How Can Southeast Asia Expedite the Transition to Renewable Energy?


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Over the past 15 years, the demand for energy in Southeast Asian countries has significantly increased by 60%. The region makes up 1% of the total global energy system, making any energy sources contributed by the region into the global mix becomes very important.

To date, coal is still the key player of Southeast Asia energy mix, even though countries in this region have different electricity consumption patterns and are at a diverse level of development. What makes them similar is the challenges they meet to fulfil the needs of more sustainable energy resources. How about coal? Isn’t it able to meet the whole electricity demand in the region? Isn’t it reliable? Isn’t it available everywhere across Southeast Asian countries? If so, why not coal? The answer is, we cannot depend on coal until forever, as its impact on air quality and its contribution to climate changes remain tasks, we should take into consideration. Besides, these are also the reasons we need to speed up the progress of renewable energy.

Responding to the concern stated above, Eco-business conducted an interview with the experts, such as Peter du Pont, Clean Energy Advisor from Stockholm Environment Institute and Sara Jane Ahmed, Energy Finance Analyst of the Institute for Energy Economic and Financial Analysis (IEEFA) on the steps Southeast Asian countries should consider to take to accelerate the transition to renewable energy. Note that we also provide additional information to the data to make it more relevant and to facilitate a better understanding.

 

  • Partially eliminate fossil fuel subsidies

Southeast Asian governments are known for their fossil fuel subsidies. However,

“There is no place for coal subsidies in today’s energy markets,” according to Peter. “The cost of coal power in Asia does not include the significant negative health and environmental externalities caused by the combustion of this dirty energy source,” he added.

Source: https://www.iisd.org/gsi/sites/default/files/ffs_gsibali_sess1_beaton.pdf

Carefully stated, the subsidies must be partial because in some cases such as fossil fuels for public purposes to enable energy access for poor society or as part of short-term boost, fossil fuel subsidies are still needed, according to Peter.

Luckily, the awareness of this concept begins to be known in the region. For instance, even under the name of pro-welfare, Malaysia’s Pakatan Harapan still perceives fossil fuel subsidies contradicts to Malaysia’s status as a Paris Agreement signatory.

 

  • Give more rooms to energy markets.

Another issue needs to be tackled the energy market itself. Cost of energy is one of the key determinants of development, but in some of the Southeast Asian countries, people as the end-users tend to pay the electricity more than they can consume. This is because most of the companies who develop coal-fired power plants also calculate and charge the consumers for the minimum level of electricity demand—known as the base load. Meaning that, no matter how small the amount of electricity we use, we would still be charged with the minimum cost of it.

To tackle this challenge, governments must work hard on producing energy at the lowest possible price so that no more additional burden should be put on our shoulder. Since renewable energy sources are extracted from nature, the minimum cost can be pressed to the minimum level. A report published by the Institute for Energy Economics and Financial Analysis (IEEFA) in August 2018, reveals that the Philippines can reduce its electricity cost by installing more solar PV on the rooftop. The report says at least the electricity price in the Philippines can be lowered to P2.50 per kilowatt-hour (kWh), without calculating other financial expenses. If this ideal scenario is well applied in the country, energy security in the Philippines can be strengthened and a new investment worth US$2.8 billion can be conducted by 2030.

 

  • The electricity prices in the Philippines from both renewable energy and fossil fuels sources, as of July 2018

Source: IEEFA, cited from https://www.eco-business.com/news/7-ways-to-speed-up- southeast-Asia-switch-to-renewable-energy/

Taking the lesson from the Philippines, governments of Southeast Asian countries should consider putting renewable energy sources into the national energy mix. However, since the system and technology that support renewable energy are still developing, having various options of renewable energy sources such as solar, wind, and geothermal can help to back up one another.

 

  • More transparent and attainable energy data

Sara Jane Ahmed, IEEFA’s financial energy analyst argued, to foster the transition from fossil fuels-based source to renewable energy, we need accurate and reliable data of energy demand. By having the data, we can target the energy demand accurately by providing suitable sources by the national energy demand projections.

For example, in the case of Singapore. At the international level, the industry of solar PV has gained in popularity over the past two decades, this can be seen by the installation of solar PV globally which in 2000 has crossed 1,000 Megawatt peak (MWp), and the capacity kept on growing until recent years.

Nevertheless, in Singapore, the solar PV industry around that time was not so popular due to its national demand projections that claim the initial investment for solar PV was more expensive than developing more coal-fired power plants. Thus, the electricity demand in Singapore until the early 2000s was met by coal. This was not until between 2004 and 2008 when the country began to promote incentives for solar power utilization as a renewable energy source then the use of solar PV started to spread across the country.

Besides these three strategies, Southeast Asian governments should also take into account the need to prioritise energy efficiency by bringing more attention to smaller daily stuff such as providing simple suggestions or advises to wisely use energy-consuming home appliances, creating a more attractive investment climate to lure investors is also essential.

The future of renewable energy is promising. More companies started to be aware of clean energy utilization. Internet and technology giant company, Google, has been a carbon neutral company for ten years. Google will open its third data centre to be based in Singapore and encourages the use of renewable energy to power its facilities.  

Another concern that arises during the transition to cleaner energy sources is the issue of fossil fuel job losses. However, fortunately, developing renewable energy-sourced projects means creating more jobs compared to possible employment created by fossil fuel industry; not to mention the International Renewable Energy Agency (IRENA) has recorded the price of renewable power keeps declining, making the price becomes competitive—or even way cheaper than—with fossil-based sources. Moreover, “Southeast Asia and South Asia are the last markets for coal. If coal does not succeed in these markets, it’s dead,” Ahmed stated.


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Nadya Yolanda Moeda
A former travel blogger who is now a full time consultant & loves to write about everything under the sun

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