Electrifying Emerging ASEAN through Off-Grid Distributed Renewable Energy Systems

Electrifying Emerging ASEAN through Off-Grid Distributed Renewable Energy
Systems

Some 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 lack of power and energy access could threaten
the region's economic growth and its economic transition.

Many industrial and commercial economic zones, and remote areas in ASEAN's
emerging countries that contribute to economic growth, are sometimes faced
with an unstable energy supply. This can prevent companies and households
from investing and providing economic activities, such as 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
hydro, with generating capacities ranging from a few kilowatts to as much as
50 megawatts. Such renewable energy technologies can either be integrated
into local distribution grids or used as stand-alone systems in areas where
the extension of transmission lines is not economically viable.

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

A business-as-usual scenario was developed for each ASEAN country to outline
the current energy policies and the expected foreseeable future of energy
policies and economy-wide energy consumption, assuming no significant
changes in government policies. An alternative policy scenario was set to
examine the potential impacts of additional energy efficiency goals, action
plans, or policies that are currently, or likely to be, under consideration.

The results show that the electricity supply from off-grid DES-related
renewable sources would increase from 65,608 gigawatt-hours under the
business-as-usual scenario to 91,854 gigawatt-hours in the alternative
policy scenario (see below figure). The investment opportunity estimated for
the combined use of solar, wind, biomass, hydropower, and geothermal is
about $34 billion for the business-as-usual scenario and about $56 billion
under the alternative policy scenario.

Among the DES-related renewable energy sources, investments in solar and
geothermal power are expected to double under the alternative policy
scenario compared with the business-as-usual scenario, while investment in
wind energy is expected to increase more than threefold to meet the expected
generation output by 2040.

Policy Options to Promote Off-Grid DES

From the potential increase in off-grid DES-related renewable energy sources
in ASEAN, it is also estimated that the CO2-emissions reduction in the ASEAN
region as a result of the application of off-grid DES-related solar, wind,
biomass, geothermal, and hydropower would be about 46.1 million metric tons
in the business-as-usual scenario and 64.6 million metric tons under the
alternative policy scenario.

But to realize 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, although it is
already targeting a 23 percent share of renewable energy in primary energy
supply by 2025.

The following framework of policy options is worth considering:

National policy design aims to provide a trajectory for the future energy
mix. It includes a renewable energy target; a renewable energy law or
strategy; a biomass and biofuels law or program; and a solar heating, solar
power, wind, and geothermal law or program

Fiscal incentives aim to reduce the upfront cost by introducing fiscal
policy instruments, such as exemptions of value-added tax, income tax,
import and export duties, and local taxes; and the introduction of a carbon
tax and accelerated depreciation

Grid access aims to give project developers confidence to invest through
grid access priority and a transmission discount policy if electricity is
produced from renewable energy

Regulatory instruments aim 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

Finance aims to reduce risk for investors through the implementation of
currency hedging, dedicated funds, eligible funds, and guarantees

In conclusion, the increase in off-grid DES-related renewable energy supply
in the ASEAN region will have multiple benefits for people and the
environment.

Its expansion and application could promote lower-cost, more efficient
energy access, and it could also address the challenging issue of
electricity access for about 134 million people whose rights have been
denied. Its application would also contribute to CO2 reduction at the ASEAN
level by reducing emissions by as much as nearly 65 million metric tons in
the alternative policy scenario.

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.brinknews.com/asia/electrifying-emerging-asean-through-off-grid-d
istributed-renewable-energy-systems/

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com