Building a sustainable, reliable energy ecosystem goes beyond meeting today’s demand, it also requires an understanding of the major trends which will dominate tomorrow. Today we explore 5 key trends likely to impact the power landscape in Malaysia and throughout Southeast Asia in 2018 and beyond.
Trend 1: Growing Demand and Decreasing Energy Intensity
Power demand will continue to grow in Malaysia and Southeast Asia in 2018. This will be led by an increasing need to power wider economic growth alongside the growing electrification of things. The emerging needs of an increasingly electric-powered world will see installed electricity generation capacity in Southeast Asia rise to over 565 gigawatts by 2040 according to the International Energy Agency (IEA). That’s more than double the 240 gigawatts installed today.
Balancing that growing demand with commitments like the COP21 Paris Climate Agreement will require countries to focus on decreasing their energy intensity. That means reducing the amount of energy consumed as a ratio against gross domestic product (GDP) – essentially, improving a country’s energy efficiency (EE) performance. In Malaysia those targets include a pledge to cut CO2 emissions intensity of GDP by 45% by 2030. The trend towards reducing the carbon intensity of economies throughout Southeast Asia is likely to accelerate in the year ahead.
Trend 2: Digital Insight and Informed Consumption
Digital insight and increasingly informed consumers will play an important role in improving energy efficiency in the future. Education programmes and digital assets such as the TNB Smart Meter Project, Home Energy Report, and MAEVI monitoring app, allow consumers to understand their energy use in a way which empowers them to better control it.
digital insights will form a key driver in reducing energy consumption
These digital insights will form a key driver in reducing energy consumption. The World Economic Forum estimates digital initiatives in the energy sector could save up to 15.8 billion net tonnes of CO2 and unlock around US$1.3 trillion of value for the electricity sector globally.
Commercial and industrial customers are also likely to benefit from new drives to deliver smarter energy ecosystems. Schemes such as time-of-use tariff encourage larger energy consumers to make informed decisions about the cheapest times to run energy intensive processes. This style of initiative helps to ensure more sustainable power consumption.
Trend 3: Shared Energy in ASEAN
The recent tri-partite energy agreement between Malaysia and Laos, utilising Thailand’s energy grid to share up to 100MW of power, highlights the benefits of shared power within ASEAN. The ASEAN power grid has been a goal of the ASEAN Economic Community for over twenty years, and today sees 5,200 MW of power shared over 9 cross-border power arrangements in the region.
The pioneering multilateral agreement signed in 2017 offers the template to benefits beyond individual bi-partisan power arrangements. This is an opportunity further encouraged by the low-carbon hydropower exported by Laos, a key motivator offering a more sustainable energy mix for partner countries.
Trend 4: Renewable Energy Growth
Renewable energy growth is set to accelerate in coming years as governments encourage more sustainable energy ecosystems while working towards their COP21 Individual Nationally Determined Contributions. Industry experts in nations such as Thailand remain optimistic about the continued growth of renewable energy in the face of falling global costs.
In Malaysia, forward movement on Large Scale Solar offers a key initiative that highlights the increasing focus on renewable energy. Meanwhile the nation’s more ambitious goal to reach 30% of renewable energy as part of the energy mix by reflects a regional trend for the accelerating uptake of RE technologies.
Trend 5: Fuel Demand and Fluctuating Costs
The wider needs of a balanced energy mix will continue to see a focus on fossil fuel generation for base-load power throughout the region. The IEA predicts that Southeast Asia will drive global demand for coal in coming years, with an estimated 100GW of additional coal-fired power by 2040. This trend is a direct result of the surging demand for cheap power in the region’s fast-growing economies.
The IEA predicts that Southeast Asia will drive global demand for coal in coming years
Balancing this growth in fossil-fuel demand against the environmental commitments of modern nations will be an important balancing act. The noted uptake of renewable energy technologies, alongside supporting greater energy efficiencies and reduced energy intensity, will be key to ensuring success.
Global commodity prices are expected to rise at a moderate 4% in 2018, after a significant 28% rise in 2017. Coal prices are widely expected to fall this year, a marked difference on the 30% rise seen globally in 2017.
Currency strengths will continue to be an important determiner in the affordability of imported fuel sources. In the case of Malaysia, that means a stable ringgit will help ensure less volatile prices for imported coal. A recent OPEC deal resulting in oil price climbs feeding into a stronger Malaysian ringgit, alongside optimistic government analysis, should contribute to a positive outlook.