A comprehensive interconnection of Southeast Asia's power grid has been a long-held dream, first emerging into serious discourse in the 1980s. Now, almost four decades later, we might finally be approaching a moment when the pressure for climate action moves this idea towards a more established reality.
Electricity demand in Southeast Asia is growing at a phenomenal rate -- forecast to triple in volume from 2022 to 2050, according to the Asean Energy Outlook. Meeting this surging demand while answering the three-headed challenge of secure, affordable and sustainable energy will not be easy.
Nations are increasingly looking to renewable energy sources for part of the solution, with most Asean countries targeting around a 30% share of renewable energy in the power mix by 2030. Thailand's latest Power Development Plan lays out ambitions to increase the share of renewables to 50% by 2050.
Asean benefits from diverse and varied renewable energy capacity to achieve its ambitions -- substantial geothermal capacity in Indonesia and Philippines, wind and solar in Vietnam, hydropower capacity in Laos and Malaysia, and significant solar energy capacity across the region, especially in Thailand and Malaysia.
Ultimately, the potential of renewables will also rely on local geography and weather. Thailand is already a regional leader with almost 12,000 MW installed as of 2021, with significant penetration of hydro, wind and solar power.
However, integrating renewable technologies has its own set of challenges. It requires investment both in technologies and grid upgrades to transport electricity from the point of generation to the location of demand. Intermittent generation will also require careful investment to balance peak generation times with peak demand.
Interconnections -- high-voltage cables that connect the systems of different countries -- can play a critical role in mitigating the challenges of integrating renewables.
SHARING AS NEEDED
Interconnections allow the transfer of energy from areas with abundant generation at a time when other regions face a shortage. This would enable the region to integrate different sources of renewable energy with complementary supply profiles, facilitating the decarbonisation of power systems.
Such trade in electricity allows for better stability and improved load balancing. It can also help optimise power infrastructure investment as countries can invest in assets for which they have high renewables potential, while relying on the Asean grid to supply other sources where needed. This would enhance market efficiency, bring down costs and improve affordability.
An interconnected power system also boosts resilience in the face of significant global pressures. Having a reliable regional supply of renewables can help reduce reliance on fossil fuel and mitigate fuel volume and price uncertainties from external events.
Achieving an effective and interconnected Asean grid will require several key enablers. Regional funding mechanisms are needed to push forward interconnection projects, and fair financial settlements will be required to create a sustainable market for import and export.
Technical considerations include ensuring the appropriate technical standards are met for inter-grid connections, ensuring secure and accurate data flow and information to enable operations, and maintaining the reliability of power transmission across participating countries.
Countries need to ensure fair governance and transparent regulations on interconnection projects and operations, and define a clear process for project approvals. Most critically, alignment across governments will be vital to drive this transition towards success.
One example of such success is the mature energy market of the European Union, where interconnections enable the regional supply of electricity from low-carbon sources such as nuclear in France, hydropower in the Nordic states, and solar and wind in Germany.
Key coordinating institutions such as the European Network of Transmission System Operators for Electricity and the Agency for Cooperation of Energy Regulators help to align efforts across over 30 countries.
The Energy Infrastructure Forum provides a platform for technical cooperation, while investment needs are addressed by EU funding instruments.
Delivering on this interconnected future will take time. Europe took decades to develop the infrastructure we see today. Yet Asean is a region on the rise, and as economies continue to mature, interconnected power infrastructure offers a chance to support that growth.
KEY ROLE FOR THAILAND
There are signs of growing momentum for the Asean Grid, with Thailand playing an important part in the region's first tri-partisan power sharing agreement in 2017.
This agreement saw Malaysia purchasing over 100 MW of hydroelectric power from Laos, transmitted through Thailand's grid under a power wheeling agreement. The agreement was extended in 2019, with capacity expanding to 300 MW. Singapore is completing the chain by participating in an integration project to trial the import of hydropower from Laos via Thailand and Malaysia.
Asean interconnections will form an important part of Thailand's decarbonisation journey, with imported renewable energy from Laos expected to increase from 7% of total electricity utilised to 9% by 2037. With Thailand's fuel mix projected to evolve to include increased imports of green energy from Laos, and power purchase agreements increasing from 9 GW to 10.5 GW in coming years, Thailand's own focus on interconnections is clear.
In addition, Thailand's geographical position in this low-carbon energy export chain not only helps fulfil its own needs, but also positions the country as a facilitator of the wider regional opportunity for a low-carbon Asean energy market.
Interconnections yield significant benefits for Thailand and Asean as a whole. Given the time required to plan and build the necessary regulatory, financial and physical infrastructure, the region must act swiftly to accelerate interconnection efforts and enable a green, secure and affordable energy future for all.
Kar Min Lim is a principal and Marko Lackovic is a partner with Boston Consulting Group.