Asean needs to triple investments in renewables to meet climate goals by 2050

SOUTH-EAST Asian nations will need to triple investments in renewable energy to more than US$7 billion to meet climate change targets by 2050, government officials said on Thursday (Sep 15). 

On an annual basis, the Association of South-east Asian Nations (Asean) needs to direct US$200 billion to US$245 billion into renewable power, biofuels, energy efficiency and enabling technologies and infrastructure over the period to 2050.

According to the second edition of the Renewable Energy Outlook for Asean: Towards a Regional Energy transition – released by the International Renewable Energy Agency (Irena) during the Asean Ministers on Energy Meeting - significant regional business and investment opportunities arise from the doubling of renewable power by 2030.

The report, prepared by Irena with engagement from Asean member states, estimates that in the nearer term to 2030, solar photovoltaic installed capacity will need to reach 240 gigawatts (GW) across the region, requiring investment of US$150 billion within this decade. Grid investment will require nearly US$200 billion.

Significant additional investment is needed in key enabling technologies such as electric vehicles and charging stations, biofuel supply, and energy efficiency.

Nuki Agya Utama, executive director of the Asean Centre for Energy, said accelerating energy transition is crucial to meet climate goals and support the region’s economic growth.

A NEWSLETTER FOR YOU

Friday, 8.30 am

Asean Business

Business insights centering on South-east Asia's fast-growing economies.

Sign Up

“Guided by the Asean Plan of Action for Energy Cooperation Phase II, Asean is committed to achieve 23 per cent renewables share in total primary energy supply by 2025,” said Nuki, adding that the regional blueprint includes the optimisation of clean coal technology as one of its programme areas. 

Today, fossil fuels make up over 85 per cent of South-east Asia’s primary energy supply.

Irena’s director-general Francesco La Camera said: “Coal retirement, coupled with renewables and regional grid interconnection, is an indispensable step to aligning with net-zero targets. Half of Asean members have signed up to international efforts to end coal in the power sector.”

Between 2015 and 2021, the total installed capacity from renewables jumped from 55 GW to 97 GW. By the end of 2021, Vietnam, Thailand and Indonesia were leading the regional race with a total of 43 GW, 12 GW and 11 GW of installed renewable energy capacity, respectively. 

Investments in recent years have shown mixed progress in Asean’s aspirational targets for 2025. Renewable energy share at 14.3 per cent of primary energy in 2021 has not changed much for half a decade. Yet the region also had a 33.5 per cent share of installed renewable power capacity in 2020, a substantial increase just over the last couple of years. 

“Therefore, while the installed capacity share looks within reach, the primary energy target will be a challenge,” Irena said.

To realise climate goals, efforts are needed across the entire energy system of Asean. For example, with electricity generation growing up to fivefold by 2050, renewables must provide between 90 to 100 per cent of the total electricity supply by 2050, up from 26 per cent in 2019.

The share of renewables will need to increase to 65 per cent by 2050, from 19 per cent in 2018. Direct electrification with renewables is the largest contributor, followed by bioenergy, but geothermal, green hydrogen and solar play important roles.