In this hybrid seminar, researchers from the ISEAS Climate Change in Southeast Asia Programme (CCSEAP), Dr. Mirza Huda, Ms. Sharon Seah, and Ms. Qiu Jiahui, shared insights on key lessons drawn from ASEAN’s first multilateral cross-border energy trading initiative the Lao PDR-Thailand-Malaysia-Singapore Power Integration Project (LTMS-PIP) and its implications for the broader ASEAN Power Grid (APG). Organized by the CCSEAP, this seminar features the newly published policy report, “Accelerating the ASEAN Power Grid 2.0: Lessons from the Lao PDR-Thailand-Malaysia-Singapore Power Integration Project (LTMS-PIP)”.
CLIMATE CHANGE IN SOUTHEAST ASIA PROGRAMME SEMINAR
Tuesday, 12 December 2023 – Dr. Mirza Huda, Lead Researcher, CCSEAP, Ms. Sharon Seah, Senior Fellow and concurrent Coordinator of the CCSEAP and ASEAN Studies Centre, and Ms. Qiu Jiahui, Research Officer, CCSEAP, spoke on the importance of the LTMS-PIP as a pathfinder project and the ASEAN region’s first foray into multilateral cross-border electricity trading, as well as its implications for future projects such as the Brunei Darussalam-Indonesia-Malaysia-Philippines Power Integration Project (BIMP-PIP) and the broader APG initiative. The session was moderated by Dr. Siwage Dharma Negara, Senior Fellow at the ISEAS Regional Economic Studies Programme, Co-coordinator at the Indonesia Studies Programme, and Coordinator at the Singapore APEC Study Centre at ISEAS.
Dr. Huda began by highlighting the best practices that drove the success of the LTMS-PIP, including its governance structure, which facilitated the coordination between different regional stakeholders that is necessary for cross-border energy initiatives. Strong political endorsement is another prerequisite for the development of multilateral grids and for the LTMS-PIP this was achieved through joint statements by the ASEAN Ministers of Energy Meeting, and discussions at the highest levels between leaders of countries involved in the project. The policy and technical maturity of ASEAN stakeholders, a result of capacity-building exercises held jointly with international partners, also enhanced the skills necessary for the LTMS-PIP’s implementation. Meanwhile, challenges faced by the LTMS-PIP include technical limitations stemming from capacity limitations of grids that may limit future expansion of the project; and a lack of consensus on the formulation and effectiveness of wheeling charges. Adverse impacts of climate change and human activities on hydropower generation, alongside the socio-environmental impacts of hydropower dams, were also cited as key challenges. These various successes and challenges of the LTMS-PIP present valuable learnings that can be applied to the broader issue of regional energy trade in ASEAN.
Dr. Huda explained how the research team adopted a three-pillar framework by the International Energy Agency (IEA) in its analysis, comprising of three minimum requirements necessary for multilateral trade, which fall into the categories of political, technical, and institutional requirements. He also elaborated on the challenges in meeting these requirements for ASEAN. In terms of political challenges, energy cooperation in ASEAN is impeded by resource nationalism concerns and regional mistrust, alongside a lack of continuity in energy trade policies. In addition, shifting government priorities undermine the continuity of projects, which makes it difficult to attract investors. Technical challenges include differing perceptions on the methodology used to calculate wheeling charges, the need to harmonise grid codes, and outdated grid infrastructure. Institutional challenges include the absence of stakeholders from financial institutions and other commercial players within the governance mechanisms of interconnection projects. Other challenges in this category include limited human resources and resistance to market reforms.
Ms. Seah focused on recommendations made in the policy report towards meeting each of the three minimum requirements. Starting with political requirements, she highlighted the need for consistent domestic policies to reassure private sector investors, and for targeted communication strategies to counter resource nationalism. She emphasised the importance of highlighting the collective benefits of regional interconnections and presenting regional cooperation in a way that inspires stakeholder collaboration, such as by using an ASEAN net-zero target in the power generation sector to galvanize collective action towards meeting climate targets.
To meet technical requirements, the report recommends developing a common wheeling charge methodology to promote transparency, fairness, and non-discriminatory behaviour, by drawing on best practices from established power pools, such as the Southern African Power Pool. In response to the challenge of outdated infrastructure, the report also recommended identifying ASEAN Projects of Common Interest (APCI), citing the example of the European Union’s Projects of Common Interest (PCI) Initiative which showcases projects on an open platform. Identifying APCIs will stand to facilitate project implementation by furnishing private sector stakeholders and potential investors with project details, such as the amount of investment needed and implementation schedules, that are often not made clear.
Lastly, meeting institutional requirements would require the inclusion of financial institutions in governance mechanisms, establishing a regional institution to drive energy integration in ASEAN, upskilling the energy workforce through capacity building in collaboration with international partners, and implementing country-specific market sector reforms informed by research.
Ms. Qiu discussed international case studies on regional integration, citing the example of the European Network of Transmission System Operators for Electricity (ENTSO-E) to illuminate the role of regional institutions in driving cooperation and energy interconnectivity. Established in 2009, the ENTSO-E is a regional platform that coordinates the operations of Europe’s interconnected electrical grid by overseeing future grid planning, technical rules, IT programmes, the facilitation of market integration, and research and innovation projects. The ENTSO-E is said to have doubled cross-border energy interconnections since its establishment and has also enabled the region to deal with security challenges like COVID-19 and challenges of renewable energy integration across Europe.
Ms. Qiu also highlighted key learning points from the ENTSO-E’s case study that can offer insights for ASEAN. She mentioned that the ENTSO-E allows Transmission System Operators (TSOs) to work closely to develop detailed and concrete plans for grid development, and helps the EU to identify potential PCIs for future investment. The ENTSO-E also provides publicly-accessible electricity market data through the ENTSO-E transparency platform.
During the Q&A session, speakers addressed interesting questions relating to the impact of bilateral relations on multilateral cooperation in ASEAN, managing energy price differences between countries, issues of social license and community consent when building grids over areas inhabited by local communities, and the regulation of wheeling charges across jurisdictions. Some notable insights from the discussion included the importance of conducting cost-benefit analyses when making decisions about land-use, the need for ASEAN to develop a wheeling charge methodology that satisfies all stakeholders, and the centrality of political factors as key impediments for regional interconnectivity projects. The seminar drew an audience of nearly almost 70 online and 20 in-person participants.