IEA 2019. All rights reserved.
Southeast Asia Energy Outlook
11 December 2019
Webinar
IEA 2019. All rights reserved.
Southeast Asia Outlook 2019
• Fourth edition of the IEA Southeast Asia Energy Outlook, free to download from the IEA website at: https://www.iea.org/southeastasia2019/
• The 2019 edition has three focus areas, reflecting the priorities for IEA-ASEAN cooperation discussed at ministerial level in Singapore in October 2018
- Future of cooling in Southeast Asia additional detail at https://www.iea.org/southeastasiacooling2019/
- Regional electricity trade / integration of renewablesadditional detail at https://webstore.iea.org/asean-renewable-energy-integration-analysis
- Power sector investment
• The Southeast Asia Energy Outlookdoes not forecast what will happen; it explores different possible futures:
- What if we reflect today’s policy intentions and targets? This is the Stated Policies Scenario (STEPS)
- What if we meet sustainable energy goals in full? This is the Sustainable Development Scenario (SDS)
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Southeast Asia is a major force in global energy…
Based on today’s policy settings, the pace of energy demand growth in Southeast Asia to 2040 is double the global average, spurred by rising incomes, industrialisation and a rising urban population
Increase in energy demand to 2040 by region
0
250
500
750
1 000
Latin America Southeast Asia Middle East Africa China India
Mtoe
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… mobilising all fuels and technologies to meet rising demand
The region’s longstanding reliance on oil, coal and natural gas is diluted only slightly by increased deployment of modern renewable technologies over the coming decades
Primary energy demand in Southeast Asia in the Stated Policies Scenario
Mtoe
0
300
600
900
1 200
2018 2025 2030 2035 2040
Coal Oil Gas Nuclear Hydro Other
renewables
Traditional use
of solid biomass
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Power sector transformation is happening, but very gradually
Policy support and investor appetite for renewable electricity projects are picking up but, as things stand, the growth in renewables would cover only about a third of rapid overall growth in electricity demand.
Southeast Asia’s average annual net capacity additions by type in the Stated Policies Scenario
2000-2018
Renewables
Gas
Coal
0 2 4 6 8 10 GW
Solar PV Wind Hydro OtherRenewables
Gas
Coal
2019-2040
Average annual additions
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Today’s policy settings push energy imports deep into the red
Southeast Asia faces an energy import bill of over $300 billion/year by 2040, largely due to soaring oil imports; the region would also become a net importer of LNG by the late 2020s
-300
-200
-100
0
100
2000 2005 2010 2015 2020 2025 2030 2035 2040
Bill
ion
do
llars
(2
01
8)
Coal
Gas
Oil
Annual net fossil fuel import bill by fuel in Southeast Asia in the Stated Policies Scenario
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There is no simple solution to Southeast Asia’s rising emissions
Southeast Asia is on track to achieve full electrification in the early 2030s, but reversing the rising trend for air pollutant and CO2 emissions would require a major acceleration in energy transitions across all sectors
CO2 emissions reductions between scenarios
Mt CO2
500
1 000
1 500
2 000
2 500
2010 2018 2030 2040
Efficiency
Renewables
Fuel switching
CCUS
OtherSustainable Development Scenario
Stated Policies Scenario
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Special focus area: Future of Cooling
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The stock of air conditioners in Southeast Asia is rising rapidly
Higher temperatures and, more importantly, higher incomes are driving up AC ownership and use.
Stock of air conditioning units in Southeast Asia in the Stated Policies Scenario
Source: IEA (2019) Southeast Asia Energy Outlook
0
50
100
150
200
250
300
350
2010 2020 2030 2040
Mill
ion
un
its
Indonesia commercial Rest of ASEAN commercial
Indonesia residential Rest of ASEAN residential
Historical Projections
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Rising demand for cooling could strain the region’s energy system
More efficient air conditioners and buildings would bring huge benefits for the region in terms of energy savings, reduction in peak demand, and reduction of carbon emissions.
