Urgency of Energy Interconnectivity
As Southeast Asia transitions to sustainable energy, enhancing energy interconnectivity within the Association of Southeast Asian Nations (ASEAN) becomes increasingly critical.
The region’s diverse energy landscape features countries like Laos, a major electricity exporter due to its hydropower capability, and Indonesia, with a potential for 2,900GW of solar PV capacity.
Conversely, Singapore relies heavily on low-carbon energy imports, and countries such as Thailand, the Philippines, and Vietnam are investing in LNG terminals as their domestic gas fields deplete.
Shared Aspirations and Infrastructure Development
A recent World Economic Forum gathering of ASEAN business leaders emphasized the importance of power infrastructure, including grids, gas/LNG infrastructure, and EV charging stations, to improve energy security and reduce system costs.
Azis Armand, Group CEO at Indika Energy, highlighted the need for a resilient, integrated energy framework leveraging diverse resources to promote energy security, equity, and environmental sustainability.
Progress and Challenges
ASEAN has made strides in electricity and gas interconnectivity through projects like the Laos-Thailand-Malaysia-Singapore Power Integration Project (LTMS-PIP) and the Borneo-Indonesia-Malaysia-Philippines Power Interconnection Project (BIMP-PIP).
However, financial limitations, outdated grid equipment, and political obstacles present significant challenges. The International Energy Agency (IEA) estimates that ASEAN needs approximately $21 billion annually in grid investment from 2026 to 2030.
Natural gas plays a crucial role in energy security, with significant progress made through the Trans-ASEAN Gas Pipeline (TAGP) project.
However, establishing a unified gas market and encouraging intra-regional LNG transactions remain difficult due to high investment requirements and complex regulatory frameworks.
Infrastructure Disparities and Investment Priorities
The shortage of necessary infrastructure is a common obstacle, with developing economies prioritizing immediate domestic needs, often leaving rural and low-income communities behind.
Lessons from Europe’s synchronous grid development suggest that ASEAN could benefit from prioritizing projects of regional importance, potentially through a scheme similar to Europe’s Projects of Common Interest (PCIs), which provide exclusive financial assistance and expedited permitting procedures.
Policy and Regulatory Frameworks
To ensure policy continuity and boost investor confidence, ASEAN countries could adopt legislation for net-zero emission targets, similar to the UK and France. This approach would create a stable policy environment, encouraging long-term investments in the energy transition.
The Path Forward
Achieving a cohesive and integrated ASEAN energy market requires concerted efforts from governments, the private sector, and international partners.
The ASEAN Leaders for Just Energy Transition (ASEAN JET) community, with over 20 CEO members across various sectors, aims to unite business leaders to build robust cross-border power infrastructure, ensuring affordable clean energy for all and fostering a sustainable, interconnected ASEAN.
In conclusion, by leveraging diverse energy resources, enhancing infrastructure, and adopting supportive policies, ASEAN can overcome its energy challenges and secure a sustainable energy future.
