ASEAN should cut political risk to attract grid investors

The new chief of the ASEAN Centre for Energy expects a breakthrough this year.

The 10 members of the Association of Southeast Asian Nations (ASEAN) should cut political risk by adopting coherent policies that will attract almost $700b in investments needed to build a regional power grid. 

“They must be consistent in policy so people have faith to put their money [in the grid],” Dato’ Ir. Ts. Abdul Razib Dawood, the new executive director of the ASEAN Centre for Energy (ACE), told Asian Power.

“This is a long period—over 10 to 20 years—and you have to build a foundation, you have to erect the steel structure, you have to string the cable and so on, and that will last very long,” he added.

Dato’ Razib said governments should come up with an agreement that would bind them to the development of a region-wide interconnected electricity grid, similar to the memorandum of understanding that set up the ASEAN Power Grid more than two decades ago.

Multilateral instead of bilateral deals would fast-track this ambition, he added.

The ASEAN power grid aims to connect member states for cross-border power trading to boost regional energy security. The system had a transmission capacity of 7.7 gigawatts (GW) as of 2024, with a target to increase it to 17.6 GW by 2040.

About $670b up to 2050 is needed to modernise the grid, Dato’ Razib said via Zoom. The Asian Development Bank (ADB) has said over $100b in transmission infrastructure investments is needed until 2040.

Several ASEAN governments have been working to get interconnected, including Laos, Thailand, Malaysia, and Singapore, which launched their power Integration project in 2022 to double traded electricity to as much as 200 megawatts (MW).

Global energy think tank Ember said the project would be replicated by the upcoming Brunei Darussalam-Indonesia-Malaysia-Philippines power integration project, for which a feasibility study would be ready this year.

“Other interconnection projects are proposed to be a priority, including the connection between Peninsular Malaysia, Sumatra, Singapore, Sarawak, and Brunei, and the lines connecting Lao PDR, Viet Nam, Cambodia, and Myanmar,” it said in a May study.

Establishing clear policies would address the political risk inherent in these large-scale, regional initiatives, ultimately making them more attractive to private investors, Dato’ Razib said.

The power grid is backed by diverse funding, including the ADB's $10b commitment to accelerate cross-border links, national grids, and renewable energy.

Dato’ Razib said another hurdle in the rollout of the ASEAN grid is geographical fragmentation. For instance, the Philippines is an archipelago composed of over 7,000 islands, making interconnection challenging.

This can be addressed with the use of submarine cables that will carry electricity across the ocean.

He said this technology has been used in other countries such as the UK and Denmark through the Viking Link. The 1,400 MW high-voltage direct current interconnector, stretching 765 kilometres, allows power exchange between them.

Whilst the progress of the ASEAN Power Grid is not moving at Formula One speed, Dato’ Razib thinks this year offers a “golden opportunity for the ASEAN to have some kind of breakthrough.”

“I think this is time for ASEAN to move forward, to realise their dreams to have an interconnected power grid to help each other and propel economic growth,” he added.