This region has a fast-growing population and economy with an increasing energy demand along with that is an increasing carbon footprint. Economic growth and energy security are key priorities for countries in the region.
According to the IEA, South East Asia’s energy demand is expected to increase by 60% by 2040 in line with the region’s rapid economic growth led by increasing industrial activities, growing population and rising incomes.
The region is net importer of energy products with more. There is a high level of dependence on hydrocarbons: oil for transport and coal and gas for electricity. With depleting reserves, the region needs to import more fossil fuels to cater to the rising demand. However, given the urgent need to reduce greenhouse gas emissions, accelerated renewable energy adoption is expected to be the solution to meeting the growing energy demand within South East Asia
Renewable energy capacity (excluding hydro) in the region increased from 4.4GW in 2000 to 25.8 in the past two decades according to the EIA. This was the result of the move towards a more sustainable future as well as pressures on phasing out fossil fuels. The expansion in renewable energy capacity was also helped by declining cost of renewables, such as solar photovoltaics and onshore wind, which helps to drive the business case for renewable energy
In terms of renewable power investment, Vietnam is the leader in solar and wind capacity with supportive policies motivated by declining hydrocarbon sources. Corporate renewable procurement is emerging as a driver of renewable electricity, as global multinationals seek to reduce supply chain carbon footprints.
The potential for renewables in the regions is significant. ASEAN member states (according to ASEAN, 2020) are targeting the following goals by 2025: 30% lower energy intensity than in 2005; 23% of renewables in primary-energy supply compared with 17% in 2019; and 35% renewables in installed power capacity.
The share of electricity in final energy demand will continue to rise, advancing from 17% in 2019 to 22% in 2030 and 41% in 2050. All three main sectors (transport, buildings and manufacturing) will see strong electrification. The 2050 electricity mix is dominated by solar and wind, generating 38% and 35% of electricity, respectively. (Source: DNV).
Solar energy is expected to lead the energy transition in South East Asia, given its declining cost and abundance of sunlight in the region. With the cost of solar reaching parity or even lower compared to conventional power sources such as gas-fired power generation, solar PV capacity has been climbing. Vietnam now has almost 16.5GW of solar capacity which exceeds that of the other South East Asia countries combined. The growth in solar capacity has been driven by new policies, most notable of which is the implementation of feed-in-tariffs (FiT). South East Asia will need to increase its solar PV capacity from 32 GW in 2020 to 83 GW to 2025 in order to achieve the APAEC regional targets by 2025. Each South East Asia country has set targets on renewables capacity in their long-term power plans as well.
There is significant potential for wind energy within South East Asia, with substantial wind resources in countries such as Indonesia, Philippines, Thailand and Vietnam. An estimated 100GW of wind energy can potentially be harnessed in the Philippines and Vietnam according to IRENA. At present, Thailand has the largest installed capacity base of wind power of around 1.5 GW. The growth of wind energy in the region has largely been driven by Thailand and Vietnam.
Indonesia, Malaysia, Philippines, Thailand and Vietnam have abundant biomass resources (e.g.: rice, sugarcane) to provide feedstock for bioenergy projects. High productivity of the agriculture sector in the region generates considerable volumes of residuals that remain under-utilised. In particular, Indonesia, Thailand and Vietnam have large agricultural industries and with a significant amount of untapped bioenergy feedstock. IRENA (Global Energy Transformation – A roadmap 2050 report) reports that biomass is expected to become the largest energy source in the total energy mix in South East Asia, which is over 40% of total primary energy supply (TPES) in 2050 under Transformation Energy Scenario (TES). Majority of the biomass is used in Industry (40% of total TPES) and Transport sector (37% of total TPES).