production.
ASEAN's energy challenges
The Association of Southeast Asian Nations (ASEAN) is being challenged to modernise its energy grid. The threat of climate change is posing an asymmetrical risk to the Southeast Asian (SEA) region due to rising sea levels, threats to agricultural production and subsequent regional instability. A primary contributor to this threat is the increasing rate at which countries are emitting carbon dioxide into the atmosphere. Despite this, the SEA region is still heavily dependent on fossil fuels to power its energy grids and has struggled to modernise towards sustainable alternatives. This issue is magnified by growing population and consumption rates, which are poised to increase energy use in the region by 80% between 2019 and 2035. These challenges create the need for stable policy directives which meet the demands of the region's growth while also reducing the dependence on fossil fuel energy.
ASEAN has also outlined a need to modernise its energy grid due to environmental stressors. To address this, the multilateral body has increased its cooperation with regional neighbours, such as Japan, with the explicit intention of improving the capacity of less developed countries to modernise. These initiatives, in tandem with unilateral audits by ASEAN, have analysed the ten largest member states of ASEAN (by GDP) and highlighted renewable energy assets as the most attractive and effective form of investment for energy security. The barriers to the development of renewable energy assets, however, are numerous. Geographical limitations confine countries to certain technologies, lack of consistent policies between nations deters public and private investment, and economic incentives are nascent. This has lead the ASEAN and member states to realise a need to innovate their policy frameworks to address these issues in an attempt to gain greater energy security across Southeast Asia.
If Southeast Asian nations are struggling to provide their own clean energy, perhaps the challenge requires a reframing of each nations energy grid. Transnationalising energy provisions offer an attractive solution which enables public and private investment the chance to meet energy demands while effectively decarbonising consumption.
Singapore's potential expansion of its energy grid to include foreign-held renewable assets may offer a solution which decouples economic growth from emission-intensive energy production. The project proposed by Australian entrepreneur and co-founder of Atlassian, Mike Cannon-Brookes, to invest $25US billion towards a solar farm in Australia's Northern Territory outlines a potential solution for the city-state of Singapore. The project proposes linking the solar farm in Australia to the city-state by connecting it to Singapore's energy grid via 3000km of cable. Once completed, the project is estimated to be able to provide up to 25% of the country's energy demands from a single asset.
How Transnationalising an energy grid will increase the adoption of renewables
The transnational solar farm, if successful, outlines how nation states are able to outsource their energy demands to countries which have a greater comparative advantage. The densely populated and geographically confined nations in the Asia-Pacific region could invest in assets in neighbouring nations such as Australia, which hosts a comparatively small population across a large continental landmass, to provide their utility demands. This would allow nations to reduce their dependence on domestic fossil fuel power stations in favour of foreign renewable energy assets. The development would present a range of benefits, including increased energy security, greater bilateral and multilateral relations and the prospect of strengthening regional institutions such as ASEAN.
The Southeast Asian region stands to gain political and economic advantages from regionalising its energy grid. As a region, ASEAN has set aspirational goals of sourcing 23% of its energy demands from renewable energies by 2025. An ambition which requires stable policy directives to move its recorded provisions of 12.4%. There is potential to increase the regional markets share in renewable energies by encouraging member states to develop large scale renewable energy projects. Countries such as the Philippines and Thailand have been identified by Bloomberg New Energy Finance and recognised by the ASEAN as having a comparative advantage in developing hydropower stations. Indonesia has 6 gigawatts of hydroelectricity under construction and as of September 2019, Vietnam has constructed the region’s largest solar farm, boasting 420-megawatt potential. The potential of these nations to expand their investment into renewable energy outlines how countries within Southeast Asia can diversify their energy portfolios to better encourage regional development.
The ambitions of ASEAN to increase its share of renewable energy creation stand to be improved by integrating national energy grids across the region. The common issues of using renewable energy assets over fossil fuel stations have long been realised; the problem of energy storage and the risk of varying production owing to cloudy days, uncertain wind and inconsistent water currents. The prospect of integrating energy grids allows for an alleviation to these common risks by ensuring that there is a greater demand across different time zones, catering for varying on and off-peak consumption trends, and an increased net production which can cater for production inconsistencies. The notion of integrating nations' energy grids is not entirely new. Other regional blocs such as the EU have debated its viability through the Junker Commission in 2019, arguing that regionalising energy provision will provide: greater security, improved energy efficiency, encourage a decarbonising economy, and increase competition, research and development. Regionalising an energy grid across SEA will improve the rate of development of member states and provide greater energy security.
Asia-Pacific nations are being challenged to find ways to effectively decarbonise their economies while still ensuring growth and stability. The developments of transnational renewable energy assets provide a basis to question the viability of regionalising energy production. Furthermore, with the existence of multilateral bodies such as the Asian Development Bank, ASEAN, and other involved multilateral institutions, the SEA region is in a position to form policy directives which encourage a competitive supply of renewable energy assets. Member states of ASEAN have the potential to create these policy directives and increase cooperation and energy security within the region.