International Business News – ASEAN is one of the regions with the most dynamic economic development in the world and one of the regions with the most prosperous energy demand. Strengthening the power interconnection in the ASEAN region and coordinating regional power resources will not only help the countries in the region turn resource advantages into economic advantages, but also promote the sustainable development of regional energy.
A few days ago, the Singapore Energy Market Authority announced that it will import electricity from Laos with a maximum transmission power of 100 megawatts. The electricity will be transmitted to Singapore via Thailand and Malaysia. This move marks the official launch of the Laos, Thailand, Malaysia and Singapore Power Integration (LTMS-PIP) project, an important step in the long-planned construction of the ASEAN power grid. Due to the uneven distribution of resources, the regional mismatch between power production and consumption has long plagued Southeast Asian countries. The analysis believes that the construction of the ASEAN power grid will promote cross-border electricity trade, which will not only help promote the economic development of the ASEAN region, but also make positive contributions to regional energy security and stability.
An important step in the construction of ASEAN power grid
The power integration project was jointly proposed by Laos, Thailand, Malaysia and Singapore in September 2014. It is an important path-finding project for the implementation of the ASEAN power grid construction. Sustainable energy supply provides opportunities for the development of low-carbon and renewable energy in the ASEAN region, improves the overall security and stability of energy in ASEAN, and promotes the coordinated development of regional economies.
According to the plan, the ASEAN power grid construction will adopt a gradual development strategy. The first step is to realize bilateral interconnection between member states, and then gradually extend to sub-regional interconnection and build the northern part (mainly covering Laos, Myanmar, Cambodia, Thailand, Vietnam) , the southern (mainly covering Singapore, Malaysia, Indonesia) and the eastern power grid (mainly covering Brunei, the Philippines), and finally establish a fully integrated ASEAN power grid system. The “2016-2025 ASEAN Energy Cooperation Action Plan” formulated by ASEAN in 2015 clarifies that at this stage, the construction of 16 bilateral power interconnection projects with a total of 45 will be promoted. According to the “Progress and Prospects of the ASEAN Electricity Interconnection Project” released in mid-2019, by 2018, 14 interconnection sub-projects have been put into commercial operation, with a power transmission scale of 5.5 million kWh.
The Lao Vientiane Times commented that as the first multilateral cross-border electricity trade and the first renewable energy export project involving four ASEAN countries, the official launch of the LTMS-PIP project is of milestone significance. Zhan Thaben, general manager of the Lao National Electric Power Company, said that the LTMS-PIP project has taken an important step towards the goal of building the ASEAN power grid.
95% of Singapore’s electricity is generated by imported natural gas, and more than 70% of the imported natural gas comes from natural gas pipelines in Indonesia and Malaysia. The Singapore Energy Market Authority believes that the LTMS-PIP project is a pioneer in realizing multilateral cross-border trade in the power grids of ASEAN countries, which will help optimize Singapore’s energy structure. In the future, Singapore will import more electricity from the Lao Power Company.
Member States actively promote energy cooperation
Although the types of energy resources in the ASEAN region are rich, the resource endowments and development conditions of each country are different, and there are obvious differences in the level of power development in each country. The analysis believes that strengthening power interconnection can enable ASEAN countries to give full play to their own advantages, meet the needs of power development, and promote sustainable energy development in the ASEAN region.
Recently, the cumulative power generation of cascade hydropower stations in the entire valley of the Nam Ou River in Laos exceeded 10 billion kWh. Since the power station was put into operation, it has been operating safely and stably for nearly 7 years, providing a steady stream of clean power for the economic and social development of Laos. Laos has many mountains and large river drops, and has good conditions for hydropower development. The theoretical reserves of hydropower resources in Laos are about 26,000 MW, and the total technical development is 23,000 MW. The Lao Ministry of Energy and Mines expects that by 2030, the number of hydropower stations in Laos will increase to 100.
