This is an extract from a recent report “A Race to the Top Southeast Asia” prepared by Global Energy Monitor.
ASEAN countries collectively have one of the fastest-growing economies in the world, with an increasing energy demand to match. As the average global energy demand grew by 16% between 2015 and 2021, ASEAN demand grew by 22% in the same time period. According to the International Energy Agency (IEA), energy demand across ASEAN countries is expected to grow by 3% annually until 2030.
Despite their economic resources, ASEAN countries face a dual challenge in seeking to fulfil energy transition targets amidst rapid growth, given the effects of climate change. Among the most vulnerable, these countries are already experiencing flooding, drought, rising sea levels and heat waves, all of which are straining electricity supplies in the context of growing energy demand.
ASEAN member states have set a collective renewable energy capacity target of 35% by 2025. Including all types of renewable power, the region is already close to meeting its goal by currently having 32% of its total capacity sourced from renewables. The region currently has 28 GW of large utility-scale solar and wind power in operation, accounting for 9% of total electrical capacity in the region. ASEAN would have to build 17 GW of utility-scale wind and solar capacity by 2025 to reach this goal. With only a 3% renewable capacity increase necessary to meet this target, ASEAN countries are expected to not only meet this goal, but surpass it.
At the same time, however, continued support for gas and coal, regulatory hurdles, and policies unsupportive of renewable energy buildout are stymying the rapid transition that is necessary to break the region’s dependence on gas and coal and progress renewable energy in ASEAN countries. While the region has potential to increase its renewables capacity seven-fold, only 3% of ASEAN countries’ total prospective capacity is currently in construction. The global average, barring China, is over twice that of ASEAN countries, at 7% prospective capacity under construction.
Key findings
■ ASEAN countries have over 28 GW of operating utility-scale solar and wind capacity and a 20% increase in operating capacity since January 2023 and make up 9% of ASEAN countries’ total electrical capacity.
■ Vietnam has the largest share of operating utility-scale solar and wind capacity in the region (19 GW). Thailand and the Philippines follow, each with 3 GW of operating utility-scale solar and wind capacity.
■ The Philippines and Vietnam are emerging leaders globally. With 99 GW and 86 GW respectively for prospective utility-scale solar and wind, they have the 8th and 9th largest prospective capacity worldwide.
■ The ASEAN countries have almost five times more prospective offshore wind power than prospective onshore wind in the region, while prospective offshore capacity in the region (124 GW) is nearly twice that of the current global offshore operating capacity (69 GW).
■ In order for ASEAN countries to meet their goal of 35% installed renewable energy capacity by 2025, 17 GW of additional utility-scale solar and wind capacity needs to become operational among ASEAN members in the next two years, yet only 3% (6 GW) of its 220 GW of prospective utility-scale solar and wind is currently in construction.
Asean Countries Have Increased Operating Utility-Scale Solar And Wind By 20% Since January 2023. Global Energy Monitor’s Global Solar Power Tracker and Global Wind Power Tracker currently catalog more than 28 GW of operating utility-scale solar and wind capacity across ASEAN countries, a 20% year over-year increase in operating capacity since January 2023. While utility-scale solar contributes the bulk of the overall capacity increase (3 GW or 17% growth), it was operational wind capacity that saw the largest comparative rise (2 GW, or 29% growth) since January 2023. Offshore wind development accounts for 2 GW of a total of 9 GW of operating utility-scale wind capacity; this is noteworthy given the technical challenges and associated higher costs of offshore wind compared to onshore wind.
Vietnam has the largest operating capacity of utility-scale solar and wind, followed by Thailand and the Philippines. Vietnam has more than double the capacity of the other member countries combined (over 19 GW compared to 9 GW). Operational utility-scale solar and wind capacity make up 25% of Vietnam’s total energy mix, compared to the average among ASEAN nations of 9%. Starting in 2017, Vietnam deployed a series of competitive and incentivized investment policies to bring utility-scale solar projects into operation, leading to a boom in solar development.
