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🧩 When considering the energy trans-ition, cleanly generating and storing power often take the spotlight. However, transmission is another piece of the puzzle.

🔌 We need to continue investing in trans-mission infrastructure just to keep up with growing demand; but with the energy transition, we also need to rethink how transmission works altogether.

As discussed in our 33rd issue on Energy Storage, one of the problems with switching to renewable sources of energy is intermittency. Solar and wind power are not always available when and where you need them. One of the solutions is to store this energy in batteries🔋, but moving the generated power to batteries remains a challenge…

🤔 What’s the deal with energy transmission?

🌏 In Southeast Asia, as with many other parts of the world, transmission infrastructure is still designed to transfer power from power plants 🏭 in less populated areas to urban areas where the demand is. Repurposing this infrastructure is difficult, and adding renewables to the grid can make older grids unstable, leading to blackouts if not managed well 😨.

🔩 Building larger networks 🔗 across geographies allows you to deal with intermittency challenges. The larger the network, the more likely it is that the sun is shining 🌞, or that the wind is blowing 🍃 in one part of the network, which creates more stability across the grid. Modern smart grid technology can also enable load management 📊— allowing grid operators to communicate with buildings and vehicles to use electricity more efficiently.

🏭 Generation consists of converting primary energy sources, such as wind, solar or fossil fuels, into electrical energy. However, generating energy is only half the challenge—we still need to get power to the people who need it. 

🗼 Transmission is where we transport electricity over long distances, whereas distribution refers to getting electricity to consumers 🏠. The difference between transmission and distribution is that transmission takes place using high-voltage power lines (to minimize energy loss), but distribution can be thought of as the equivalent of the ‘last-mile’ challenge. 

⌨️ Grid operators in each country or region manage this grid, balancing supply and demand and ensuring that the transmission and distribution systems are reliably delivering power. With increasing demand and the need to integrate new energy sources to enable the energy transition, making sure that the grid is stable is becoming harder. 

🌏 What does Southeast Asia need to do?

There are three main challenges that SEA faces with electricity transmission:

1. Continuing to expand access to electricity ⚡

2. Building larger and more stable networks 🛜

3. Planning for integration 🔗

📈 The last two decades have been a story of success for Southeast Asia, as the population of the region with access to electricity rose from 60% in 2000 to 95% in 2020. However, 45 million people in the region, largely in Cambodia, Indonesia, Myanmar and the Philippines still lack access to electricity. 30% of the region also does not have access to the infrastructure or appliances that would enable clean cooking. Increasing the quality of electricity access and keeping up with growing demand, while keeping prices affordable, is the key challenge in the coming years. 

🏝️ Geography makes this a particular issue in the archipelagic nations of Indonesia and Philippines. The key to success with transmission is building larger networks, as increasing interregional and international links can create stability, ultimately promoting energy security. Traditionally, providing electricity on smaller islands relied on smaller fossil-fuel powered plants. Although renewables with battery storage are becoming a popular and cost-effective option, transmission provides an alternative where renewables prove unfeasible. 

🤝 One of the proposed initiatives is the ASEAN Power Grid, aiming to connect all the ASEAN countries using cross-border power connections. This would require cross-border infrastructure to connect the grids across all the borders in ASEAN, which currently operate independently and differently.

📃 The challenge with integration is not just technical and infrastructure challenges, but also policy and market structures. Initiatives like the ASEAN Power Grid can only be successful with better cross-country collaboration, but the market and regulatory structures of ASEAN countries vary widely, from vertically integrated state-owned utilities to those with wholesale & retail competition in generation, transmission & distribution. A more collaborative and beneficial grid will require policy changes to enable collaboration across borders. 

💰 Financing the transmission

💸 Financing is another critical aspect of the transmission transition. Transmission operates as a common good and has thus often been financed using public coffers. However, given the scale of the challenge, we require private financing to invest the right amount in transmission. Existing constraints on cooperation and private financing might lead to a transmission solution that is less than optimal.

🪫 Only 3% of the sustainable debt issued globally is issued in Southeast Asia, and attracting more long-term low-cost debt is critical to more investment in transmission. 📇 Part of this requires regulators to help create conducive policies, though development finance also has a role to play in catalyzing private funds, as can be seen with initiatives like the Just Energy Transition Partnerships (JETPs) with Indonesia and Vietnam, which we covered in our 31st issue.

📚 Want to learn more about this topic?

