Electricity market designs in Southeast Asia

This research, conducted by E3G in collaboration with IESR, aims to delve into the political economy of electric vehicle (EV) development in Indonesia. By analyzing the underlying political dynamics, the study seeks to identify barriers and opportunities for accelerating the transition to EVs. The research builds upon the understanding that political economy factors, rather than solely technical or economic constraints, often hinder significant policy changes. By examining the complex interplay of interests, power dynamics, and institutional factors, this study provides valuable insights for policymakers, industry stakeholders, and civil society to support the effective implementation of EV policies in Indonesia.

Indonesia stands at a critical juncture in its energy transition journey. The IETO 2025 report provides a comprehensive analysis of the country’s progress, challenges, and opportunities in the face of a rapidly changing global energy landscape.

Despite government commitments, Indonesia has made limited progress in renewable energy adoption and decarbonization. The continued reliance on coal hinders the transition to a low-carbon future. However, global trends in renewable energy and declining costs present a window of opportunity for Indonesia to leverage its abundant solar, geothermal, and bioenergy resources.

To accelerate the transition, several key challenges must be addressed. These include strengthening policy and regulatory frameworks, mobilizing financing, fostering innovation and technology transfer, ensuring a just transition, and strengthening international cooperation.

By addressing these challenges and seizing the opportunities, Indonesia can pave the way for a sustainable and prosperous future. The IETO 2025 report serves as a crucial tool for policymakers, businesses, and civil society to understand the complexities of the energy transition and to make informed decisions.

Authors: Martha Jesica Solomasi Mendrofa, Ilham Rizqian Fahreza Surya, Alvin Putra Sisdwinugraha, Farid Wijaya, Rahmi Puspita Sari, Putra Maswan, Muhammad Dhifan Nabighdazweda, Shahnaz Nur Firdausi, Anindita Hapsari, Pintoko Aji, Raditya Wiranegara, Faris Adnan Padhilah, His Muhammad Bintang, Julius Christian

This report provides a brief overview of ASEAN’s power sector landscape in 2023, tracks energy transition development in the past five years, presents several scenarios on decarbonisation for ASEAN, documents policy changes in the past year and emerging discourses in ASEAN energy transition. This report presents strategies to fine-tuning policies to reduce dependence on fossil fuels and start the systemic shift necessary for a clean power sector transition, providing strategic guidance for policymakers, researchers and energy practitioners in the region.

Purpose - The paper systematically examines the capacity building needs of energy and climate stakeholders in the Association of Southeast Asian Nations (ASEAN). It looks at conditions and opportunities for improvements in institutional, organisational, technological, innovation and financing capacities. This paper provides a guide to concrete capacity building programs and implementations to accelerate the implementation of National Determined Contributions (NDCs) and low-carbon energy transition in the ASEAN region.

Design/methodology/approach - This paper proposes a comprehensive capacity-building framework, drawing on transition management theory and the interactive systems framework for capacity building. The assessment is based on interviews with representatives of the ministry responsible for energy policy and the ministry responsible for climate policy in each ASEAN country, as well as a survey among a broader set of Southeast Asian energy and climate experts from academia, think tanks and international development partners.

Findings - The paper identifies the priority areas for capacity building for each ASEAN country and the region as a whole. Each country has a unique set of needs and priorities. At the regional level, the widest capacity gaps were observed in institutional capacity, technical capacity, human resources capacity, financing capacity and the capacity to develop policy and legislation. Specific gaps for capacity building are discussed in delivering strategic areas of energy transition, such as electrification of transportation, development of the green supply chain, deploying renewable energy, energy efficiency, strengthening finance and investment and reducing dependencies on fossil fuels.

Originality/value - This paper helps fill the gap for detailed capacity needs analysis and facilitates long-term plans/strategies and their implementation. The insights help to increase ASEAN energy and climate stakeholders’ understanding of the interaction between energy and climate, therefore enhanced capability in developing more effective action maps and intervention points in achieving NDCs and sustainable development goals.

Authors: Emi Minghui Gui, Indra Overland, Beni Suryadi, Zulfikar Yurnaidi

Common-use transmission assets are those that provide widespread benefits across a market area, rather than serving only the countries or jurisdictions hosting the infrastructure.

In ASEAN, several potential common-use transmission projects could progress with the support of development banks, aligned with efforts to develop a multilateral power trade (MPT) market. There are several initial conclusions that ASEAN can draw regarding common use assets, including lesson learned from other regions employing this concept:

Advancing Infrastructure: Given its potential for optimal cost allocation, the regional common-use asset concept should be examined by ASEAN stakeholders as a way to accelerate ASEAN Power Grid (APG) infrastructure development and to unlock MPT opportunities.

Identifying Assets: In the absence of regional market structures, a region-wide technical study is essential to assess how interconnections can benefit multiple countries. The AIMS process could be tasked with this analysis.

Regional Market Benefits: Regional market structures would provide mechanisms for identifying common-use project benefits while allocating costs fairly for new assets.

Collaborative Financing: It’s critical to work with development finance institutions (DFIs) and partners to create a financing model tailored to the region’s needs, including for common use assets.

Agreement on Cost Allocation: For the common-use asset model to succeed, participating countries must agree on cost allocation and recovery methods, potentially through a standardized wheeling charge methodology.

Authors: Nadhilah Shani, Marcel Nicky Arianto, Akbar Dwi Wahyono, Beni Suryadi, Putri Apilia Maharani