Two feed-in-tariff (FIT) programs were deployed by Vietnam’s state-owned utility from 2017 to 2020. Upon the expiration of these programs, Vietnam failed to administer a replacement pricing policy. Coupled with COVID-19 pandemic-led supply chain disruptions, many projects were not operational before FIT cut-off dates, and were left without long term guidance for further project development and grid integration.
Thailand and the Philippines each have more than 3 GW of operating utility-scale solar and wind capacity. Thailand has the second largest economy of ASEAN nations, and is seen as a low-risk country, with few barriers for investment in utility-scale solar and wind projects. This view has facilitated the growth of Thailand’s 3 GW of operational utility-scale solar and wind capacity, nearly 67% of which is from onshore wind development. The Philippines hosts a streamlined project bidding system, with predominantly privatised power generation, allowing for an unencumbered pipeline for project development. Three-quarters of the Philippines’ operational utility-scale solar and wind capacity comes from solar.
The Philippines And Vietnam Contribute 80% Of ASEAN’s Prospective Utility-Scale Solar And Wind Capacity, But Construction Rates Remain Low. Both the countries have over 185 GW in announced, pre-construction, and construction status. Collectively, these countries contribute over 80% of ASEAN’s prospective utility-scale solar and wind capacity. Over 60% of this prospective capacity comes from offshore wind development in Vietnam and the Philippines (72 GW and 52 GW respectively). However, only 6.3 GW (3%) of all prospective capacity in ASEAN is currently under construction.
The Philippines alone is responsible for nearly half (45%) of the prospective capacity of ASEAN countries. This is more than five times the prospective capacity of any other ASEAN country, barring Vietnam. The Philippines has established its Green Energy Auction Program (GEAP) to grow its renewable energy sector. The Philippines’ latest auction, in March 2023, (GEA-2) encouraged over 300 bids to develop 3 GW of solar, onshore wind, and bioenergy with 2024–2026 start dates. As GEA-2 was initially set up to facilitate the development of over 11 GW, the auction was evidently largely undersubscribed. On the bright side, however, the capacity won by bidders demonstrated a 75% increase over the first auction in 2022, indicating growing interest in the Philippines’ renewable energy sector. Offshore wind comprises the majority (52%) of the Philippines’ prospective utility-scale renewable power capacity, with five times more offshore wind than onshore.
While Vietnam has over 86 GW of prospective capacity, including 72 GW of prospective offshore wind capacity, only 2% is in the construction phase. The discrepancy between prospective and in-construction capacity is due in part to Vietnam’s lack of concise and reliable renewable energy policies that could serve as a crucial roadmap for project implementation. This has left many financiers without incentive to move forward with development. Global Energy Monitor has catalogued nearly 40 GW of utility-scale solar and wind projects in Vietnam that have seen no progression or announcements in the past two years—at which point these projects are considered shelved—further demonstrating a lack of incentive to prioritise solar and wind construction and grid connection in the country.
An additional challenge that Vietnam’s renewable energy efforts are facing is the enabling of a Just Energy Transition Partnership (JETP), with the support of G7 countries, in order to establish mechanisms to accelerate Vietnam’s energy transition and reduce the financial hurdles to develop a robust renewable energy economy, as it backs away from fossil fuel dependence. In May 2023, Vietnam released its delayed National Electricity Development Plan for 2021–2030, also known as the Power Development Plan 8 (PDP8). Along with mapping out Vietnam’s future energy mix, this document outlines the trajectory of Vietnam’s power development strategy on improving the transmission of electricity for domestic use. The true impact of Vietnam’s JETP and PDP8 on the development of utility-scale solar and wind power in Vietnam are yet to be determined, as the alignment of these policies and funding schemes are still in development.
