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Imagine a Future Where Malaysia Becomes ASEAN’s Clean Energy Interconnectivity Hub

Southeast Asia is a region that is rapidly growing, and along with this population boom, comes a growing need for energy security and sustainability. The ASEAN Power Grid, or APG, is a long-standing dream that was first envisioned in the 1990s as a way to solve these issues. The APG would be a multilateral undertaking that would connect the electricity grids of the ten ASEAN member states, allowing for cross-border electricity trade across the region.

Long History, Slow Progress

The idea of a regional power grid was first documented in the ASEAN Plan of Action for Energy Cooperation (APAEC) 1999-2004. Over the course of more than two decades, progress on the project has been limited due to a variety of factors, including regulatory, legal, and technical barriers.

Nevertheless, over the past few years, there has been a reinvigorated interest in the project, with several new milestones making headlines. It’s evident to stakeholders that the advantages of the APG are not merely industrial, but commercial and environmental as well. The APG can fast-track the region’s transition to clean energy by encouraging knowledge-sharing, capacity-building, private sector investment, and the building of infrastructure that supports the transmission of renewables across borders.

Through this renewed vigour, the vision of ASEAN becoming a global model for clean energy is taking form — an accomplishment which many member states hope to spearhead.

Malaysia’s Role in ASEAN Power-Sharing

For Malaysia, the potential to become a clean energy capital is an attainable north star. As a nation, it is not short of natural resources. Blessed with an abundance of solar, hydro, and biomass, the country’s renewable energy capacity has increased steadily over the past decade, allowing the industry to flourish on a technological, financial, and regulatory scale.

Strategically located in the heart of Southeast Asia, its geographical position additionally allows it to play a leading role in interconnectivity. Less than a year ago, Singapore began importing energy from Laos, with Malaysia and Thailand playing a role in transmitting that energy through an Energy-Wheeling Agreement. The arrangement under the Lao PDR-Thailand-Malaysia-Singapore Power Integration Project (LTMS-PIP) allows Singapore to import up to 100 MW of renewable hydropower from Laos. For Malaysia, the partnership marks an important milestone in the national utility, Tenaga Nasional Berhad’s (TNB) interconnection journey after the successful upgrade of its electricity interconnector between Peninsular Malaysia and Singapore, facilitating the LTMS-PIP connection. The success of this multilateral cross-border agreement — the first of its kind in ASEAN involving four countries— signifies the range of opportunities available to member states.

Malaysia’s success with neighbouring countries does not end there. Across the South China Sea, Sarawak has demonstrated considerable success in its development of hydropower as an energy source, leveraging the state’s abundant natural resources.  The project is just one of the many that Sarawak is undertaking since the state is the largest provider of renewable energy in Malaysia, leading the way for the nation to be a renewable energy hub in the region.

Infrastructure-Ready: Malaysia’s Upper Hand

These milestones demonstrate Malaysia’s readiness to take on a leading role in regional energy trade. To stake its place in the game, Malaysia must capitalise on its strength: its abundance of natural resources and developed grid infrastructure.

Since 2016, TNB has spearheaded the development of Malaysia’s power grid, anchored by its ambition of building a ‘Grid of the Future’. The goal was to enhance the current grid infrastructure ensuring it is modern, efficient, and able to receive and process a larger load of variable renewable energy.

The country’s results speak for itself. In the World Economic Forum’s (WEF) latest Energy Transition Index, Malaysia ranked a respectable 39th, with system performance and transition readiness at 69% and 60% respectively. In 2022, TNB performed at world-class levels, recording only 0.17 minutes of the transmission system and a 45.1 minutes System Average Interruption Duration Index (SAIDI) per customer. For comparison, the United States experienced 1.5 hours of interruptions (without major events such as hurricanes, etc.) in 2019.

Having system-ready infrastructure will enable the seamless integration of different energy carriers, including solar, hydrogen, and wind. This trump card cannot be understated – imagine having a power source of a billion watts with only a tiny cable to distribute it. As projects continue to scale to large heights, world-class infrastructure will be in high demand, and Malaysia must step up to deliver.

