Roundtable Executive Report: Renewable Energy Outlook for ASEAN – A REmap Analysis

The International Renewable Energy Agency (IRENA) and the ASEAN Centre for Energy (ACE) organised a roundtable at the Singapore International Energy Week (SIEW) 2016 to discuss the renewable energy outlook for ASEAN. The roundtable addressed the sectors and technologies which offer potential for the region to meet its renewable energy goals, how regional cooperation and integration of energy markets can help to accelerate renewable energy uptake, and the key challenges and solutions involved.

Charting ASEAN’s roadmap to increasing renewables

In October 2015, ASEAN set an aspirational target of achieving 23% of its total primary energy supply from renewable energy by 2025, representing a significant increase from the 2015 level of about 10%. Realising this renewable energy target requires a significant increase in renewable energy deployment. Therefore it is necessary to have a detailed understanding of the types of renewable energy technologies that are available in the region, their potential, and the subsequent costs and benefits of significantly accelerating deployment over the coming decade.

Over the course of 2016, IRENA and ACE conducted an in-depth study looking at renewable energy potential for the region. This was done in close collaboration with the ten ASEAN Member States and supported by the Renewable Energy Support Programme for ASEAN, a jointly implemented project by ACE and Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) on behalf of the Federal Ministry for Economic Cooperation and Development (BMZ). The study applied IRENA’s REmap analytical methodology, which assesses the deployment potential, costs and benefits of renewable technologies across the entire energy systems of countries. Close consultations with ASEAN also helped the study focus on identifying the key trends and technologies that will enable the region to meet its renewable energy target of 23% by 2025.

The joint report “Renewable Energy Outlook for ASEAN – A REmap Analysis” was released and discussed at the roundtable – with the following insights shared:

The ASEAN region has set an aspirational target of 23% renewable energy share in total primary energy supply by 2025. What are the possible developments over the next decade?

• In 2014, the renewable energy share was 9.4%. According to the fourth ASEAN Energy Outlook (AEO4), under the business-as-usual scenario, the share will increase to just over 10% by 2025. Based on a more aggressive renewable energy deployment scenario of the AEO4 (called the Advancing Policy Scenario), the share could be 15.4%. IRENA combined the AEO4 APS and the most recent country updates to develop a Reference Case that indicated that this share would increase to 16.9%. There is potential for renewable options that can be utilised beyond the Reference Case of IRENA, which is sufficient to close the gap of 6 percentage points from 16.9% to ASEAN’s target of 23%.

How will the energy system and related effects change over the period to 2025?

• By 2025, the population of the ASEAN region will increase from around 615 million in 2014 to 715 million, and the economy will grow by over 5% annually during the period. The result will be a nearly 50% increase in energy demand and doubling of electricity demand over 2014. While the region has some indigenous fossil fuel resources, much of it will need to be redirected from exports to meet internal demand. The share of imported fossil fuel will increase as demand for oil and natural gas rises. The largest increase in energy demand will be for electricity production, but also for fuels used in industry and transport. In the Reference Case, CO2 emissions from energy use will increase by 61% – one of the fastest growth rates worldwide. Total energy-related CO2 emissions will be over 2.2 gigatonnes (Gt) annually by 2025, or just above 5% of total global CO2 emissions. External costs related to air pollution from the combustion of fossil fuels will increase by 35% from an average of USD 167 billion annually in 2014, to an average of USD 225 billion annually by 2025. This would represent around 5% of ASEAN’s GDP in 2025.

What are the renewable energy technologies to meet this growing energy demand and how do they achieve ASEAN’s renewable energy target of 23%?

• The region’s ample renewable energy resources can provide opportunities for the cost-effective deployment of renewable energy technologies for electricity, but importantly, also for heating and cooking. The technology mix changes significantly by 2025. The Reference Case sees slight increases in the relative share of hydropower and geothermal power in primary energy, and one-third reduction of the share of traditional uses of bioenergy. Additional potential identified in the report, known as the REmap Options, show that solar PV accounts for the largest increase in renewable power, with contributions from wind, small hydropower, geothermal and bioenergy. In end-uses for heating, cooking and transport applications, there is strong growth in modern bioenergy (in part substituting traditional uses of bioenergy), solar thermal energy, and increased electrification.

What are the costs and benefits of this accelerated renewable energy use?

• The portfolio of renewable options needed to increase the renewable energy share from the Reference Case level of 17% to ASEAN’s 23% target would cost only USD 1.9 per MWh of final renewable energy. In absolute terms, this is equivalent to USD 0.7 billion per year by 2025. Reduced externalities from lower levels of outdoor air pollution and CO2 emissions result in savings of at least 10 times larger than the incremental cost of realising ASEAN’s renewable energy target. If the reduced externalities from indoor air pollution are also included, savings are up to 50 times higher than the costs. CO2 emissions from energy will rise by 61% in the Reference Case. The REmap Options and closing the gap to ASEAN’s renewable energy target will restrain this rise to 47%. This will help ASEAN Member States realise their long-term commitments to mitigate climate change. The energy intensity of the region’s economy will decline by around 30% by 2025 over 2005 levels, broadly in line with the region’s targets for energy intensity improvement. The ASEAN region will need to invest 1% of its GDP annually (USD 27 billion) or USD 290 billion by 2025, in order to meet the 23% renewable energy goal. Half of the investment will already occur in the Reference Case, and half from the REmap Options. Among the sectors, the power sector will account for 75% of annual investment (USD 27 billion).

Roundtable participants:

• Sakari Oksanen, Deputy Director-General, IRENA

• Dr Sanjayan Velautham, Executive Director, ACE

• Eugene Toh, Director (Policy & Planning Department), Energy Planning and Development Division, Energy Market Authority, Singapore

• Maritje Hutapea, Director, Directorate General of New and Renewable Energy, Ministry of Energy and Mineral Resources, Indonesia

• Dr Karnnalin Theerarattananon, Engineer, Energy Research Bureau, Department of Alternative Energy and Development and Efficiency, Thailand

• Maria-Jose Poddey, Principal Advisor, Renewable Energy Support Programme for ASEAN (ASEAN-RESP), GIZ

• Cecilia Tam, Special Advisor, Asia Pacific Energy Research Centre (APERC)

For more information about the findings of the report “Renewable Energy Outlook for ASEAN: A REmap Analysis” or to download the report, please visit www.irena.org/remap

By :International Renewable Energy Agency & ASEAN Centre for Energy