The development of hydropower resources is an important starting point for Laos to develop its economy, eliminate poverty, and realize industrialization and modernization. To this end, Laos has put forward a development strategy of building a “battery battery” in Southeast Asia, committed to developing the energy industry, accelerating the construction of hydropower stations, and accelerating the development of solar and wind energy. At present, all provincial capitals in Laos have achieved electricity supply, 94% of villages and 95% of households in the country have access to electricity, and electricity is exported to neighboring countries.
Thailand has been Laos’ largest electricity trading partner, and the two countries have signed several memorandums of understanding to enhance electricity trade between the two countries. In March this year, the Lao and Thai governments signed a document to increase Thailand’s power purchase agreement from Laos to 10,500 MW from the maximum transmission power of 9,000 MW when it was signed in 2016.
While meeting domestic electricity demand, Laos continues to increase its delivery potential. The Lao government strives to export 14,800 megawatts of power to neighboring countries annually by 2025, including 9,000 megawatts in Thailand, 5,000 megawatts in Vietnam, 500 megawatts in Myanmar, 200 megawatts in Cambodia, and 100 megawatts in Malaysia. Dao Feng, Minister of Energy and Mines of Laos, said that the international community’s demand for green and low-carbon development continues to increase, and Laos’ hydropower advantages will become more prominent. The Lao government attaches great importance to clean energy and sustainable development, and will continue to strengthen energy cooperation with other ASEAN member states and promote regional power connectivity.
Strengthen policy and funding coordination
As the economy continues to grow rapidly, the energy demand of ASEAN countries will maintain a high growth rate. The “Sixth ASEAN Energy Outlook” released by the ASEAN Energy Center predicts that by 2040, ASEAN’s energy demand will increase by 146% compared with 2017, and the contradiction between ASEAN’s electricity supply and demand will become more obvious in the future.
Fitch, an international rating agency, believes that the construction of ASEAN’s power grid is still in its infancy, and most transactions are bilateral and one-way. The main obstacles to strengthening cooperation in the power sector between member states are policy and technical issues, such as the power market of each member state. At different stages of development, there are differences in market structure, mechanism, electricity price, voltage and frequency.
In order to coordinate policies, the ASEAN Energy Ministers’ Meeting has repeatedly proposed to strengthen cooperation to achieve interconnection and power transactions among ASEAN countries, and to cooperate on technology, financing, taxes and prices, regulatory and legal frameworks, power transactions and cross-network transactions. make principles. The ASEAN Energy Ministers’ Meeting also regularly formulates a five-year plan for ASEAN energy cooperation actions, including the construction of ASEAN power grids.
At the same time, member states have also adjusted their domestic institutions and regulations to better promote the construction of ASEAN power grids. Taking Thailand as an example, the country’s Ministry of Energy has set up a working group to promote Thailand as a regional power trading center by strengthening grid connections across the country and upgrading high-voltage transmission lines. The Electricity Authority of Thailand also signed a cooperation agreement with the Stock Exchange of Thailand to conduct more in-depth studies on the establishment of wholesale electricity markets and to revise regulations on electricity trade and commerce.
In addition to the investment within ASEAN countries, some multilateral banks and financial institutions in non-ASEAN countries are also actively participating in the construction of power grids in the ASEAN region. In March 2021, the Lao National Transmission Grid Corporation, jointly established by China Southern Power Grid Corporation and the Lao National Electric Power Corporation, signed a franchise agreement with the Lao government to be responsible for the investment, construction, and operation of the 230 kV and above power grid in Laos, as well as cross-border cooperation with neighboring countries. Networking project.
The ASEAN Post, citing data from the International Energy Agency, reported that between now and 2040, the ASEAN region will need US$1.2 trillion in investment to expand and modernize the power grid. Intra-ASEAN power interconnection is critical to ASEAN’s energy stability and economic development. significant. ASEAN Secretary-General Lim Jock Hoi said ASEAN will need at least US$367 billion over the next five years to finance its energy goals, and needs to strengthen regulation, policy coordination, expand funding sources and improve the investment climate to achieve energy transition goals.