Empowering Southeast Asia's Green Future: The Vital Role of the ASEAN Power Grid in Regional Energy

20 Feb 2024
Authors: Nadhilah Shani and Peter du Pont
Authoring Organisation: ACE
Posted At: 02-2024

Power Interconnectivity: The Keystone of Southeast Asia's Energy Transition

Editor's note: This blog is one in a series of monthly contributions by regional and international authors on their work promoting and supporting the acceleration of the Energy Transition in the Southeast Asia Region.

Nadhilah Shani, Power and Renewable Energy Policy Expert, and Senior Research Analyst on Power at ASEAN Centre for Energy 

Peter du Pont, Ph.D.,Co-Founder and Co-CEO of Asia Clean Energy Partners

In Southeast Asia, the shift towards sustainable energy is more than a goal—it's a necessity. Amid this backdrop, power interconnectivity emerges as a cornerstone, not just facilitating but accelerating the region's Energy Transition. And in particular, the ASEAN Power Grid (APG) initiative stands at the forefront of this movement, a manifestation of the collective resolve of the ASEAN community (governments, the private sector and the people) to embrace a greener future for the region.

Why Interconnectivity?

Interconnectivity means more than just physical wires crossing borders. It represents the integration of energy and economic policies, and environmental goals across Southeast Asia. By enabling the sharing of renewable energy resources among nations, the APG will make the energy sector more resilient, efficient, and sustainable.

The logic is straightforward yet powerful: renewable energy, unlike fossil fuels, is not uniformly available. The sun shines brighter in some areas, the wind blows stronger in others. Interconnectivity allows regions blessed with abundant renewable resources to share their surplus, ensuring a steadier, more reliable energy supply across the grid. This concept is the embedded spirit of enhancing regional interconnectivity under APG, both to help achieving ASEAN aspirational RE target but also at the same time as nation strategy to help them achieve theirs by higher shared utilization of RE.

Economic and Environmental Synergies

The economic case for interconnectivity is compelling. By pooling resources, Southeast Asian countries can achieve significant cost savings, reduce the need for expensive infrastructure investments, and mitigate the risk of over-reliance on imported fuels. This not only enhances energy security but also positions the region as a competitive player in the global shift towards clean energy.

The United Nations Economic and Social Commission for Asia and the Pacific (UN ESCAP) reckons that a fully integrated power grid for ASEAN will lower the overall cost of electricity by 8%; and that every USD 1 spent on grid infrastructure will reduce system costs by USD 7.40.[1]

Environmentally, the benefits are equally profound. Transitioning to a grid that leverages renewable energy can significantly reduce greenhouse gas emissions, combatting climate change and improving air quality. ACE found that by having more cross-border interconnection under APG, the region would avoid the use of 48.8 million tons of coal, 2.1 million tons of oil and 13,607 million m3 of natural gas cumulatively in 2040[2]. It's a strategy that aligns with global environmental goals and the region's commitment to the Paris Agreement.

ASEAN Ministers and Governments Prioritize the APG

Recent years have seen remarkable progress in development of the APG and have been marked by key political and institutional milestones.  Initiatives like the Lao PDR-Thailand-Malaysia-Singapore Power Integration Project (LTMS-PIP) and the newly initiated Brunei Darussalam-Indonesia-Malaysia-Philippines Power Integration Project (BIMP-PIP) highlight the region's ambition to transcend borders in energy collaboration. The recent Joint Statement on the BIMP-PIP initiative marks a significant step towards APG realization, with a dedicated Working Group tasked to tackle the feasibility of cross-border electricity trade by 2025.

These projects not only facilitate cross-border energy trade but also pave the way for a more resilient and integrated power system in the region.

Indeed, ASEAN Ministers are prioritizing the ASEAN Power Grid (APG) to boost regional energy cooperation.[3] They've endorsed ongoing enhancements to their power systems, APG project implementation, and multilateral power trading. Furthermore, there’s a push to extend the APG Memorandum of Understanding (MoU) until December 2025 while in parallel drafting the successor agreement, aiming to immediately continue when the current one ends. This agreement will pave the new stage of the regional cooperation on APG, especially to give clarity in the institutional arrangement of the current APG bodies.

