Asean ministers discuss energy grid

Ministers at an international energy summit in Singapore on Monday agreed that a connected Asean power grid was a crucial step for energy security in the region, but that it needed to be done in phases.

The top-level government officials from Malaysia, the Philippines and Singapore said that Asean governments needed to commit to move quickly on implementing a region-wide energy grid. Such a grid would integrate Asean’s energy markets, and would require investments into trans-Asean gas pipelines and expanding connections between member countries.

Speaking at a panel discussion at the Singapore Energy Summit, Singapore’s Minister in the Prime Minister’s Office S Iswaran said such plans needed clear political direction at the regional and national levels, adding that an Asean energy grid would serve individual national interests as well as the region as a whole.

He recommended that the development of such a grid be done in phases, noting that some countries were already connected on a sub-regional level.

“If you think of (energy grid infrastructure) as a big Asean-wide proposition, it can be quite overwhelming and daunting. But if you think of it as a connection between geographically contiguous Asean member states in order to serve each other’s needs, then the logic is quite compelling,” said the minister. 

Existing cross-border energy flows include both fuel imports, such as natural gas that is piped from Malaysia to Singapore, and electricity imports, such as the hydropower electricity that Thailand purchases from Laos.

Mr Iswaran,  who earlier in the day announced plans for Singapore to gather views on importing electricity, said that the Republic aimed to encourage better cross-border flow of electrons, or electricity trading, as opposed to bulky fuel sources such as natural gas or oil. He added that this would entail work on infrastructure linkages, a regulatory framework and market pricing.

“Asean as a community has significant scope to pool at least to some extent some of its resources and allow cross border flows,” he said.

Secretary of Energy for the Philippines, Jose Rene Almendras, said that his country would support an Asean energy grid even though the Philippines would probably be the last nation connected due to its remote location. He agreed that the connected grid required gradual steps and it could increase the flexibility and diversity of Asean nations’ energy supplies.

Malaysia’s Minister in the Prime Minister’s Office, Sri Idris Jala, however, said that cross-border trade in natural gas was more likely to be the driver of progress on an Asean grid, compared to electricity trade. Pipelines are easy, but a connected grid is not so easy to do, he noted.

Some of the challenges to Asean energy connectivity outlined by the ministers included inconsistent pricing policies, differing levels of market liberalisation, infrastructure such as electricity grids and pipelines, and the need for clear political direction.

Singapore’s Mr Iswaran, who is also Second Minister for Home Affairs and Trade and Industry, noted that government policies also needed to be adapted to encourage private sector involvement. “Governments can conceive (of the plans), but we really need the private sector to come in to execute,” he said.

Incentives for private sector investment sparked a debate amongst the ministers about subsidies and feed-in tariffs, which are guaranteed rates for electricity – often for renewable sources - sold into local or national power grids.

Mr Almendras of the Philippines noted that experts from other parts of the world – some of which have negative experiences with feed-in tariffs - say the tariffs distort the energy market and should not be used. “I don’t think it’s a one size fits all,” he said, adding that different countries had unique needs that should be examined on a case-by-case basis.

He said that the Philippines, which is promoting energy from small-scale hydro-power and biomass projects, had to provide power on a small scale for many unconnected islands, making government intervention, such as feed-in tariffs, necessary for clean energy alternatives to the diesel generators used on many of the islands.

The Philippines is in the process of introducing feed-in tariffs for renewable energy projects such as solar, wind, biomass and hydro.

Mr Iswaran of Singapore, a Republic that firmly follows a policy of not distorting its electricity prices, said that the reality is that the costs of many renewable energy sources are several times the price of eletricity from conventional sources.

“If we choose the path of subsidising consumption of these alternative energy sources, then really we are subsidising a more costly alternative in an environment when we need to look at the competing options available,” he added.

Instead, he explained, Singapore supports research and development (R&D) to help bring down the costs of alternative energies so that they can stand up to the scrutiny of economic feasibility studies.

But Malaysia’s Mr Jala countered that he was of the view that feed-in tariffs were good subsidies, as long as the end goal of the policy was grid parity. Grid parity is the point at which electricity from alternative energies are cost competitive with prevailing electricity rates.

“There are many projects in any country that require the government to assist by giving what is called a tipping point. If the government does not create the conditions for the tipping point, then I think the future of renewable is doomed,” he said.

As with the Philippines, Malaysia is introducing a feed-in tariff to encourage renewable energy. Malaysia has the world’s third largest solar manufacturing industry, said Mr Jala, adding that the country cannot use its own products because it lacks the infrastructure.

All the ministers agreed on the need to push for more energy efficiency in light of the region’s rapidly rising energy demand, which Mr Jala noted, is projected to outstrip supply by 2017.

Mr Almendras cautioned that technology was only part of the energy efficiency solution and said that lifestyle choices were a bigger factor in reducing energy demand. “We have to face the fact that there are changes that need to happen…The next generation will have a reality to face, which is that they are going to have to live a more energy efficient lifestyle,” he added.

The Singapore Energy Summit, held at Suntec City, is a highlight of the fourth annual Singapore International Energy Week (SIEW), which runs from 31 October to 4 November. Attended by an estimated 16,000 energy experts and professionals, SIEW brings together policymakers, industry leaders and academics to Singapore to discuss energy issues at a variety of conferences, exhibitions and networking events. This year’s theme is “Securing our Energy Future”.

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