1. “Development of ASEAN Power Grid and Factors Affecting Regional Power Market Integration” by Energy Studies Institute

2. “Electricity grids may trip Southeast Asia renewables drive without government intervention” by Eco Business

3. “The Battery of Southeast Asia Challenges to Building a Regional Transmission Grid” by Foreign Policy Research Institute

📢 Shout-out to Steward Redqueen!

🙇🏻 We’re grateful to have co-authored this week’s issue with Pranav Kalra & Grace Chiang of Steward Redqueen; to learn more about their work , you can check out their website!

🗞️ Recent News

👍🏻 Good News

👎🏻 Bad News

📢 Other Voices

🎙️ Interview with Jinsok & Kendra of Energy Studies Institute

💡 Why were you initially inspired to work on issues related to the electricity grid?

🔌 There are many cross-sectoral impacts from the power sector which requires governments to work together to make the energy transition work. The energy transition is greater than the sum of its efforts. It’s clear that the main focus of many countries is centered around how to work together in order to make the energy transition happen. There are key factors to consider such as geopolitics and the availability of technology, its exciting to try to unwrap and unravel to make sense of everything that's going on now. 

📈 The power market and gas market are closely related and there is a lot of interplay between them. It’s interesting to look at successful examples from Europe on how they are integrating energy markets and the benefits they gain from cooperation between companies and markets. It is important to continue tracking the development of energy markets and international cooperation.

🌏 How does the ASEAN power grid contribute towards the energy transition in Southeast Asia?

🌏 Each country has different potential to produce different types of clean energy and through interconnections, SEA can share the benefits instead of trying to produce everything in one country just for themselves. There are major advantages to sharing resources and merits as this facilitates decarbonization efforts for all. 

⛓️ The importance of integration and interconnectivity of power systems cannot be understated. Singapore is largely powered by natural gas and there are not a lot of pathways for us to decarbonise the power sector. Singapore’s power imports help bridge that gap by allowing us to import clean electricity from Laos all the way down through Thailand and Malaysia into Singapore, such resource sharing greatly contributes to the energy transition.

⛰️ What are the challenges to making the ASEAN power grid a reality?

🤔 One of the challenges right now is that we are largely operating in bilateral spaces and issues arise within cross-border electricity transmission. If countries are already limited in their ability to generate electricity, that in itself does limit the amount of electricity that you can even transmit. To illustrate this point, we see that in Central America, the electrical interconnection system was successful due to the integration of more than a few eager countries. The success in Central America is also due to the participation of intergovernmental bodies that were established in order to facilitate more interconnections. In SEA we saw mainly bilateral interconnections, only time will tell if they will progress into a more regionally integrated market. 

💡 We also need to have enough capacity from power generation and for transmission in order to get international energy markets to be as mature as domestic markets. This would require more effort in building up energy infrastructure.

⏰When do you SEA countries will see a turning point in achieving greater decarbonization in the power sector?

⚡️ The size of energy market and energy trade globally is huge so we may not see a tipping point at some point, but decarbonisation efforts may develop at a much higher tempo. Over the past decades, decarbonisation has happened gradually which may be due to the sheer size of the market.

🏭 There are many ways to decarbonize, countries are also approaching these efforts on a sectoral basis that looks beyond just energy and electricity and, instead, at manufacturing emissions, transport emissions etc.

😲 What is a surprising fact about electricity grids or the energy transition in SEA?

🔋 There are many bilateral trade relationships already in place and we observed clear trend in efforts to continue improving bilateral power or energy trade in the region. 

🤝 In many countries that we assessed in our study, we noticed that the Central American electrical interconnection system as well as what's happening in the EU is largely operating as deregulated markets. In other words, these markets can compete and run on their own, proving that integrated power market structures are feasible. Studies have shown that it is more economical for countries to integrate power markets and to facilitate cross-border electricity trade which is why many countries are looking into cross-border interconnection.

🎬 What actions can readers take now to support your cause?

📚 We have a new bulletin coming out this August, we also regularly publish policy briefs on energy transition and decarbonization and host workshops and conferences where we share our research findings.  Our research focuses a lot around the energy transitions and we also consider the impact from current affairs. We appreciate if readers take the time to view our work and provide any feedback them may have. We aim to provide insightful information to all who are interested in these topics, regardless of your knowledge and experience level.

❓ Did you enjoy this week’s issue? If yes, please do forward to your friends who would enjoy the read as well.

📧 Also, feel free to let us know what you thought by giving us feedback at [email protected].

🌊 SEA you next week!

Karina & Massimiliano