Australia’s power play in Southeast Asia

The region’s energy transition is stalling. An ASEAN electricity grid could change that.

Ruth Adler,Richard Neumann

19 February 20263 min read

In the increasing global trend towards renewable energy, the emissions reduction targets set by the ASEAN countries of Southeast Asia remain modest. This, for some, is a consequence of a lack of resources for investment in energy transition. For others, the problem is a lack of urgency.

Under the Paris Agreement, parties are required every five years to prepare nationally determined contributions (NDCs) documenting the actions they intend to take to address climate change. With the exception of Myanmar and Timor-Leste, ASEAN countries have set economy-wide emissions reduction targets and identified energy as a key priority in their efforts to decarbonise. ASEAN has also identified shared priorities.

The NDCs of Cambodia, Indonesia, Myanmar, the Philippines, Thailand and Vietnam include modest “unconditional” mitigation targets and “conditional” targets that are more ambitious – yet these are dependent on appropriate financial and other support. For example, Thailand’s NDC highlights that the energy transition is a primary area of interest encompassing initiatives in green energy, green transportation and green industries, requiring an estimated US$6.11 billion by 2035.

Timor-Leste’s NDC highlights its climate vulnerability as a Least Developed Country and Small Island Developing State, and the lack of human capacity, financial resources and technology required to implement “robust” mitigation and adaptation measures. Meantime, Timor-Leste has invested hundreds of millions in infrastructure to service a non-existent LNG plant.

A bet on fossil fuels remains a key part of the region’s energy future.

Yet some positive signs can be identified, including the deployment of solar PV in Vietnam in the early 2020s and the effort by four countries (Indonesia, Malaysia, Singapore and Thailand) in joining the world’s fastest EV transitioning markets.

Australia should play a bigger role in supporting regional emissions reduction efforts. The obvious focus should be on efforts to develop an ASEAN electricity grid.

A Public Electric Vehicle Charging Station (SPKLU) in Medan, North Sumatra, Indonesia (Sutanta Aditya/NurPhoto via Getty Images)

While the Mekong sub-region has numerous border grid connections, elsewhere progress in connecting countries has been slow. Singapore has been the main driver, supporting the supply of hydropower from Laos, wind energy from Vietnam and solar PV from Indonesia. A more formalised ASEAN grid and associated electricity markets would help underwrite new investment in renewable energy generation that is currently crowded-out by existing thermal generation by offering more potential customers.

Australia’s interests are manifold, but not least among them is the geopolitical case. With vast renewable energy resources and control over the headwaters of the Mekong River, China is keen to advance a Mekong sub-region power grid with the control room in Kunming. That approach does not sit well with regional capitals, unwilling to offend Beijing but also not wanting to be controlled by it. An ASEAN grid, on the other hand, puts the countries of Southeast Asia in the driver’s seat.

Australia’s of testing new technology such as big batteries, virtual power plants and bidirectional charging vehicle-to-grid will help make the region’s electricity grids more resilient if implemented effectively.

A focus on the ASEAN grid could increase the region’s energy resources to advance electrification. For example, Vietnam’s EV manufacturing powerhouse Vinfast is targeting fleet markets in the Philippines for a range of electric cars and buses, dovetailing with the Philippines’ plans to grow its offshore wind industry. In Thailand, production of fossil fuel vehicles is in decline, while the manufacture of battery electric vehicles by companies such as China’s BYD Auto, SAIC (MG) and Great Wall Motor is growing.

Australia has valuable experience in managing a grid with a high proportion of renewable energy. Similarly, Australia’s of testing new technology such as big batteries, virtual power plants and bidirectional charging vehicle-to-grid will help make the region’s electricity grids more resilient if implemented effectively.

Practical actions Australia could take include utilising Export Finance Australia to support regional partnerships, providing technical support through organisations such as the Australian Energy Market Operator (AEMO) and promoting regional regulatory harmonisation. Such actions could be advanced through forums including the ASEAN Post-Ministerial Conference, bilateral initiatives and industry-led dialogue.

Given Southeast Asia includes three of the ten most vulnerable countries in terms of the risks and effects of climate-related extreme weather events, the case for action is clear.

About the authors

Ruth Adler

Dr Ruth Adler is a former senior career officer with the Department of Foreign Affairs and Trade.

Richard Neumann

Richard Neumann is Chair of the Smart Energy Council Pacific Working Group and a member of the Advisory Council of the Franco-Australian Centre for Energy Transition at Swinburne University.

Topics

Australia ASEAN Climate & environment Energy & resources