Time to catch up

Most national energy plans were developed before the enormity of the price cuts was common knowledge and when there was still a strong sense that low prices were only attainable with subsidies.

For instance, Cambodia’s Master Energy Plan was finalised in early 2017 and included no solar energy. By mid-2017, investor interest had exploded, forcing energy planners to indicate that the next energy plan would incorporate solar energy.

Many ASEAN countries do not yet have clear policies. Thailand, Malaysia, Vietnam and Indonesia have adopted feed-in-tariffs (FiTs) for solar or wind projects, but results are mixed as there is a lack of clarity on other regulatory issues, ranging from permits to the terms of power purchase agreements for solar, wind and biomass technologies.

Transmission needs

The IEA believes that most of the estimated US$2.7 trillion of investment is needed for transmission infrastructure, a topic that is easily overlooked in debates about the choice of power sources.

About 10 per cent of ASEAN’s population still lacks reliable access to electricity. Investment in traditional power grids to support energy trade and distributed micro-grids located in remote communities will be key to meeting their needs.

Leaders first mooted a regional ASEAN power grid for energy security in 1997. It has not yet been developed. There are no transmission lines for large-scale multi-national energy trade.

Bilateral energy trade is common but multilateral energy trade has largely been stymied by anxieties about protection of domestic energy industries, differences in electricity prices, and contractual problems.

The ASEAN Plan of Action for Energy Cooperation has set a target of getting three multilateral energy trade schemes operational by 2020. China also supports regional energy trade, as a regional grid could allow for excess hydropower from Yunnan province to reach foreign markets.

Despite investor interest, progress has been slow. By 2018, only one example of multilateral trade between Laos, Thailand, and Malaysia had moved forward. The political difficulties are unlikely to be addressed until the economics of trade become too attractive to be ignored.


Upcoming policy revisions provide opportunities for countries in the region to benefit from falling prices for renewables, though it far from certain they will do so. National energy plans are currently being updated in Thailand, Vietnam, Cambodia, Myanmar and Laos. Most other ASEAN members will be reviewing their plans after 2020.

There are some signs that ASEAN countries are responding to global energy market shifts. Thailand has recently raised its renewable energy target from 20 per cent to 30 per cent  following some government successes in encouraging solar investment. 

CambodiaIndonesiaMalaysia and the Philippines are moving from feed-in-tariffs to competitive auctions for renewable energy projects.

The transition could gather pace as policymakers wake up to the evolving economics and shifting risk. Any new consideration of commercial-scale renewables, smart grid and distributed generation technologies, and energy trade presents an opportunity to outside investors, especially from China.

If decision-makers in China’s policy banks and state-owned enterprises move swiftly to take advantage of their country’s competitive solar sector and prioritise renewable investments abroad over outdated coal technologies, Southeast Asia’s energy future could quickly become more diverse and sustainable.

If they continue their current preference for coal plants, the prospects for the climate will be bleaker.

This story originally published by Chinadialogue under a Creative Commons’ License.