ASEAN Regional Electricity MarketIntegrationASEAN Regional Electricity MarketIntegration

18 October 2016

Anton Finenko

ESI

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Outline

• Background and introduction

• Historical development

• Current state and planned developments

• Challenges and opportunities

• Background and introduction

• Historical development

• Current state and planned developments

• Challenges and opportunities

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Background

ASEAN (2015)

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Background

IMF (2015)

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History

• First bilateral power interconnection (100MW) built between Laos andThailand in 1966

• ASEAN Declaration in August 1967 was signed between five foundingmembers: Indonesia, Malaysia, the Philippines, Singapore, andThailand.

• Heads of ASEAN Power Utilities/Authorities (HAPUA) established in1981, to promote electricity network integration in the region

• First bilateral power interconnection (100MW) built between Laos andThailand in 1966

• ASEAN Declaration in August 1967 was signed between five foundingmembers: Indonesia, Malaysia, the Philippines, Singapore, andThailand.

• Heads of ASEAN Power Utilities/Authorities (HAPUA) established in1981, to promote electricity network integration in the region

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History• Rather sluggish progress until 1997 when “ASEAN Vision 2020” was

signed between the member states

• APG and TAGP were announced as a part of ASEAN Vision 2020 in 1997

• The Memorandum of Understanding (MOU) on the APG was signedbetween the ASEAN member states in 2007

• Meanwhile some countries are already in progress of developingbilateral interconnectors (GMS)

• Rather sluggish progress until 1997 when “ASEAN Vision 2020” wassigned between the member states

• APG and TAGP were announced as a part of ASEAN Vision 2020 in 1997

• The Memorandum of Understanding (MOU) on the APG was signedbetween the ASEAN member states in 2007

• Meanwhile some countries are already in progress of developingbilateral interconnectors (GMS)

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APG

• Objective: to strengthen and promote power interconnection and tradeto help ensure greater regional energy security and sustainability on thebasis of mutual benefit

▫ Facilitate cross border power trade

▫ Optimize usage of energy resources in the region

▫ Reduce capital investment required for generation

▫ Increase access to electricity

• Objective: to strengthen and promote power interconnection and tradeto help ensure greater regional energy security and sustainability on thebasis of mutual benefit

▫ Facilitate cross border power trade

▫ Optimize usage of energy resources in the region

▫ Reduce capital investment required for generation

▫ Increase access to electricity

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Benefits of interconnection – who gets it?

P P

QQ

University of Bath (2014)

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Infrastructure development• Follows recommendations prepared in ASEAN Interconnection Master

Plan Studies (AIMS)

• AIMS are prepared by HAPUA with help of regional experts

• Prior to first AIMS the vision for APG was 14 bilateral and multilateralinterconnection projects

• AIMS I, released in 2003, concluded that it was uneconomic to create asingle ASEAN grid, and recommend instead 11 bilateral interconnectorsto be constructed by 2019.

• Follows recommendations prepared in ASEAN Interconnection MasterPlan Studies (AIMS)

• AIMS are prepared by HAPUA with help of regional experts

• Prior to first AIMS the vision for APG was 14 bilateral and multilateralinterconnection projects

• AIMS I, released in 2003, concluded that it was uneconomic to create asingle ASEAN grid, and recommend instead 11 bilateral interconnectorsto be constructed by 2019.

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Infrastructure development• Following the re-organisation of HAPUA in 2004, its Working Group 4

embarked on a second study (AIMS II) which was published in 2010

• Unlike AIMS I, AIMS II concluded and ASEAN-wide power grid waseconomically viable

• However, it suggested first to create three geographically separateinterconnection sub-systems before integrating them into one APG

• In addition to the five interconnections that already existed at that time,the report listed another 12 projects that were classified as “committed”and another 17 as “generic”

• Following the re-organisation of HAPUA in 2004, its Working Group 4embarked on a second study (AIMS II) which was published in 2010

• Unlike AIMS I, AIMS II concluded and ASEAN-wide power grid waseconomically viable

• However, it suggested first to create three geographically separateinterconnection sub-systems before integrating them into one APG

• In addition to the five interconnections that already existed at that time,the report listed another 12 projects that were classified as “committed”and another 17 as “generic”

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Current vision for APG

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Current vision for APG

AIMS II (2010)

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Supply and demand situation

ACE (2015)

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Supply and demand situation

IEA (2015)

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Supply and demand situation

ACE (2015)

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Supply and demand situation

ADB (2015)

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Supply and demand situation

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Supply and demand situation

ACE (2015)

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Benefits of APG

ACE (2015)

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Benefits of APG

IEA (2015)

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Current state

AIMS II (2010)

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Current state: traded volumes

IEA (2015)Thailand’s consumption was 165 TWh in 2010

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Future possible projects until 2020

AIMS II (2010)

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Projects under construction beyond 2020

AIMS II (2010)

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Major achievements so far• adoption of the AIMS and the updated AIMS II, which serves as a

reference guide for the implementation of the ASEAN interconnectionprojects

• restructuring of HAPUA to streamline operations and the establishmentof a permanent HAPUA Secretariat, which rotates every three years;

• signing of a Memorandum of Understanding on the ASEAN Power Grid(MOU on the APG)4 to serve as a reference document for thecoordination and facilitation of programmes to implement the APG;

• establishment of the APGCC to oversee the overall development andimplementation of APG projects

• adoption of the AIMS and the updated AIMS II, which serves as areference guide for the implementation of the ASEAN interconnectionprojects

• restructuring of HAPUA to streamline operations and the establishmentof a permanent HAPUA Secretariat, which rotates every three years;

• signing of a Memorandum of Understanding on the ASEAN Power Grid(MOU on the APG)4 to serve as a reference document for thecoordination and facilitation of programmes to implement the APG;

• establishment of the APGCC to oversee the overall development andimplementation of APG projects

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Challenges: national• Large regional diversity in geographic, cultural and economic terms

• Different national policies of ASEAN member states

• Countries’ desire for self-sufficiency before interconnection is allowed

• Countries’ concerns over restructuring of national power sectors andliberalisation

• Conflict of interest in resource use (e.g. hydropower in Laos)

• Corruption

• Large regional diversity in geographic, cultural and economic terms

• Different national policies of ASEAN member states

• Countries’ desire for self-sufficiency before interconnection is allowed

• Countries’ concerns over restructuring of national power sectors andliberalisation

• Conflict of interest in resource use (e.g. hydropower in Laos)

• Corruption

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Challenges: regional

• No harmonized operational & regulatory framework or tariff structure,tariff subsidies

• No mechanisms for power wheeling, pool rules, power bidding,regulatory framework and ensuring system reliability & security

• Financing Modalities for funding sources

• Unresolved diplomatic issues

• No harmonized operational & regulatory framework or tariff structure,tariff subsidies

• No mechanisms for power wheeling, pool rules, power bidding,regulatory framework and ensuring system reliability & security

• Financing Modalities for funding sources

• Unresolved diplomatic issues

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Thank you!

Energy Studies Institute29 Heng Mui Keng TerraceBlock A, #10-01Singapore 119620

Thank you!

Energy Studies Institute29 Heng Mui Keng TerraceBlock A, #10-01Singapore 119620