A New Partnership for a Sustainable Energy Future in Southeast Asia
The global energy landscape is witnessing rapid and wide-ranging change driven by an unprecedented growth of renewables. This transformation is reshaping the global energy paradigm, bringing new opportunities for sustainable growth and livelihoods. Nowhere are these opportunities more available and transformational than in the 10 states that make up the Association of Southeast Asian Nations (ASEAN).
Southeast Asia is home to some of the world’s fastest-growing developing economies. Rich in natural resources and young, vibrant societies, ASEAN’s member countries have secured strong, consistent economic growth for half a century – dramatically reducing poverty rates and improving livelihoods. Cooperation, trade, and abundant conventional energy resources have been instrumental in its progress. Now, ASEAN countries are well positioned to build a new and increasingly inclusive economic future, based on low-carbon energy.
There is a formidable global momentum behind renewable energy development. Advancements in technology and cost reductions have underpinned the rise of renewables as a mainstream source of global power. Last year, additions in renewable energy capacity reached 168 gigawatts (GW) globally and in each of the last six years, renewable power has outpaced all fossil fuels worldwide. In Southeast Asia, hydropower, geothermal energy, and bioenergy are already within the range of fossil fuel power generation costs. Solar photovoltaic (PV) costs in the region have fallen by half over the last six years while wind energy has emerged as a competitive alternative in some countries in the region. These cost reductions are set to continue.
The increased competitiveness of renewables has inspired greater ambition. All ASEAN countries now have national renewable energy targets in place, and the adoption of an aspirational ASEAN renewable energy target of 23 per cent of total primary energy by 2025 represents a clear signal of intent from the region. In pursuit of this target, there is progress. Last year, Indonesia installed more geothermal energy capacity than any country in the world other than Turkey, and total non-hydropower renewables grew from six GW to 15 GW in the 10 years between 2006 and 2016. ASEAN’s renewable energy potential is also exciting. Based on IRENA estimates, more than 50 GW of solar PV could be deployed in the region by 2025.
Yet, to attain this 23 per cent aspirational goal, ASEAN members must raise ambition within current plans and policies. Our analysis finds that achieving the target requires an estimated USD 27 billion of investment in renewable energy capacity per year for the next eight years – a tenfold increase on 2016 investment volumes. Improving the readiness of projects, expanding access to finance, and reducing the presence – and perception – of risk in the sector are measures that can unlock the investment capital required. Supporting the deployment of renewable energy through more streamlined and transparent legal and regulatory processes are also important factors.
These measures will be central to a new strategic partnership between IRENA and ASEAN. A memorandum of understanding signed at the Singapore International Energy Week (SIEW) will strengthen cooperation between them, with an aim to stimulate higher investment flows and accelerate the pace of transformation, delivering widespread socio-economic gains to communities in every corner of the region. It is pertinent then that this year’s SIEW addresses the theme “Transforming Energy: Invest, Innovate, Integrate”, which highlights opportunities amidst rapid changes in the energy landscape to invest, innovate, and integrate energy systems for a more resilient energy future.
One key area of opportunity is in job creation. Last year alone, more than half a million new jobs were created in the renewables industry, bringing the global total to more than 10 million jobs. In Southeast Asia, employment in the renewable energy sector stands at around 600,000 today. However, the potential exists to generate well over two million jobs under an accelerated 2030 path.
Renewables are also improving livelihoods. Low-cost renewable electricity is reducing fuel bills in a region subject to some of the highest electricity prices in the world. In the Philippines, for example, solar-powered microgrids have reduced household spending on power generation by a third and allowed communities to install additional appliances such as televisions, refrigerators, and fans.
Health can also be dramatically improved by lowering air pollution. Estimates suggest that ASEAN societies will spend up to USD 225 billion over the next seven years to tackle the consequences of atmospheric pollution on public health without decisive mitigation action. Renewables are also a key solution for climate mitigation and will support climate resilience in vulnerable countries.
Finally, there is the lack of energy access – a challenge facing more than 65 million people in the region. Rising urban demand as well as low population density in remote communities make decentralised renewables solutions a reliable and affordable alternative for households. Scaling up the adoption of such off-grid systems is therefore the focus of IRENA’s International Off-Grid Renewable Energy Conference taking place here in Singapore this week.
The future of tomorrow depends on the energy decisions that we are making today. Fundamentally, the accelerated adoption of renewable energy offers broad environmental, economic, and social benefits that can underpin sustainable economic development throughout Southeast Asia. IRENA looks forward to working closely with the region under this new partnership to support its transition to a sustainable energy future.
Adnan Z. Amin, Director-General of IRENA is Director-General of the International Renewable Energy Agency (IRENA).
He delivered a keynote address at the Singapore International Energy Week (SIEW) 2018 on 30 October, which focused on creating an enabling environment for investments in new energy solutions.
This was originally published in The Business Times on 30 October 2018.
By IRENA