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As global momentum builds towards renewable energy sources, Southeast Asian nations are navigating a complex energy transition. While emissions reduction targets across the Association of Southeast Asian Nations (ASEAN) remain relatively modest, a growing demand for investment and a shifting geopolitical landscape are creating opportunities for key partners like Australia to play a more significant role. The region’s energy future hinges on developing robust infrastructure and fostering collaboration, and Australia is uniquely positioned to contribute.
The path to decarbonization in ASEAN is marked by both challenges and progress. Under the Paris Agreement, most ASEAN countries – excluding Myanmar and Timor-Leste – have established economy-wide emissions reduction targets, prioritizing energy as a crucial area for change. Although, achieving these goals requires substantial financial support and technological advancements. Thailand, for instance, estimates it will need US$6.11 billion by 2035 for initiatives in green energy, transportation, and industries, according to its Nationally Determined Contribution (NDC). Timor-Leste, identified as particularly vulnerable, highlights a lack of capacity, resources, and technology as key obstacles to effective climate action.
Despite ongoing reliance on fossil fuels, positive developments are emerging. Vietnam has seen significant deployment of solar photovoltaic (PV) technology in recent years, and Indonesia, Malaysia, Singapore, and Thailand are among the fastest-growing markets for electric vehicles (EVs). This momentum underscores the region’s potential for a cleaner energy future, but requires sustained investment and strategic partnerships.
The Case for an ASEAN Electricity Grid
A key area where Australia can exert influence is in the development of a unified ASEAN electricity grid. While some sub-regional connections exist, particularly within the Mekong region, broader integration has been slow. Singapore has taken a leading role in facilitating the flow of hydropower from Laos, wind energy from Vietnam, and solar PV from Indonesia, but a more formalized grid and associated electricity markets are needed to attract further investment in renewable energy generation. Currently, existing thermal generation often crowds out new renewable projects due to limited market access.
Australia’s geopolitical interests are also at play. China’s ambition to establish a Mekong sub-region power grid, with control centered in Kunming, has raised concerns among regional capitals. Many countries are hesitant to develop into overly reliant on a single external power source. An ASEAN-led grid, conversely, would empower Southeast Asian nations to control their own energy destiny.
Leveraging Australian Expertise
Australia’s experience in managing a grid with a high proportion of renewable energy is invaluable. The nation’s advancements in technologies like big batteries, virtual power plants, and bidirectional vehicle-to-grid systems can enhance the resilience of regional electricity grids. Practical steps Australia could take include utilizing Export Finance Australia to support regional partnerships, providing technical assistance through organizations like the Australian Energy Market Operator (AEMO), and promoting regulatory harmonization across ASEAN member states. These efforts could be advanced through existing forums such as the ASEAN Post-Ministerial Conference and through bilateral initiatives.
The urgency of this collaboration is underscored by Southeast Asia’s vulnerability to climate change. The region includes three of the ten countries most at risk from climate-related extreme weather events, making proactive action essential. Vietnam’s burgeoning EV manufacturing sector, led by companies like Vinfast, which is targeting markets in the Philippines, exemplifies the potential for synergy between renewable energy and emerging industries. Similarly, Thailand is witnessing a decline in fossil fuel vehicle production alongside growth in battery electric vehicle manufacturing by companies such as BYD Auto, SAIC (MG), and Great Wall Motor.
Looking Ahead
Australia’s ability to support the development of a robust and interconnected ASEAN electricity grid will be crucial in shaping the region’s energy future. Continued collaboration, investment in innovative technologies, and a commitment to regulatory harmonization will be key to unlocking the full potential of renewable energy in Southeast Asia. The next steps will likely involve increased dialogue between Australian policymakers and their ASEAN counterparts, focusing on concrete projects and financial mechanisms to accelerate the energy transition.
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