Renewable energy a growth catalyst

Renewable energy a growth catalyst

In the next 20 years, energy demand in Southeast Asia will rise by more than 80%. Ongoing economic growth, the strong urbanisation trend, a growing middle class and a young population will drive this spectacular increase.

Effective utilisation of the region's renewable energy potential holds the key to securing the energy supply that is critical to Asean's economic expansion.

While much of the discussion on future energy sources has concentrated on extending the use of fossil fuels, there is huge potential in solar, geothermal and ocean energy. The amount of renewable energy available in the region is equal to 18 times Asean's current energy demand, but so far only 5.5% of renewable energy potential is currently exploited.

From both an economic and environmental point of view, it makes sense to diversify the energy mix. With its strong economic growth outlook, a key opportunity for the region lies in adopting energy strategies which provide affordable energy for all without resulting in exponential growth of greenhouse gases, and technologies that are resilient to the adverse effects of climate change. Energy planners and policymakers must find a way to support industries -- because of their importance in employment and economic growth, while minimising environmental deterioration and negative impacts on local air and water quality.

Another area of opportunity is increasing the overall efficiency of energy consumption in the region. Southeast Asia currently consumes more than twice the amount of energy per unit of GDP than the OECD average. Closing the gap would deliver between US$15 to $40 billion (532 billion to 1.4 trillion baht) in annual cost savings.

To close the gap, what can be done? Government fossil fuel subsidies -- amounting to $36 billion in 2014 according to the IAE, should be reviewed for their relevance and genuine economic benefit. Fossil fuel subsidies mask the real cost of electricity, distort the market and divert money from investment in modern infrastructure, which is much needed. With global oil prices at their current low levels, why not look again to see if these costly and inefficient subsidies need to continue? Energy poverty is an issue in many countries. However, generalised fossil fuel subsidies do not only benefit the needy; in fact quite the opposite is true.

Higher prices are usually the best incentive for energy efficiency; government-led incentive schemes and regulatory regimes can bolster this. Requirement for energy certificates for buildings, consumer electronics, tax or incentive credits for proven decrease in energy consumption and training and education about energy efficiency are all tools with which many countries have achieved significant savings in energy consumption.

New, disruptive technologies will positively affect the uptake of large-scale renewable energy solutions, as prices drop below those of traditional channels of supply. With decentralised generation and storage systems available at increasingly affordable cost, micro-grids will become a more frequent feature in rural areas, bypassing the need for large connective infrastructure. In addition, innovation in battery storage has helped overcome intermittency problems that were the main barrier for wide deployment of solar and wind power.

While micro-grids can substitute the need for costly transmission infrastructure in rural areas, smart grids will replace traditional one-way transmission and distribution grids in urban centres. Distributed generation will complement centralised generation as consumers also become generators. Smart grids will have the potential to optimise the supply and demand every minute at every location, while shaving peak-capacity demand in this participative energy system.

The energy sector, like many other areas of business, is adapting to a rapidly changing society and business environment. Traditional policies and forward planning must now be complemented with a framework that enables simple, agile and responsive solutions, while still meeting macro-supply requirements.

With its projected economic development, Asean offers a genuine opportunity for energy planners and policymakers to look at tried and tested practices and solutions from around the world, in order to develop sustainable regulatory frameworks.

The pressure for more energy to support growing populations and economies in the region challenges us to find ways to encourage private investment, remove subsidies and policy inefficiencies, and remain flexible and responsive to renewable energy sources and rapidly changing technologies.

If we can achieve this, we can help transform the futures of hundreds of millions of people.


Csilla Kohalmi-Monfils is Head of Strategy, New Business and Communications at ENGIE Asia-Pacific.

Csilla Kohalmi-Monfils

ENGIE Asia-Pacific Head of Strategy

Csilla Kohalmi-Monfils is Head of Strategy, New Business and Communications at ENGIE Asia-Pacific.

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