Supporting the Region’s Renewable Energy Needs

The title of a clean energy hub also requires a sustained strategy for scaling up renewables. This means the ability to not only produce clean energy, but store and transmit it. This ecosystem of enabling clean energy is what defines a truly effective ‘hub’.

A thriving ecosystem requires the harmonisation of cutting-edge technologies, public policy and regulations, as well as private sector participation. Importantly, it requires resources and funds.

Under TNB’s New Energy Division, the company has outlined a clear growth plan to expand its renewable energy portfolio in both domestic and international markets such as Thailand, the Philippines, Vietnam and more. If executed well, TNB’s expansion strategy could help it stamp its mark as a regional nexus and driver of clean energy. A move that will not only benefit Malaysia, but the region as a whole, with an estimated growth in renewable capacity to 18.4 gigawatts by 2040, based on the National Energy Policy (2022-2040)

Steps Toward Progress

Is ASEAN ready for interconnectivity? Individual progress over the past decade seems to point so. At a regional conference in Bangkok last year, TNB President and CEO, Dato’ Indera Ir. Baharin Din, took the opportunity to call on fellow industry players — stating that the “[APG]’s advancement must be hastened for several critical reasons.”

With projected annual growth rate of over 5.5% per year, ASEAN is projected to become the fourth largest economy in the world by 2050 and sees booming population growing at a rate faster than China. This emphasises the urgency to safeguard the region’s communities from the potential threats posed by the climate crisis, a benefit that the APG could deliver.

The renewables market in ASEAN has grown leaps and bounds since the 1990s. Nations such as Vietnam today perform on par with global heavyweights. Although there is still much room to grow, the region has demonstrated that it is ready to step into the next stage with numerous efforts aimed at catering to the rising demand for shared sustainable power.

As the region strives to pursue the mutual clean energy objectives, Malaysia, in particular has displayed strong commitment in facilitating progress, fostering healthy competition, and attracting private investments in recent times. This commitment is further reinforced by the country’s upcoming Energy Transition roadmap which will be released by end of June 2023, paving the way for Malaysia to develop the first cross-border regional electricity system. The country has also announced its decision to lift restrictions on the export of renewable energy resources, as announced by its Economy Minister, Rafizi Ramli who expressed that it will allow for excess renewable energy generation to be traded with neighbouring countries.

Some of Malaysia’s efforts include the collaboration towards enhancing the Malaysia-Thailand interconnection with potential renewable energy exploration between TNB and major energy players in Thailand such as the Electricity Generating Authority of Thailand (EGAT), Planet Utility, as well as B.Grimm. The national utility has also formed various strategic alliances to strengthen the Asean Power Grid (APG) mission and build Malaysia’s renewable capabilities. This includes a partnership   as well as its participation in the development of Ibu Kota Nusantara, Indonesia allowing TNB to explore grid interconnection opportunities with PT Perusahaan Listrik Negara (PLN) including the various renewable energy technologies such as gas, solar, wind, hydro and battery storage.

A similar story was sung in the 1990s, when the Nordic nations decided to integrate their electricity systems. Before the Nordic Grid came to success, each country operated independently and was highly regulated. Toward the late 1990s, all of those countries — Denmark, Finland, Norway, and Sweden — had begun liberalising their markets to increase competition, encourage investment, and improve efficiency.

The Opportunity for ASEAN

The APG is an avenue that can open the doors to these opportunities.

Collectively, ASEAN has set a target of achieving 23% of renewable energy by 2025. Malaysia has set its own ambitious goal of achieving net-zero by 2050. Achieving these, along with international commitments under the Paris Agreement, cannot be achieved in silos.

The APG is an avenue that can open the doors to these opportunities. With the right political will and motivation, ASEAN could be well on its way to becoming the world’s next regional clean energy powerhouse. And at the heart of that engine would be nations that successfully capitalise on their strengths.

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