Enlit Asia (formerly PowerGen Asia) is a major event in Southeast Asia that gathers various power sector stakeholders, from regulators and financiers to industry leaders and from generation grids to consumers. It shares visions and strategies of the region's energy transition course and exchanges experts' knowledge that drives the way to the low-carbon pathway.

Our experts presented and moderated six separate sessions during the event, on 20 to 22 September.

S&P Commodity Insights contributions to Enlit Asia 2022

Power development planning post COP26 and Russia-Ukraine war: Struggle between affordability and decarbonization

Southeast Asia continues to be committed to its long-term net-zero target. However, volatile commodity prices have thwarted near-term efforts. Many emerging economies in the region are facing the same dilemma. On one hand, they represent the strongest economic growth and require substantial new power capacity; on the other hand, they are coal-reliant countries, and decarbonizing the existing power fleet is a difficult task against a backdrop of high imported LNG prices delaying the start-up of gas imports and gas-fired plants. These issues have also led to the consideration of continuing the use of coal-fired power, either through delays in plant retirement and/or reconsidering moratoriums on coal plant developments.

Carbon capture and storage has been mentioned by planners as an option to battle carbon emissions, but the current applications are mostly in a smaller size and almost exclusively in oil and gas and industrial sectors, where emissions are more concentrated and the abatement cost is lower.

There is a clear agreement that decarbonizing the power sector will require tremendous capital investment, external technical support, along with interregional collaboration. There will also be a greater focus on energy efficiency as a lever to decarbonize the sector, and this will result in a lower forecast for power demand growth.

Thailand's 2022 power development plan (PDP) should be finalized in October 2022, while Vietnam's PDP8 continues to be plagued by delays. What remains clear is that even if net-zero pledges have been scrutinized in the process, the new plans will likely maintain a sizeable coal share owing to affordability concerns.

Besides, ASEAN interconnection was mentioned again in this year's conference, with most energy leaders concerned about the cross-border policy hurdles. Beyond shifting of green electricity around, an enhanced ASEAN interconnection network would provide more effective, firm, and flexible generation capacity to improve the supply reliability.

In fact, instead of building green power projects and exporting to Singapore, Thailand and Malaysia would encourage the corporates to move their green energy demand/investment to Thailand or Malaysia. As Singapore's lower-carbon pathway is relying on green power import (please refer to Which ASEAN country will be the front runner for net-zero? for more details), the difficulty to get green power from neighbors appears to be a threat to its plan.

The renewables sector remains attractive

Malaysia has confirmed that the country will kick off the renewable energy zone study soon, to help identify zones with favorable resources to facilitate and boost renewables development. The creation of renewable energy zones will help coordinate power system planning and allow for faster-pace development of solar and wind capacity (please register for our upcoming webinar, Lofty renewable targets in Southeast Asia: How to attract more private investments? to learn more details).

Vietnam remains an attractive market for mergers and acquisitions, for both operating and upcoming projects. This is despite the lack of clarity on the future pricing and award mechanism, as well as timing when new projects will be awarded. This interest is underpinned by the lofty targets in the draft PDP and the growing demand for renewables by the commercial and industrial sector as clearly seen in the growth of the behind-the-meter solar segment.

The behind-the-meter solar sector in Thailand remains vibrant, as competition builds up and customers become savvier. The discount off tariff being offered has increased to 60%, compared with 20% previously, while more customers have called for open tenders instead of bilateral negotiations. The customers are also taking advantage of the competition in the market to obtain more favorable contracting terms, removing the guaranteed offtake level, which was once the standard requirement for project developers to secure financing.

Demand for renewable energy certificates (RECs) continues to outstrip supply in Singapore, while the planned low-carbon power imports appear to be facing delays. This has resulted in REC prices tripling since the start of the year to S$60/MWh and is being bought up as soon as they are offered.

The development of blending with low-carbon fuels to decarbonize thermal generation is accelerating

Hydrogen (H2) continues to be widely discussed, and despite the high cost, all stakeholders are presenting plans of quick advancements, with large-scale pilot projects starting in the 2030s and the rollout starting in the 2040s. This is while smaller-scale pilots are already being undertaken.

Major equipment suppliers, such as GE, Siemens, and Mitsubishi, all announced that a 100% H2-fueled large-scale (400-500 MW) turbine will be available by 2030, and currently the highest blending ratio is 20-30% H2 by volume for large-scale turbines. 100% H2 is only for smaller-frame turbines (50 MW or below). Upgrading of equipment will be necessary to blend more than 15% of hydrogen with natural gas by volume, but switching back to burning 100% natural gas can be done without additional maintenance cost.

Alternatively, the option to blend biomass with coal is available, although the blending ratio is limited at 15% for larger coal plants (500 MW) and 30-42% for smaller plants (150-200 MW).

Read more insights into key topics related the power sector energy transition in Southeast Asia at our research series homepage.

Posted 11 October 2022 by Allen Wang, Senior Director, APAC Regional Integrated Service, Gas, Power and Climate Solutions, S&P Global Commodity Insights and

Cecillia Zheng, Associate Director, Gas, Power and Climate Solutions, S&P Global Commodity Insights and

Joo Yeow Lee, Associate Director, Gas, Power and Climate Solutions, S&P Global Commodity Insights

This article was published by S&P Global Commodity Insights and not by S&P Global Ratings, which is a separately managed division of S&P Global.