SE Asia needs more renewables
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SE Asia needs more renewables

Renewable energy offers Southeast Asia sustainable, affordable, and reliable power, but achieving this requires bold, decisive action. Slowing down coal phase-out ambitions would undermine these efforts.

Southeast Asian countries are highly vulnerable to climate change impacts, yet they continue to rely heavily on coal for economic development. Compared to other parts of the world, the region is still to fully embrace the potential of low-cost renewable energy sources, such as solar and wind power. Despite commitments to phase out coal, Indonesia, Vietnam, and the Philippines still plan to build 45GW of new coal capacity, lacking detailed roadmaps for coal phase-out and ambition to phase in renewables.

The transition to variable renewable energy (VRE) can bring a plethora of benefits to Southeast Asia. Evidence from power systems around the world indicates that integrating VRE can reduce costs and enhance reliability. A rapid transition to renewable energy is also the most effective strategy to reduce pollution, improve public health, increase competitiveness, and build more resilient economies. Why haven't most Southeast Asian countries not pursued this transition more?

A significant impediment to Southeast Asia's energy transition is the region's political and economic reliance on coal. This has led to misperceptions regarding the technical and economic viability of an energy transition based on solar and wind power, slowing down its progress.

Coal power is often assumed to be cheaper. However, this is often only artificially the case. In Indonesia, the government keeps coal electricity prices low through hidden subsidies provided via the domestic market coal price cap at a maximum of US$70 (2,573 baht) per tonne. Without this subsidy, based on coal prices in the international market, electricity from coal plants could be 20% more expensive than the current average coal prices. With this price, solar and storage could be on par with coal electricity.

Coal has also traditionally been regarded as more reliable. However, coal-fired power plants in the Philippines and Vietnam have recently experienced frequent unplanned outages and supply constraints, prompting serious concerns about their reliability. Moreover, coal-fired power plants also significantly contribute to air pollution and climate change, among other negative externalities, which severely negatively impact economies, ecosystems, and public health.

At the same time, global experience with renewable energy has shown that the integration of VRE can make power systems clean, affordable, and secure. Technological advances and economies of scale have made renewable energy sources increasingly affordable and competitive, particularly in Southeast Asia. Several nations have taken advantage of these falling costs. Uruguay, Chile, Portugal, Germany, and the UK generate over 30% of their electricity from wind and solar power. Hawaii, a remote island state, increased its share of solar power to 20% of total electricity production.

These countries have not just improved their affordability but also maintained and often improved their reliability. They have done so by investing in advanced grid management, energy storage, demand response, and other VRE integration solutions. In short, they have made their power systems more flexible. In this context, the concept of baseload on which most coal-fired power plants have been designed and built (i.e. running around the clock and generating electricity at a constant level) has become obsolete. Power plants in these systems increasingly adjust their output to facilitate VRE integration, reducing greenhouse gas emissions and lowering costs for consumers.

But the benefits of the transition extend further. Reducing the use of fossil fuels avoids their environmental and social harm (air pollution, deforestation, biodiversity loss, etc), boosting health and wellbeing. Investments in renewable energy, in turn, create employment and stimulate local economies in ways that are often more sustainable and resilient to economic fluctuations than those in the fossil fuel industry. Increasing the share of renewable energy also increases energy security. Reducing countries' dependence on imported fossil fuels can mitigate the risks associated with fuel price volatility and geopolitical tensions. This energy independence serves to promote stability and resilience, thereby reducing the vulnerability of economies to external shocks.

In countries starting to develop wind and solar power, like Indonesia or the Philippines, much can be achieved to integrate higher shares of VRE in the short term through simple measures like operational adjustments, grid management improvements, and basic infrastructure upgrades. Going beyond a share of 5 to 10% VRE -- as seen in Vietnam -- requires putting the flexibility paradigm at the core of power system design, planning and operation.

However, reaping the full benefits of the transition and achieving it in our limited time frame requires bold and decisive action, substantial financial support, and policies safeguarding the most vulnerable groups during the transition. Policymakers need to send clear signals to public and private actors alike that they are pursuing the transition.

Talking about keeping coal power plants running for several more decades only undermine the credibility of the region's commitment to a clean energy future and delays the progress we need. Instead, clear strategies are needed to phase out coal power, including inclusive, transparent, and concrete just transition policies to mitigate the economic, political, and social impact of the phase-out.

The shift to renewable energy is urgent, feasible, and desirable. Although it will require collective effort and a clear vision, the benefits will far outweigh the challenges. The time is now for Southeast Asia to embrace the global energy transition wholeheartedly.

Fabby Tumiwa is Executive Director of the Institute for Essential Services Reform. Dimitri Pescia is Director for Southeast and East Asia, Agora Energiewende.

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