The Association of Southeast Asian Nations (ASEAN) targets for a clean, sustainable and prosperous future by setting the aspirational target of securing 23% of its primary energy from modern, sustainable renewable sources by 2025. This objective suggests a 250% increase in the modern renewable energy share compared to 2014. Power generation is also targeted to double by 2025, as the overall demand is estimated to grow by almost 50%, according to International Renewable Energy Agency.
Growing Demand for Energy
Affordable, secure and environmentally sustainable energy will be crucial to underpin Southeast Asia’s development over the coming decades. Meeting this growing demand through fossil fuels alone comes at the expense of energy security, environment, and sustainable development. The diversification of Southeast Asia’s energy supply through investments in renewables offers a viable option to support the expansion and also achieve wider socio-economic and environmental benefits.
The population of the ASEAN region will increase from around 615 million in 2014 to 715 million by 2025. The economy will also grow more than 5% per year, resulting in a rapid rise in energy demand. ASEAN countries will see a 4% annual growth in energy demand until 2025, amounting to a rise of 50% over 2014 levels. Electricity demand is also projected to double between 2014 and 2025.
ASEAN also needs to focus on energy storage as one of the solutions in overcoming the energy intermittency affecting renewable energy such as solar. According to a World Bank report, energy storage deployments in emerging markets around the world is projected to grow by more than 40% annually in the coming decade, generating additional 80 gigawatts (GW) of new storage capacity to the pre-existing two GW. There is approximately 1,784.5 MW of energy storage system capacity in the pipeline across the developing economies of the Asia Pacific region.
Key Challenges Moving Forward
The ASEAN region will need to invest USD 27 billion annually, a total of USD 290 billion by 2025, in renewable energy capacity in order to meet the 23% renewable energy goal. The lack of financial support and channels, including the availability of public funding support, has made the renewable energy sector in ASEAN a relatively unattractive sector to invest in. At present, there is a lack of experience and expertise in some ASEAN member states, particularly in Indonesia, Malaysia and in evaluating the risk of renewable energy investment.
Geographical as well as technical conditions are some of the challenges faced by renewable energy project developers in the Southeast Asian region. Particularly Indonesia and the Philippines, which are archipelagic countries in nature, the challenge is limited infrastructure capacity that hinders effective renewable energy deployment, in regard to electricity transmission.
For instance, a predominantly mountainous region with roads riddled with potholes in Rio Tuba, located in the Municipality of Bataraza on the island of Palawan in the Philippines, making it difficult for households in the area to be connected to the national grid. The region is powered by standalone grids in small scale power generation of between 10 kW and 10 MW which are usually deployed to power small rural villages.
Another challenge is the lack of policies in place to regulate the proper use of land as well as the subsequent environmental impact when large scale renewable energy projects are carried out in the region. The lack of coordination amongst government agencies and the private sector is also the case in ASEAN, hindering the implementation of renewable energy priorities and policies.
As is the case in Indonesia, another obstacle would be the issue of complex bureaucracy. The State Electricity Company monopolizes the transmission, distribution and system operation of electricity. The company also dominates the local electricity generation market, inhibiting the interests of potential investors.
The lack of awareness and public support also leads to the challenges faced by ASEAN countries when it comes to developing the renewable energy sector. The minimum use of renewable energy technologies is notably evident amongst land and building owners as well as industrial players. This could be due to the lack of awareness regarding the potential benefits of renewable energy towards environment conservation for a cleaner and greener future.