Challenges and Solutions

Yet, the path to interconnectedness is not without its hurdles. Technical, regulatory, and political challenges loom large. Differing national regulations, investment needs, and concerns about sovereignty and energy security are among the key obstacles. Overcoming these requires not just infrastructure but a framework for regional cooperation, policy harmonization, and trust-building.

Innovative solutions and collaborative efforts are already underway. Cross-border projects within the APG framework are demonstrating the tangible benefits of interconnectivity, serving as models for broader regional integration. Furthermore, advances in technology, such as smart grids and energy storage, are enhancing the feasibility and reliability of interconnected energy systems.

The New Narrative Message: “No Energy Transition Without Transmission”

The narrative within the ASEAN region is shifting, with the recognition that a successful energy transition is inextricably linked to the development of transmission infrastructure. Countries like Malaysia, Thailand, and Singapore have integrated APG into their national electricity development priorities, acknowledging that interconnectivity is not just beneficial but essential for achieving national climate targets and sustainable development goals.

The extension of the Memorandum of Understanding (MOU) on the ASEAN Power Grid (APG) until 2025, with plans for a successor agreement, underscores the region's long-term commitment to the APG vision. This strategic direction, bolstered by priorities of the Lao PDR, in its role as the ASEAN Chair during 2024, demonstrates the priority being placed on interconnectivity and resilience of the power grid. The establishment of a project catalogue for priority interconnections is a further manifestation of the APG  implementation plan.

For Southeast Asia, the Energy Transition facilitated by power interconnectivity is not merely an option but an imperative. The APG initiative is a bold step forward, but its success hinges on continued commitment, investment, and collaboration among ASEAN nations and their partners.

As we look to the future, the vision is clear: a seamlessly interconnected Southeast Asian energy grid, powering the region's sustainable development. It's a vision that promises not just environmental stewardship but economic prosperity and energy security for generations to come.

Collaboration to Build Strength

The role of our organization, the ASEAN Centre for Energy (ACE) as a catalyst, think-tank, and knowledge hub is instrumental in advancing the objectives of the APG. Through conducting essential technical studies, facilitating stakeholder consultations, and fostering cooperation among ASEAN stakeholders and international partners, ACE is pivotal in translating the vision of APG into reality.

In its work on the APG, ACE is privileged to have strong collaborative relationships with key partners such as the Southeast Asia Energy Transition Partnership (ETP); GIZ’s Clean Affordable and Secure Energy for Southeast Asia project; the Economic Research Institute for ASEAN and East Asia (ERIA), the Asian Development Bank, the World Bank, the US Agency for International Development (USAID), and the US Trade and Development Agency (USTDA) and many other potential upcoming partners.

In conclusion, power interconnectivity is the linchpin of Southeast Asia's energy transition. It encapsulates the region's collective journey towards a sustainable, secure, and prosperous energy future.  As ASEAN nations forge ahead, the APG initiative will continue to be a key pillar of the Energy Transition in Southeast Asia, demonstrating that collective action and interconnectivity are not just strategic imperatives but essential pathways to a greener future.

[1] Matthew Wittenstein, Section Chief, Energy Connectivity, UN ESCAP. Presentation at Launch of a New USAID/WWF Mekong for the Future Report “Towards a Green and Inclusive Power Sector in the Greater Mekong Subregion”. Coral Life Building, Bangkok. 7 February 2024.

[2] Findings of ASEAN Interconnection Masterplan Study (AIMS) III under ASEAN RE Target scenario

[3] At the 41st ASEAN Ministers on Energy Meeting (AMEM), ASEAN Ministers welcomed the continuing initiatives to enhance the region’s power systems through the APG and commended initiatives to further expand MPT in the region including the BIMP-PIP initiative.