Reduction in cooling’s share in peak demand
in the Sustainable Development Scenario
(SDS)
0
20
40
60
80
100
120
140
160
180
201
8
204
0 S
TEP
S
Equip
men
t
Effici
ency
Build
ings
Effici
ency
Dec
arbon
is
ing P
ow
er
204
0 S
DS
mill
ion
tC
O2
0%
10%
20%
30%
40%
50%
Southeast Asia
Sh
are
in
peak d
em
an
d
2018 2040 STEPS 2040 SDS
Decomposition of factors for reduction of CO₂ emissions between the Stated
Policies (STEPS) and the Sustainable Development (SDS) scenarios
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More efficient ACs are available, and not always more expensive or imported
Results of air conditioning market analysis in selected Southeast Asian countries
Least efficient Most efficient
Efficiency level (W/W) 3.08(proposed ASEAN 2020 MEPS level)
3.7 4.3 5 5.6 6.2
Availability of ACs
by efficiency level
Singapore
Thailand
Viet Nam
Indonesia
Philippines
Affordability of ACs
by efficiency level
Singapore
Thailand
Viet Nam
Indonesia
Philippines
Locally manufactured ACs
by efficiency level
Singapore
Thailand
Viet Nam
Indonesia
Philippines
Sources: IEA analysis based on information from CLASP, the Kigali Cooling Efficiency Program and the National registration da tabases of Indonesia and Singapore
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Special focus area: Regional power trade /
Integration of renewables
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Assessing the value of cross-border interconnections
How can cross-border trade help to accommodate rising
shares of variable renewables? This illustrative case
study examines trade between four regions in Southeast
Asia, which have existing cross-border interconnectors,
but trading is, at present, mostly limited to bilateral PPAs:
We examine two scenarios, one in which the share of
variable renewables approaches 10% by the 2030s (a
representation of the Stated Policies Scenario) and the
other in which it exceeds 20% (as in the Sustainable
Development Scenario). For each of these scenarios, we
model three cases:
• Bilateral trade (BT): the existing model of bilateral
trade continues, with no new interconnections
• Optimised trade (OT): power flows are optimised
across the regions, with no new interconnections
• Optimised and expanded trade (OT+): power flows
are optimised and cross-border transmission capacity
is expanded as well
NW
CE
S
C: Central (Thailand); E: East (Cambodia, Lao PDR and Viet Nam);
NW: Northwest (Myanmar); S: South (Malaysia and Singapore)
Four selected transmission zones in the case study
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The value of cross-border interconnectors rises with higher shares of wind & solar
Expanding cross-border trade reduces system costs, but achieving reduced system costs and lower emissions requires a strong alignment between power trade, infrastructure and renewables deployment
0
50
100
150
200
250
300
0
5
10
15
20
25
Bilat_trade Multi_trade Expanded_tx
Base VRE (~10%)
Vari
ab
le c
ost
s (U
SD
/MW
h) an
d C
O2
em
issi
on
(M
t)
Other variable costs Fuel cost CO2 emission (right axis)
0
50
100
150
200
250
300
0
5
10
15
20
25
Bilat_trade Multi_trade Expanded_tx
High VRE (~20%)
High VRE share (~20%)Base share of variable renewables (VRE) (~10%)
BT OT OT+ BT OT OT+
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A step-by-step approach to establish multilateral power trading
Southeast Asia has made significant progress in developing
the ASEAN Power Grid, but more work is necessary to
establish multilateral trading.
As part of its cooperation with ASEAN, the IEA has analysed
international best practices and has developed a set of
concrete recommendations
A key principle guiding these recommendations is the
principle of voluntary, step-by-step implementation
Three phases are critical:
1. Establishing and meeting minimum requirements (policy, technical, institutional)
2. Designing trade models
3. Implementation of trade models
Establish minimum requirements
Choose appropriate trade model per ASEAN member state
Detailed design phase of trade models
Capacity building and training
Implement multilateral trading in ASEAN
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Special focus area: Power sector investment
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Under any pathway, investment in Southeast Asia needs to step up
With today’s policy settings, investments over the next two decades total $2.5 trillion; in a sustainable pathway they rise to $3.2 trillion, with sizeable reallocation of capital across supply and demand
Energy investment in Southeast Asia compared with annual average investment
in the Stated Policies (STEPS) and Sustainable Development (SDS) scenarios, 2019-2040
0 10 20 30 40 50 60 70 80
SDS
STEPS
2018
SDS
STEPS
2018
SDS
STEPS
2018
Po
wer
sect
or
Fue
l
sup
ply
En
erg
y
eff
icie
ncy
Billion Dollars (2018)
Energy efficiency
and end-useOil supply
Gas supply
Coal supply
Biofuels
Fossil fuel power
Renewable
powerElectricity
networks
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State-backed capital has played a key role in investment
Funding for over three-quarters of generation investment has come from sources within the region. But public and domestic sources alone cannot cover the sizeable investment needs ahead
Sources of finance for power generation investment in Southeast Asia (by year of FID, 2014-2018)
0 20 40 60 80
Utility-scale
solar PV and
wind
Hydropower
and geothermal
Coal and gas
power
USD billion
Public
Private
Notes: FID = final investment decision. Includes only utility-scale projects ≥ 25 megawatts. Public finance includes the partici pation of state-owned enterprises,
development finance institutions, export-credit agencies and other public entities.
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Roadmap for enhancing capabilities to attract private investment
Reducing risks and improving policy and market approaches around four priority areas is critical to meet future power investment needs
Key investment priorities and risks for power markets in Southeast Asia
Market
Investment Priorities
Financial health of the
utilities
Procurement and
project bankability
Financing and cost of
capital
Integrated approaches
with demand side
Indonesia
Malaysia
Philippines
Singapore
Thailand
Viet Nam
Other (Cambodia, Lao
PDR, Myanmar)
Low risk/supportive factor for investment Potential risk factor/barrier for investment High potential risk factor/barrier for investment
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Conclusions
• Southeast Asia is increasingly influential in global energy trends, but will need to adapt its
energy development model to new energy security and sustainability challenges.
• The prospect of rising dependence on imported fuels presents a range of hazards that can
be mitigated by the pursuit of a more efficient, diversified energy mix
• Whichever pathway the region takes, meeting Southeast Asia’s energy needs and priorities
will require higher levels of investment, including enhanced efforts to attract private capital.
• There is no single solution to turn emissions trends around: renewables, efficiency & a host
of innovative technologies, including storage & CCUS, are all required
• The deepening engagement with ASEAN confirms the Agency as a “key strategic partner in
helping the region tackle its energy challenges across all fuels and all technologies.”
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