ASEAN nation states can cut the costs to decarbonise their power grids by 11 per cent if countries cooperate and work towards a regional power grid, according to a new study by risk management and assurance consultancy DNV.

But this would entail making Laos, Thailand and Indonesia’s Sulawesi the “engines” for the region’s energy transition, where renewable installations and future-ready hydrogen plants can predominantly be commissioned, while Singapore, Myanmar and Vietnam receive the clean energy produced.

Casting this vision at the Singapore International Energy Week, DNV vice-president and regional director for Asia-Pacific energy systems Brice Le Gallo said that the “regional optimisation” approach is where “full resource sharing” happens across countries in working towards a net-zero future, instead of them executing plans on their own.

Under this scenario, countries can collectively cut the need for a third of the renewables and a tenth of the electricity storage currently projected to be needed by 2050. This is because renewables can be strategically deployed at places with better access to “quality” solar, wind and hydro power, such as Thailand and Laos. 

A third of renewables is 930 gigawatts worth of installations, while a tenth of electricity storage is 2.5 terawatt-hour (TWh) worth of storage, Le Gallo contextualised. Optimisation additionally saves 15 TWh worth of hydrogen storage as well, he pointed out. Making do without all these installations and storage would also reduce the countries’ carbon footprint by 37 per cent.

The main downside to regional optimisation is that the approach would require 1.75 million kilometres more of electrical infrastructure to be laid, versus a scenario where each country plans for its own energy transition. That will be significant enough to raise global demand for transmission cables by 15 per cent, Le Gallo noted.

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But the costs for such interconnectors are “minor” compared with the savings that can be achieved.

A chart he flashed on screen as part of his presentation showed that the interconnectors will cost US$600 billion, but they will enable the region to save US$700 billion in renewables and storage costs.

This is because under a scenario where each Asean country were to embark on individual grid decarbonisation efforts, the region will likely spend US$7.2 trillion cleaning up grids, including some US$4 trillion on storage.

In contrast, costs will only top US$6.5 trillion under the regional optimisation scenario, the DNV study assessed, with storage costs cut to US$2.8 trillion and renewables costs cut to US$2.7 trillion.

Further details to this study’s findings will be shared in a White Paper to be released later this year.

DNV’s study had set out to quantify the benefits of a regional approach to decarbonisation in Asean, understanding that a coordinated approach could cut redundancies, free up the amount of space required for renewable deployment while achieving some cost savings. 

The idea of an Asean power grid is not new. While the Lao PDR-Thailand-Malaysia-Singapore Power Integration Project (LTMS-PIP) is a success, Singapore’s Energy Market Authority (EMA) had said it merely serves as a “pathfinder” towards realising this vision of multilateral electricity trading beyond neighbouring countries, which can improve energy security and stability in the region. Under LTMS-PIP, 100 megawatts of renewable hydropower is imported from Laos to Singapore via Thailand and Malaysia using existing interconnections.

Le Gallo said countries can start working towards this vision of an interconnected Asean by tackling three “lower hanging fruits”: set up a regional taskforce to work towards interconnection; provide clarity and certainty to the private sector that wishes to be a part of the regional network; and learn from other regions and sectors.

Elaborating on the second point, he said a lack of certainty is “often cited as preventing investment decisions from happening, and preventing us from building the new manufacturing capacity that we need to accelerate the transition”.

Parties that Asean can learn from include Europe, which has been looked at as an example of an interconnected grid, and the telecommunications industry where international cooperation has been achieved, he added.

In the longer term, countries can gun for a harmonised regulatory framework across Asean that not just covers electricity markets but also technical codes. Countries should also work towards developing local supply chains that can mitigate the risk of power constraints and competition while boosting the local economy, apart from striking up multilateral power trade agreements, he added.