What will Southeast Asia’s energy future look like? With countries in the region committed to renewable energy targets, it is likely that the answer to this question will be powered by clean sources. But what does this mean for coal? Will there be a shift away from coal-based power generation? Some argue that coal will still play an important role in the energy mix of most Southeast Asian countries, while others point out that continued reliance on coal may lead to higher emissions.
In terms of investment, the region is home to some of the world’s biggest markets for coal, with coal-fired power plants in Indonesia accounting for around 9% of global coal consumption and Indonesia and the Philippines having the largest coal reserves in the world. The potential for expansion of these coal-fired plants could bring them close to becoming carbon-dioxide (CO 2 ) sinks. However, the rapid shift away from coal is a growing concern, and international bodies such as the International Energy Agency (IEA) have already warned that Southeast Asia will have to abandon coal to meet its climate change targets.
Southeast Asia’s energy landscape is rapidly changing. But, while coal-fired power plants are in decline in many Asian countries, in others – such as Vietnam, Myanmar and Laos – these coal-fired power plants are expanding. Furthermore, the IEA estimates that Southeast Asia will need to invest more than US$250 billion annually for coal-fired power generation capacity additions over the next decade.
Of course, Southeast Asia’s energy future is complex. Some countries are making moves to increase the use of clean energy and reduce reliance on coal. They are pushing ahead with nuclear power and electric vehicles, while also investing in renewable energy, such as solar and wind power.
On the other hand, other countries in Asia are turning towards gas, with Japan, China and India increasing their gas imports in recent years.
Energy Trends in Southeast Asia
In Southeast Asia, electricity production from coal fell significantly, from 65% of total electricity generation in 2014 to 63% in 2019. This is mainly because the Southeast Asian economy has shifted away from primary energy sources.
The share of coal-fired electricity generation across the region fell from 19% in 2000 to only 10% in 2019. In addition, the share of coal in primary energy consumption for electricity generation fell from 81% in 2000 to just 50% in 2019. This is largely due to the growth in the generation of electricity from natural gas (from 31% in 2000 to 45% in 2019) and from renewable sources (from 7% to 15%).
Hydropower remains a major source of renewable energy in Southeast Asia, with power generated from hydropower plants being the dominant renewable energy source in four of the five Southeast Asian countries in the top 10 for hydroelectricity generation.
Indonesia, the Philippines, Laos and Thailand all rank in the top 10 for hydropower generation capacity, and Indonesia and Thailand rank in the top 10 for the number of hydropower generating plants.
In the Philippines, there are about 70 plants in operation which have a total capacity of about 3,701MW.
According to the EIA, global electricity generation sources are projected to grow by an average of 3.3% per year over the next 10 years. The EIA projects Southeast Asia’s electricity generation to grow to 72.5 TWh in 2035, an increase of around 35% from current levels. This growth is driven by the high rate of electrification and economic development.
For example, Indonesia’s electricity generation increased by 2.1% from 2005-2019. In comparison, the share of population with access to electricity in the Philippines is just over 92%. Similarly, Indonesia’s per capita electricity consumption is well below that of Malaysia or Thailand, but it still requires a significant amount of coal-fired power generation.
Much of Southeast Asia is very well-suited for renewable energy. Many of the region’s countries have numerous lakes, tropical forests and mountains that are susceptible to solar radiation and, therefore, solar farms can be located quite easily and inexpensively in these areas. For example, Malaysia’s Johor Bahru city can have an installed capacity of 3,500 MW of solar power, which is twice that of Singapore and more than Indonesia’s capital Jakarta. But even so, in areas that are more arid, the challenge of building massive solar farms is greater. Wind turbines are also more challenging to build in tropical and mountainous regions.
One other option is geothermal energy, which would provide affordable, clean and reliable energy to many Southeast Asian countries.
On paper, Southeast Asia’s energy future appears bright. Renewable energy is increasingly important to the region’s energy security and supply. However, a detailed analysis of the region’s national energy mixes suggests that in many parts of Southeast Asia, the transition to renewables will be incomplete. Coal remains an important part of the mix, even though it may not have as strong an influence in the coming decades. And, some of the region’s most populous countries are making an aggressive push towards the electrification of their transportation system.
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