Building Sustainable Cities

Asean power grid — option for S'pore to source green energy

Trial to import electricity from Malaysia the first step to larger imports of clean energy from South-east Asian neighbours

According to UOB chief sustainability officer Eric Lim, a regional power grid would save governments the cost of constructing new generation facilities and reduce the need for storage and related services.
According to UOB chief sustainability officer Eric Lim, a regional power grid would save governments the cost of constructing new generation facilities and reduce the need for storage and related services.PHOTO: GETTY IMAGES

Clean or renewable energy usually tops the list of changes the world can implement to stave off the worsening effects of climate change.

This is because renewable energy sources such as solar and wind do not emit carbon dioxide and other greenhouse gases that contribute to global warming.

In Singapore, power generation still accounts for 40 per cent of total emissions. But, to halve its peak emissions by 2050, Singapore will start importing electricity from Malaysia by the end of this year.

For a start, it will import 100 megawatts (MW) of electricity, which would meet just 1.5 per cent of Singapore’s peak electricity demand.

The two-year trial to import electricity from Malaysia marks the start of what could eventually be a significant part of Singapore’s energy mix — clean energy drawn from a regional power grid.

To diversify and green its energy supply, Singapore wants to reduce reliance on natural gas — 95 per cent of its electricity is currently generated from this fossil fuel — and tap on three other “switches”: solar energy, emerging low-carbon technologies like hydrogen, and finally, a regional power grid.

Singapore’s trial to import electricity, and its decision to finally initiate cross-border trade under the Lao PDR-Thailand-Malaysia-Singapore Power Integration Project (LTMS-PIP) — both announced late last year — also give fresh traction to long-standing plans for an Asean power grid, first conceived more than two decades ago.

Second Minister for Trade and Industry Tan See Leng said of the two-year trial in a parliamentary speech in March: “This will also allow us to tap on the abundance of hydropower and other renewable energies that some of our South-east Asian neighbours have.”

“But these are just first steps towards a regional grid,” Mr Tan added.

These trials are meant to help Singapore refine regulatory and technical frameworks in preparation for larger-scale commercial imports from the region.

How can an Asean power grid help?

The benefits of collaboration across the power markets of Asean — which has been working towards greater economic integration — are clear.

The International Energy Agency’s 2019 report on multilateral power trade in Asean, said: “Regional power system integration can enhance electricity security, improve the affordability of electricity and scale up the deployment of the region’s abundant renewable energy resources.”

As energy demand surges across the region thanks to rapid urbanisation and industrialisation, Asean has now set a target of meeting 23 per cent of its energy needs from sustainable, renewable sources by 2025.

Things are moving fast. According to the Asean Centre of Energy’s update this month, 82 per cent of the 22 gigawatt (GW) of power capacity added across Asean last year was renewable. And the most significant among the fresh additions were jumps in solar capacity in Vietnam and hydro capacity in Laos.

UOB chief sustainability officer Eric Lim says increased cross-border power integration and trade can be an energy solution that is both “economically viable and environmentally friendly”.

Explaining his point, he says: “Power interconnection will also help to open up new markets for resource-rich countries, and to provide countries with high electricity demand greater and more affordable access to clean energy.”

A regional power grid would also save governments the cost of constructing new generation facilities and reduce the need for storage and other services, he adds.

But progress on the Asean power grid has been slow, particularly compared with the progress of other regional electricity grids such as that of the Nordic countries — first mooted at around the same time which are now well established.

Speaking about the slow progress of the Asean power grid, the head of the energy security division at the National University of Singapore's Energy Studies Institute Philip Andrews-Speed, says: “One of the key political obstacles has been the apparent preference of Asean member states for self-reliance in power supply.”

But this is changing slowly, says Dr Andrews-Speed, who is also a senior principal research fellow at the institute.

Fresh impetus for Singapore to eye the region

When the LTMS-PIP was launched in 2018, Singapore was not part of it. It began with 100 MW of electricity flowing from Laos to Malaysia, through Thailand, and last year the amount being exported rose to 300 MW.

So Singapore’s decision last October to initiate cross-border trade under the LTMS-PIP and import up to 100 MW from Laos, is significant. Dr Andrews-Speed says that the urgency of the energy transition has provided the impetus for Singapore to join the cross-border power trade.

For years, commercial considerations took priority over the LTMS-PIP cross-border power trade. Singapore’s excess generation capacity meant additional electricity supplies were not needed and could have depressed prices to a non-profitable level for local power generating companies.

But now, Singapore has to gear up for rising demand. Over the next 10 years, the Energy Market Authority (EMA) projects that annual system demand will grow at a compound annual growth rate of 2.5 to 3.1 per cent.

For the upcoming trial with Malaysia, EMA required importers to submit documentary proof of carbon output to verify how clean the electricity being imported is.

Still, according to Dr Andrews-Speed, it may be another five to 10 years before this energy “switch” supplies a significant part of Singapore’s needs, even if all goes well.

Infrastructure, funding key to power grid

After Singapore’s trial power imports from Malaysia, what happens next? According to Dr Andrews-Speed, boosting infrastructure is the first step.

“For Singapore to receive substantial power imports, the capacity of the grid connection from Malaysia will need to be substantially increased and connections with Indonesia, for instance Batam, will be needed if Singapore companies build solar photovoltaic plants there.

“At a later date, we expect a connection to Australia,” he adds.

Solar energy infrastructure company Sun Cable, which is building the world’s largest solar farm in Australia’s Northern Territory, hopes to export power from Australia to Singapore via a 3,500 km undersea cable. 

Following the electricity import trial, Dr Andrews-Speed expects more Singaporean and other companies building solar capacity in Malaysia to feed this line. 

What is most needed to spur progress on the Asean power grid, he says, is government support for private enterprises with novel ideas.

Local financial institutions are also expanding their financing of sustainable energy projects — through the issuance of green bonds and more.

Speaking about UOB's role, Mr Lim says: “Beyond sustainable financing, we also aim to direct more investments to renewable energy projects and source our operational energy needs from renewable sources in the region to support Asean’s energy transition.”

This is the ninth of a 15-part series in collaboration with