ASEAN power grid opens doors for Singapore to be regional clean energy trading hub

The planned ASEAN power grid could offer Singapore a golden opportunity to become the region’s trading hub for clean energy, as the city-state works hard to soften the potential blow on its booming petrochemical sector amid the shift from fossil fuels.

“The ASEAN transmission grid is very critical. Singapore understands trade very well and we know how it’s done,” said Surbana Jurong’s energy and industrial managing director Tan Wooi Leong.

He added: “As long as we can bring the molecules (hydrogen) and renewable electrons through a certain central location, we could probably start trading them.”

But the ASEAN grid, which is hoped will integrate the national power systems of its 10-member countries and facilitate the region’s decarbonisation efforts, is a mammoth task with a fair amount of technical and financial challenges.

For one thing, Tan said the interconnection project could be a long way off. “It will take a long time. If you talk about transmission, all the transmission grids in every ASEAN country are running at different frequencies... different voltages.

“So if the countries need to sync up to the same frequency, they basically need to revamp the country’s whole grid. That’s definitely not easy. Also, it requires a lot of money to invest in upgrading the grid, and everybody needs to agree on what standards to work towards.”

Ambitions among the governments will have to be managed too, said BMI’s power and renewables analyst David Thoo, who pointed to a slight setback two years back when Malaysia’s previous government announced it would ban the export of renewable electricity in 2021. “While the current government announced in May 2023 that the ban will be lifted, it has yet to happen, which goes to show that policy does take a while to move.”

The uneven spread of renewable energy resources from solar and hydro to wind, and the associated intermittencies should compel ASEAN countries to connect their electricity grids to optimise green power utilisation, said Sharad Somani, KPMG’s Singapore-based ESG head.

He cited the different stages of maturity in each of the markets and differing regulatory regimes as key impediments in the creation of a joint transmission network across ASEAN countries.

“While the power market in Singapore is wholesale, most other countries consist of single buyer vertically integrated utilities, which can result in fragmentation and thus varying levels of maturity among the industry players in the market.”

There have been key moves in this area. Singapore has been working with various countries on pathfinder projects such as the Lao PDR-Thailand-Malaysia-Singapore Power Integration Project.

BMI’s Thoo said that as a result of this project, Southeast Asian power grids are connected (or at least, some parts), enabling investors based in Singapore to take an interest in investing in renewable power projects outside of the city-state.

He also expects more incentives and business opportunities to boost prospects for renewables in the region, as Singapore continues to push for clean energy imports from power projects developed in neighbouring markets.

“This will not just result in more renewable electricity owing into Singapore’s grid, but also spur renewables development in Southeast Asia. Additionally, there is potential for the power grid to connect to Cambodia, Indonesia, Vietnam, and the Philippines, unlocking more opportunities,” Thoo added.

In September, Singapore’s energy market regulator granted conditional approvals to five projects to import a total of 2 GW of low-carbon electricity from Indonesia into Singapore.

These five conditional approvals follow the earlier conditional approval to Keppel Energy in March to import 1 GW of low-carbon electricity from Cambodia.

The 3 GW of conditional approvals collectively is part of Singapore’s plan to import up to 4 GW of low-carbon electricity by 2035.

Singapore’s Energy Market Authority has been in discussions with other participants under its request for proposals (RFP) to appoint licensed low-carbon electricity importers.

The RFP, which closes end-2023, has drawn more than 20 proposals, including from Indonesia, Laos, Malaysia, and Thailand.

Sun Cable is also keen to snag the import licence for its audacious A$30 billion (S$26 billion) solar project to ship sunshine from Darwin to Singapore via what would be the world’s longest and deepest subsea cables.

Surbana Jurong’s Tan, who was part of the pioneering team to design Jurong Island – the cornerstone of Singapore’s energy and chemicals sector – and now, working on its decarbonisation, is also adviser to Sun Cable on this project.

While the generation part of Sun Cable’s flagship project is “straightforward”, Tan said the technology involved in the subsea cables and the converter stations are the project’s “two critical puzzle pieces”. “But these technologies are improving,” he added.

KPMG’s Somani said Singapore’s plan to import clean energy will deepen the interconnection with its neighbours, and facilitate more power exchange between countries.

“A bi-directional power exchange infrastructure will also provide for enhanced security of supply, while also making more affordable green power available across countries.”
 

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