International renewable energy deals are spreading across Southeast Asia as the region works to transition away from fossil fuels, with electricity-hungry Singapore as a driving power.
With natural gas accounting for around 95% of its energy mix, the country aims to import 4 GW of low-carbon electricity by 2035, which constitutes roughly 30% of its energy supply. This ambitious plan is also creating an opportunity for neighboring nations that are expanding power generation from renewables.
Imports began in 2022 with the transmission of hydropower from Laos via Thailand and Malaysia, totaling 100 MW over two years. Regulators have approved plans to bring in 2 GW from five solar projects in Indonesia, and Singapore will also purchase power from a floating solar farm off Indonesia's coast.
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In March, Singapore's Keppel Infrastructure Holdings also signed a deal to buy 1 GW of renewable power from Cambodia-based Royal Group through a 1,000 km-long undersea cable.
Keppel Infrastructure CEO Cindy Lim said that the project will "catalyze the regional power grid and accelerate renewable energy growth in ASEAN."
The International Energy Agency projects that Southeast Asia would generate more than 40% of its electricity from renewables in 2030, and 95% from renewables and ammonia in 2050, if countries meet their goals under the Paris Agreement. To achieve this, renewable capacity would need to grow around 10% a year, accounting for increased demand from economic growth.
This creates opportunities for countries like Laos, where around 70% of power generation is hydroelectric due to the Mekong River. Around 80% of the electricity Laos produces is sold to countries like Thailand and Vietnam, making up 30% of its exports. It began sending electricity to Singapore in 2022 and built transmission infrastructure this year to sell power to Cambodia.
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Some countries are both sellers and buyers. Vietnam, whose potential wind power output is high as 600 GW, plans to send electricity to Singapore from the southern region. But central part is set to receive power from a $950 million wind project in Laos, which also supplies northern Vietnam with hydropower.
North and central regions are home to plants from companies like Taiwanese contract manufacturer Foxconn and Chinese EV maker BYD. As foreign firms pull away from China and consider Vietnam as an alternative, the country is rushing to tackle chronic energy shortages.
The surge in oil prices after Russia's attack of Ukraine underscored the dangers of relying on fossil fuels, as the concentration of resources among a relatively small numbers of countries leaves the market vulnerable to such conflicts. Cross-border renewable energy deals spread out supply throughout the region, providing more security against disasters and geopolitical risks.
Hiroshi Takahashi, a professor at Hosei University, refers to building a cross-border electrical grid as a form of “collective energy security” and sees ASEAN as a suitable fit for such a project. ASEAN 's 10 nations are connected through economic activity, while having a diverse array of political systems.
Whether the grid can actually be completed and supply power remains to be seen. Progress has stalled on Australia-based Sun Cable's $19 billion Australia-Asia Power Link, which would send electricity from a 20 GW solar farm in Australia to Singapore via a 4,200-km undersea cable.
