Network taps Laos hydropower, solar and wind energy from Indonesia and Vietnam
Wind farms in southern Vietnam have the potential to generate 600 gigawatts of power, according to one estimate. (Photo obtained by Nikkei)
YUJI NITTA, Nikkei staff writerSeptember 20, 2023 06:02 JST
HANOI — A web of international renewable energy deals is spreading across Southeast Asia as the region works to transition away from fossil fuels, with electricity-hungry Singapore as a driving force.
The city-state, where natural gas makes up around 95% of the energy mix, aims to import 4 gigawatts of low-carbon electricity by 2035, equivalent to 30% of its supply. This ambitious plan, in turn, is creating an opportunity for neighboring nations that are expanding power generation from renewable sources.
Imports kicked off in 2022 with the start of hydropower transmission from Laos via Thailand and Malaysia, totaling 100 megawatts over two years. Regulators have approved plans to bring in 2 GW from five solar projects in Indonesia, and the country will also buy power from a floating solar farm off Indonesia’s coast.
Singapore’s Keppel Infrastructure Holdings in March also inked a deal to buy 1 GW of renewable power from Cambodia-based Royal Group via an undersea cable more than 1,000 kilometers long.
The project will “catalyze the regional power grid and accelerate renewable energy growth in ASEAN,” Keppel Infrastructure CEO Cindy Lim said.
The International Energy Agency estimates that Southeast Asia would generate more than 40% of its electricity from renewable sources in 2030, and 95% from renewables and ammonia in 2050, if countries meet their goals under the Paris climate accord. To achieve this, renewable capacity would need to grow around 10% a year, accounting for increased demand from economic growth.
This creates opportunities for countries like Laos, where around 70% of power generation is hydroelectric thanks to the Mekong River.
Roughly 80% of the electricity Laos produces is sold to countries like Thailand and Vietnam, making up about 30% of its exports. It began sending electricity to Singapore in 2022 and built transmission infrastructure this year to sell power to Cambodia.
Some countries are both buyers and sellers.
Vietnam, whose potential wind power output is high as 600 GW by one estimate, plans to send electricity to Singapore from the southern part of the country. But central Vietnam is set to receive power from a new $950 million wind power project in neighboring Laos, which also supplies northern Vietnam with hydropower.
Northern and central Vietnam are home to plants run by such companies as Taiwanese contract manufacturer Foxconn and Chinese electric-vehicle maker BYD. As businesses pulling away from China look to Vietnam as an alternative, the country is rushing to solve chronic energy shortages.
The surge in oil prices after Russia’s invasion of Ukraine underscored the dangers of relying on fossil fuels, as the concentration of reserves among a relatively small set of countries leaves the market vulnerable to such conflicts. Cross-border renewable energy deals spread out supply throughout the region, providing more protection against disasters and geopolitical risks.
Hiroshi Takahashi, a professor at Japan’s Hosei University specializing in renewable energy policy, called building a cross-border electrical grid a form of “collective energy security,” and sees ASEAN as a good fit for such a project. The Southeast Asian bloc’s 10 members are connected through economic activity, while having a diverse array of political systems.
But whether the grid can actually be completed and supply power as hoped remains to be seen.
Progress has stalled on Australia-based Sun Cable’s planned 30 billion Australian dollar ($19 billion) Australia-Asia Power Link, which would send electricity from a 20 GW solar farm in Australia to Singapore via a 4,200-km undersea cable. That could change after Sun Cable’s acquisition this month, with the new owners looking to resume the project.
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