Asean needs to invest in off-grid energy

Asean needs to invest in off-grid energy

About 134 million people in the Association of Southeast Asian Nations
(Asean) region do not have access to electricity.

At the end of 2015, the Asean Community declared that a lack of power and
energy access could threaten the region's economic growth and its economic
transition.

Many industrial, commercial and economic zones, as well as remote areas in
Asean's emerging economies that contribute to economic growth, are sometimes
faced with an unstable energy supply.

This likelihood has a tendency to discourage businesses and households from
investing in economic activities, such as the provision of goods and
services.

Off-grid Distributed Energy Systems (DES) using renewable energy could be a
solution to this problem, thanks to the increasing availability of small
power generation and renewable energy technologies.

Off-grid DES-related renewable energy sources include biomass, solar, and
hydropower, with generating capacities ranging from a few kilowatts to as
much as 50 megawatts.

Such renewable energy technologies can either be integrated into local
electricity distribution grids or used as "stand alone" systems in areas
where the extension of electricity transmission lines is not economically
viable.

As the energy supply from off-grid DES-related renewable sources has a lot
of potential to increase in emerging Asean economies, the Economic Research
Institute for Asean and East Asia has attempted to estimate such potential
using both a "business-as-usual" scenario and an "alternative policy
scenario".

The business-as-usual scenario was developed for each Asean country. It
outlines current energy policies, future energy policies and economy-wide
energy consumption, assuming there are no significant changes in government
policies.

The alternative policy scenario was set to examine the potential impact of
additional energy efficiency goals, action plans, and policies under
consideration.

The results showed that if Asean governments have alternative policies,
electricity supply in the region from off-grid DES-related renewable sources
will rise to 91,854 gigawatt-hours from the business-as-usual scenario's
combined capacity of 65,608 gigawatt-hours.

The region's investment opportunity, estimated for the combined use of
solar, wind, biomass, hydropower, and geothermal will also increase to about
US$56 billion (1.9 trillion baht) under the alternative policy scenario from
about $34 billion under the business-as-usual scenario.

Of all DES-related renewable energy sources, the investment potential of
solar and geothermal power is high.

With alternative policies, total investment in each of the two energy
sources is expected to double from the investment value estimated for the
business-as-usual approach.

Similarly, with alternative policies, investment in wind energy is expected
to increase more than threefold to meet the expected generation output by
2040.

With potential increases in off-grid DES-related renewable energy sources in
Asean, it is also estimated that CO2-emission reduction in the region will
be about 46.1 million metric tons under the BAU scenario, and 64.6 million
metric tons under the APS scenario.

But to realise the potential of off-grid DES-related renewable capacity and
investment, an enabling policy framework that provides a long-term
government commitment and credible targets will be needed.

Asean may need to consider a wide range of policy options and instruments,
though it has already targeted a 23% share of renewable energy in primary
energy supply by 2025.

Therefore, Asean countries should consider designing a national policy that
aims to provide a trajectory for the future energy mix.

The policy should include a renewable energy target, a renewable energy law
or strategy, and law and programmes for particular types of renewables.

Governments should also provide fiscal incentives that aim to reduce the
upfront cost by introducing fiscal policy instruments such as exemptions of
value-added tax, fuel tax, income tax, import and export duties, and local
taxes, and the introduction of a carbon tax.

They will boost confidence in project developments and encourage investment
in the introduction of grid access.

Moreover, regulatory instruments should be introduced to provide incentives
for investing in renewables through the implementation of energy policies
such as feed-in tariffs, feed-in premiums, auctions, net metering, and
quotas.

Other options that Asean governments should include in their policies are
financial mechanisms arranged to help reduce risk among investors through
the implementation of currency hedging, dedicated funds, eligible funds, or
guarantees.

The expansion and application of this renewable supply would give people a
chance to access energy at a much lower cost, and help bring electricity to
communities of about 134 million people who can use it to improve their
livelihoods and pursue economic opportunities.

This type of renewable energy supply will also contribute to CO2 reduction
by reducing emissions by as much as nearly 65 million metric tonnes in the
APS scenario. Undoubtedly, Asean will enjoy quality growth by investing more
in off-grid DES-related renewable energy sources.

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Link to Original Article:
http://www.bangkokpost.com/news/special-reports/1229956/asean-needs-to-inves
t-in-off-grid-energy

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com