Indonesia has 19 GW of prospective utility-scale solar and wind capacity, 16.5 GW of which is solar. 13 GW (70%) of this 19 GW of prospective capacity is in announced phases. No projects are currently under construction. Within ASEAN countries, Laos stands out for its substantial prospective utility-scale solar and wind capacity relative to the size of its economy. Notably, Laos’ prospective utility-scale solar and wind capacity rivals that of Thailand (both exceed 3 GW), despite Laos’ economy being only 2% of the size.
Furthermore, with an economy just 3% of that of Malaysia’s, Laos’ prospective utility-scale solar and wind buildup surpasses Malaysia’s by more than 150%, highlighting Laos’ ambition to punch above its economic weight. Laos’ development of utility-scale solar and wind is fueled by financial collaboration with ASEAN partners. Impressively, Laos is set to house ASEAN’s largest onshore wind farm, Monsoon wind farm, which is currently in construction with an expected capacity of 600 MW.
ASEAN Ability To Reach Regional 2025 Renewable Energy Targets Hinges On Reducing Gas And Coal Use. While ASEAN member states are working towards transparent and supportive energy policy, ASEAN’s target of 35% of total operating energy capacity by 2025 from renewable power is easily attainable and ultimately unambitious for ASEAN. ASEAN countries already have an operating renewable energy capacity of 32%, including operating hydropower, geothermal, bioenergy, solar, and wind.
Indeed, the gap between operational capacity and the targeted 35% can be easily met with utility-scale solar and wind already in ASEAN countries’ prospective pipelines. Even in the context of ASEAN countries’ rapid growth in energy demand—an estimated 3% annual rise until 2030—ASEAN countries only need to commission their 6.3 GW of utility-scale solar and wind currently in construction, plus an additional 10.7 GW by 2025, in order to meet this goal. With over 220 GW of prospective utility-scale solar and wind in prospective phases of development, and 23 GW of this set to become operational by 2025, ASEAN countries have the potential to surpass this goal.
Furthermore, this relatively unambitious regional target allows countries with significant existing hydropower and renewable energy, like Laos, Cambodia, Malaysia, and Vietnam, where the average renewable energy mix stands at 58%, to compensate for countries that continue to rely heavily on fossil fuels, such as Indonesia with less than 15% renewable energy. Although national policies designed to attract renewable power investments are a clear sign that ASEAN countries are gearing up to increase their solar and wind capacity, this mobilisation is undermined by entrenched fossil fuel infrastructure which restricts new investment in utility-scale solar and wind.
Insufficient investment in reinforcing the grid infrastructure is another persistent hurdle for integrating utility-scale solar and wind power into countries’ electrical grids. For example, Vietnam’s latest solar fleet has experienced an onslaught of obstacles related to grid integration, which may serve as a bellwether to investors of the challenges they could face in ASEAN countries opening solar and wind markets.
However, it is evident from progress in national energy policies that ASEAN countries are making an effort to attract private investment in solar and wind development to help alleviate this hurdle. These investments are being courted not only from outside the region, but also among ASEAN countries. Multilateral power purchasing and transmission infrastructure between ASEAN countries is seeing rapid development, such as Singapore’s partnerships with Indonesia and Cambodia to import 3 GW of renewable energy by 2028. Intentional and transparent policy can guide ASEAN countries and send clear signals to investors that they are committed to the energy transition.
Conclusion
Renewable energy deployment is crucial for ASEAN countries to reduce their dependence on fossil fuels as well as meet growing energy demands. The region has vast potential, with 220 GW of prospective utility-scale solar and wind capacity, compared to its current operating capacity of 28 GW. The majority of ASEAN countries have set national targets and have started integrating these targets into national policy. National policies supportive of bringing prospective capacity into operation are not only necessary to meet national and ASEAN-wide energy targets, but to encourage further investment in the renewable energy sector. While there is clear effort being made to ramp up renewable energy development, this is complicated by a buildout of fossil fuels and low solar and wind construction rates across the region. By doubling down on bringing as much of the 220 GW of prospective utility-scale solar and wind projects into fruition, ASEAN countries will be poised to not only meet regional renewable energy targets, but pave the way to detransition from fossil fuels.
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