Electrifying Asean with interconnected energy grid

Vientiane – Four Asean member states are working on a power grid interconnection project between Laos, Thailand, Malaysia and Singapore as part of regional efforts to ensure energy security.

Laos deputy minister of energy and mines, Viraponh Viravong said working groups on the first 100 Mw that uses existing facilities are meeting regularly to make this interconnection a reality.

A 2013 report from Jakarta-based Economic Research Institute on Asean and East Asia (ERIA) showed that the estimated possible cumulative benefit range from this project would be approximately US$ 20 billion.

“A memorandum of understanding amongst the four countries is planned to be signed in September in Myanmar during the Asean Energy Ministers meeting,” said Viraponh during a discussion on Asean energy challenge at the 5th ERIA Editors’ Roundtable held earlier this month in Vientiane, jointly organized by ERIA, Lao Journalists’ Association and Vientiane Times.

The deputy minister said Laos produces almost 100% its domestic electricity supply from hydropower. In 2015, its household electrification was 89% and would rise to 95% by 2020.

“Combining electricty production from large hydropower projects for domestic use and export and interconnection with neighboring countries has proven to be cost-effective for Laos,” he said, adding that the country also projects to export up tp 10,000 megawatt to Thailand, Vietnam, Cambodia and Myanmar by 2020 or about 50,000 GWh annually, which would also contribute to energy security in the region.

“Energy security tops the energy policy [in Laos], aimed at improving energy diversification, energy conservation programs and intensifying efforts to identify and develop energy resources,” Viraponh added.

However, another challenge is ensuring affordable supplies to support continued economic growth and development in the country, which aims to gain eligibility to graduate from least developing countries status by 2020 and to achieve the ranking as an upper-middle-income country by 2030.

Landlocked Laos has a population of 6.49 million people and from 2011 to 2015, its gross domestic product has grown on average of 7.4% while its electricity demand has increased by more than 14%, thus making energy security fundamental for its national development because energy supports and sustains economic and industrial activities.

ERIA president Professor Hidetoshi Nishimura said ERIA has completed a long-term development vision for Laos industrial development strategies 2016 – 2030.

“In cooperation with Lao PDR government and research institute, Lao PDR will shift from landlocked country to land-linked country,” Professor Nishimura said.

With all Asean member states, except for Brunei, being net importers of energy, the regional bloc faced a serious challenge in energy security, which is essential to boost its integrated economy and regional development.

The bloc’s current primary demand for energy is about 550 Mtoe or million ton of oil equivalent, which supplies its 600 million population across the 10 member states and generates 1,166 Mt of energy-related Co2 emmission. According to various data from Asian Development Bank, International Energy Agency and ERIA, the primary energy demand in the region by 2035 would increase to 1,004 Mtoe, generate 2,300 C02 emmission used by 736 million population.

The Asean 2016 chair Laos also noted that common energy challenge in the region include improving energy security and sustainability of energy use as well as reducing economic costs, though energy policies in the ten member states vary as they reflect the differences in political direction, economic development and natural resources assets.

Energy is rated as the number one out of the top 10 problems that Asia would face over the next 50 years, followed by water, food, environment and poverty, said Venkatachalam Anbumozhi, a senior energy economist at ERIA.

He noted that the success of development in the region would also rely on the rate of electricity consumption.

“Human development index and energy consumption are linked. Countries with high human development index have higher energy consumption compared to those who don’t,” Anbumozhi said, adding that Singapore and Brunei, whose energy consumption are almost 8,000 kWh per capita, were the two Asean countries that belong in the same group of countries that have high energy consumption and human development index, such as Japan, Australia and the United States.

“Energy security concerns grow in Asean under growing demand circumstances,” he said.

The concerns grow as Asean’s energy supplies from Middle Eastern countries are experiencing setbacks and with the changing dynamics of emerging Asia as China, Japan, Korea slow down while India, Asean and Central Asia take over as the engines of global energy demand growth.

To ensure its energy supplies, Asean energy development would be propelled by geopolitical and market uncertainties, while energy efficiency and renewable energy could play a role in the region’s energy security and setting the low-carbon green growth agenda.

Anbumozhi said the region needed to look to an energy transition in the future when its pyramid of energy use, which currently places fossil fuel for the most part at the base and less use of renewable and energy efficiency at the apex, would be reversed to a much-wider use of renewable and energy efficiency and eventually, an end to the use of fossil fuel.

“Far-sighted government policies, innovative financing and regional cooperation are essential to steer the Asean’s development on to a safer course,” Anbumozhi said.

Asean’s continued development and integration however is somewhat overshadowed by the aftermath of Britain’s exit from the European Union (EU), raising concerns whether the same thing could happen in Asean.

But economics and international affairs pundits dismissed the notion, saying that Asean has a different model of regional integration compared to the EU. Most notably, EU member states have to relinquish some sovereignty such as writing their own laws, which would be written in Brussels and accommodate regional concerns.

Dr. Victor Sumsky, the director of Asean Centre at the Russian Foreign Ministry’s Moscow State Institute of International Relations said that EU was overly bureaucratized. It provides many lessons for Asean of what not do in terms of bureaucratization and institutionalization.

“It is not foreseeable right now of a Brexit replica in Asean,” he added.

ERIA senior economist Dr. Ponciano Intal said compared to the EU, Asean is in a different stage of development and the region would have a greater potential by integrating.

Asean secretary-general Le Luong Minh said the impact might be on the negotiations for free trade agreement between the two blocs, which started in 2007 but was halted in 2009 to make way for EU to forge trade agreements bilaterally with individual Asean member states first.

Moreover, Asean doesn’t have the migration issue and free movement of people that EU face. Non-Asean citizens are not that free to travel within the region because Asean doesn’t have a single visa policy like the EU’s Schengen visa.

“For us, it is a wake up call. We have to promote efforts to narrow development gap and for member states to strike the balance between short-term national interests with long-term regional interests,” the secretary-general said.

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