How Singapore’s clean energy drive can support commitment to a greener Asean Power Grid

Singapore can use its early mover advantage to establish approaches to the green electricity trade and inspire positive change regionally

Courtney Weatherby

Published: 11:00am, 30 Jun 2024

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At Cop28 last year, 125 countries agreed to triple renewable energy capacity by 2030 and double energy efficiency improvements. Half of the Association of Southeast Asian Nations signed this pledge, but even countries that did not have made national commitments to increase renewable energy and move to net-zero emissions. An Asean power trade will be crucial to ensuring that these commitments are met.

Singapore already has electricity trade projects with six other Asean members – Laos, Thailand, Malaysia, Cambodia, Vietnam, and Indonesia – placing it at the forefront of regional power trade. Singapore can use its early mover advantage to establish standard approaches to the green electricity trade and inspire positive change regionally.

Southeast Asia is collectively the world’s fourth-largest energy consumer, and the International Energy Agency projects that Southeast Asia’s energy demand will rise around 5 per cent annually through 2030 and 3 per cent through 2050, above the global average during that time frame. Indonesia, Malaysia, the Philippines, Thailand, and Vietnam are responsible for about 89 per cent of Asean’s current energy demand and most of its future growth. Singapore is responsible for only 5 per cent of Asean’s energy demand, but nonetheless is influential as a hub of electricity trade innovation and progress.

A vendor waits for customers under a light powered by solar panels installed on the roof of a market in Klaten, Indonesia’s Central Java province. Photo: AFP

Singapore’s leadership in this space is driven by domestic needs: currently, most of its power comes from natural gas, and the government has set a long-term target of reducing that to a little over 50 per cent by substituting clean electricity. Some of this alternative energy will come from domestic sources such as rooftop solar and potentially geothermal, nuclear, or hydrogen. However, given land constraints, electricity imports will be a necessary factor in Singapore’s future energy mix.

The Energy Market Authority has set a target of importing 4,000 megawatts (or about 30 per cent) of Singapore’s electricity by 2035. Reaching this target will require a major expansion of imports, since Singapore currently imports only 1.3 per cent of its electricity in the form of 100MW of hydroelectricity sold through the Laos-Thailand-Malaysia-Singapore Power Integration Project (LTMS-PIP). This milestone was the first multilateral power trade scheme in Asean and is likely to soon rise to 300MW.

However, future needs are likely to be met through other sources, due in part to requisite infrastructure upgrades to expand interconnections and power flow for the LTMS-PIP, and in part to the general security and resilience benefits of power diversification. Singapore’s Energy Market Authority recently gave conditional approval for a series of alternative electricity imports: agreements for 1,000MW of solar, wind, and pumped storage hydropower from Cambodia; 1,200MW of offshore wind projects in Vietnam; and up to 2,000MW of solar from Indonesia were signed in 2023.

There are many factors in the region’s re-energised push for regional power trade, including excess electricity and reserve margins in exporting countries like Laos, shared concerns about overreliance on volatile fossil fuel markets in light of the Covid-19 pandemic and Ukraine conflict, and the climate crisis driving national efforts to reduce emissions. Within this context, Singapore’s agreements are helping spur momentum on innovations to regional power trade that were not considered in earlier analyses of the Asean Power Grid.

A worker takes a picture of rooftop solar panels on the Keppel Bay Tower office building in Singapore last year. Photo: Reuters

Singapore’s preference for clean energy is driving new ideas for power routes, such as high-voltage undersea transmission cables, which enable direct electricity trade with Cambodia, Indonesia, and Vietnam. Singapore will also need to hash out operational and pricing agreements for cross-border power purchases of solar and wind, which, given their variable output, require different terms from traditional power sources.

Singapore should show the region that these increasingly affordable alternatives are reliable and a good return on investment, both domestically and when traded regionally. This could open the door to larger-scale renewable energy trade between other Asean members and influence similar projects such as the Brunei-Indonesia-Malaysia-Philippines Power Integration Project. Sharing Singapore’s experiences driving innovative investments can also demonstrate success for other foreign investors like China, which could scale up clean-energy investments around Asean.

Expanding interconnections will generate major savings for Asean. A recent DNV study estimates Asean could save US$800 billion through 2050 if countries tap into renewable energy through multilateral trade. Equally importantly, the study shows that expanded regional power trade could reduce the land-use footprint of power projects by 13 per cent by avoiding unnecessary buildout of domestic power plants and energy storage.

Electricity trade opens the door to a wider menu of power generation options, enabling Singapore and the region to be more selective about which projects to purchase power from and thus selectively reduce the most significant environmental footprints of investment. Many low-carbon energy projects also have significant non-carbon environmental effects – such as river fragmentation related to large-scale hydropower or land-use tensions involving large solar farms.

Explicitly considering a range of criteria for signing power trade agreements – such as high-standard environmental and social impact assessments or high-standard requirements for renewable energy certification – can help prioritise projects that are both clean and broadly sustainable.

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Singapore unveils one of the world’s biggest floating solar panel farms

The Energy Market Authority could require specific standards for environmental and social impact assessments before issuing conditional approval to projects, incentivising investors in exporting countries to meet higher standards than domestic regulations may require and avoid projects with unmitigable negative effects.

Coordination with national utilities in exporter countries on processes to issue and trade renewable energy certificates would also be key to tracking the wider effects of electricity imports, and could eventually be sold to private firms that utilise large amounts of energy and seek to meet company renewable energy targets.

Singapore alone cannot ensure change, but it can inspire and support a regional conversation about a greener Asean Power Grid. While Singapore’s electricity demand is limited compared to its neighbours’, as an early adopter it has an opportunity to explore standard-setting and build consensus around the regional scaling of power trade.

Singapore is already a hub for technical training programmes through university hubs, the Singapore Cooperation Programme, and the Third-Country Training Programme with numerous international partners. Targeting future training series towards renewable energy certification standards, grid integration of renewables, and system-scale planning would help lay a path for a greener and more resilient regional energy system in line with Asean’s interests.

Courtney Weatherby is the Deputy Director of the Southeast Asia Programme and a Fellow with the Energy, Water, & Sustainability Programme at the Stimson Centre in Washington. This commentary was first published on ISEAS – Yusof Ishak Institute’s commentary website fulcrum.sg.