Bilateral projects in solar and wind energy likely to take off in Asean in the near-term
Janice Lim
WITH the ongoing war in Ukraine pushing the prices of fossil fuels up, and the prices of some renewable energy sources coming down, energy players in South-east Asia are betting on solar and wind energy as the low-hanging fruits of the renewable energy market, which is expected to grow in the region.
Investments into solar and wind energy projects in the near future, however, would be based on bilateral projects, instead of multilateral ones involving several member countries of the Association of Southeast Asian Nations (Asean).
Economic disparities, differing policies both across the region and within countries, as well as the lack of financing for green projects in the region have been cited by various experts and industry players as challenges that the region faces in its energy transition journey.
“Bilateral trade, especially led by the private sector, seems to be taking off in the near term, but it will probably take more than a decade for Asean to progress towards a multilateral and a unified model for cross-border energy trade to be realised,” said Subodh Mhaisalkar, an engineering professor at Nanyang Technological University and the executive director of its Energy Research Institute.
Speaking with The Business Times, Eric Francia, chief executive officer of renewable energy platform Acen, said that it makes its investment decisions based on the renewables investment climate of that country, instead of the potential opportunities that could come from having a multilateral system in Asean.
In fact, he questioned if there is a strong impetus for a multilateral single market across the region.
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“It may sound good on paper, but the devil’s in the details and there’s going to be a lot of challenges on standards and also there is a counter force now, right? ... With some of the supply shocks we have witnessed, some countries resort to decentralisation and independence... It’s going to be hard,” said Francia.
Noting that renewable energy will be a scarce commodity, some countries may choose to prioritise their own needs to meet the decarbonisation commitments that they have made.
On top of 1,500 megawatts of capacity among its renewable assets in the Philippines where Acen is based, the company, which has set a target of having 100 per cent of its generation output to be powered by renewable sources, has also invested in solar and wind projects in Vietnam and Indonesia.
Francia said solar and wind energy would be the clean technologies of the future.
This also includes derivatives of the technology, such as offshore wind, which aims to harvest energy from wind that blows from the land to the sea, as opposed to conventional wind farms that utilise wind moving from the sea to the land.
Given that wind speeds tend to be lower near the equator, Brice Le Gallo, regional director of energy systems for Asia-Pacific at energy advisory company DNV, said that slow-speed wind turbines could be looked into to support wind generation in South-east Asia.
Floating solar panels are also another opportunity that should be looked at, said both Le Gallo and Francia.
Concurring, Tan Wooi Leong, who is the energy and industrial managing director at infrastructure and urban development consultancy Surbana Jurong, said that solar energy is the most mature technology in the renewable energy market, as well as the easiest to implement.
However, he added that it is important for companies and organisations to start developing their entire energy transition strategy, and looking beyond near-term opportunities.
Tan said “it’s important to start seeding now” if one wants to be a player in the long run.
Experts have cited several other technologies that are important to the energy transition process in the medium to long-term. These include: Hydrogen, carbon capture, utilisation and storage, battery storage systems, as well as hybrid solutions comprising various combinations of these components.
Small-scale hybrid solutions, comprising solar energy and a battery storage system, for example, could be used to power sparsely populated islands spread across the region, said Le Gallo.
Countries such as Indonesia and the Philippines could tap geothermal energy projects, while those along the Mekong delta can develop hydro energy.
Several experts stressed that opportunities in South-east Asia are plenty, given the abundance of natural resources, except Singapore.
A truly regional energy market, however, could see several countries collaborating on different stages of the energy value chain. For example, Singapore could look at researching hydrogen technology and developing its intellectual property, while other Asean countries could be a base for its manufacturing, said Philip Lim, senior adviser at Foresight Economics, a think-tank for the financial sector.
Asean is obviously not at that stage yet. But Le Gallo said that the recent development of Singapore importing renewable energy from Laos, through Thailand and Malaysia, could serve as a pilot project that could be replicated on a larger-scale in the future.
It marks the first multilateral cross-border electricity trade involving 4 Asean countries and the first renewable energy import into Singapore.
With the potential for a higher percentage of renewables forecasted, energy storage and a strong Asean grid would be needed to drive this growth, noted Mhaisalkar.
“Thus it is imperative for Asean nations to overcome political, technical, and cost-related hurdles for an effective transition towards clean energy,” he said.
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