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Opinion | How Singapore’s pursuit of clean energy can support its commitment to a greener Asean energy grid

Posted on by darion

On Conference 28 last year, 125 countries agreed to triple renewable energy capacity by 2030 and double energy efficiency improvements. Half Association of Southeast Asian Nations have signed this declaration, but even countries that have not made national commitments to increase renewable energy and move towards net zero emissions. ASEAN energy trade will be key to ensuring that these commitments are met.
Singapore is already implementing electricity trade projects with six other ASEAN members – Laos, Thailand, Malaysia, Cambodia, VietnamAND Indonesia – placing it at the forefront of regional energy trading. Singapore can use its early mover advantage to set the standard for green electricity trading and inspire positive change in the region.
Southeast Asia is the world’s fourth largest combined energy consumer, and the International Energy Agency forecasts that energy demand in Southeast Asia will increase by about 5 percent annually by 2030 and by 3 percent by 2050, above the global average during this period. Indonesia, Malaysia, PhilippinesThailand and Vietnam account for about 89 percent of ASEAN’s current energy demand and most of its future growth. Singapore accounts for only 5 percent of ASEAN’s energy demand, but it still has influence as a center for innovation and advancement in electricity trade.
A seller waits for customers under lights powered by solar panels installed on the roof of a market in Klaten in Indonesia’s Central Java province. Photo: AFP

Singapore’s leadership in this space is driven by domestic needs: most of its energy currently comes from natural gas, and the government has set a long-term goal of reducing that to just over 50 percent through clean electricity substitution. Some of this alternative energy will come from domestic sources, such as rooftop solar and potentially geothermal, nuclear, or hydrogen. However, given land constraints, imported electricity will be a necessary factor in Singapore’s future energy mix.

The Energy Market Authority has set a target of importing 4,000 megawatts (or about 30 per cent) of Singapore’s electricity by 2035. Achieving this target will require a significant increase in imports, as Singapore currently imports only 1.3 per cent of its electricity in the form of sold power hydropower with a capacity of 100 MW Laos, Thailand, Malaysia and Singapore Energy Integration Project (LTMS-PIP). This milestone was the first multilateral energy trading system in ASEAN and is likely to grow to 300 MW soon.

However, future needs will likely be met from other sources, partly due to required infrastructure upgrades to expand interconnection and power flow for LTMS-PIP, and partly from the overall security and resiliency benefits of power diversification. The Singapore Energy Market Authority recently granted conditional approval to a number of alternative electricity imports: deals to supply 1,000 MW of solar, wind and pumped storage power from Cambodia; 1,200 MW of offshore wind projects in Vietnam; and up to 2,000 MW of solar power from Indonesia signed in 2023.

Many factors are contributing to the region’s renewed push for regional energy trading, including excess electricity and reserve margins in exporting countries such as Laos, shared concerns about overreliance on volatile fossil fuel markets in light of Covid-19 pandemic AND Conflict in Ukraineand the climate crisis driving national efforts to reduce emissions. In this context, agreements with Singapore help spur innovation in regional energy trade that has not been captured in previous analyzes of Asean’s energy grid.
Last year, an employee took a photo of solar panels on the roof of the Keppel Bay Tower office building in Singapore. Photo: Reuters

Singapore’s preference for clean energy is driving new ideas for energy routes, such as high-voltage undersea transmission cables that enable direct electricity trade with Cambodia, Indonesia and Vietnam. Singapore will also need to develop operational and pricing arrangements for cross-border purchases of solar and wind energy, which require different conditions than traditional energy sources due to variable production.

Singapore should demonstrate to the region that these increasingly cheaper alternatives are reliable and provide a good return on investment, both domestically and in regional trade. This could open the door to larger-scale renewable energy trade among other ASEAN members and influence similar projects such as the Brunei-Indonesia-Malaysia-Philippines energy integration project. Sharing Singapore’s experience in innovative investment could also demonstrate success to other foreign investors, such as Chinawhich could increase the scale of investment in clean energy in the Asian region.

Expanding interconnections will generate significant savings for the ASEAN region. A recent DNV study found that Asean could save $800 billion by 2050 if countries embraced renewable energy through multilateral trade. Equally important, the study shows that expanded regional energy trade could reduce the land-use footprint of energy projects by 13 percent, avoiding unnecessary construction of domestic power plants and energy storage facilities.

Electricity trading opens the door to a wider range of power generation options, enabling Singapore and the region to be more selective in the projects from which power is purchased, thereby selectively reducing the most significant environmental impacts of investments. Many low-carbon energy projects also have significant non-carbon environmental impacts – such as river fragmentation associated with large-scale hydropower plants or land-use tensions associated with large solar farms.

Explicitly including a range of criteria for signing energy trade agreements – such as high-quality environmental and social impact assessments or high standards for renewable energy certification – can help prioritise projects that are both clean and fundamentally sustainable.

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Singapore showcases one of the world’s largest floating solar panel farms

Singapore unveils one of the world’s largest floating solar farms

The Energy Market Authority could require specific standards for environmental and social impact assessments before granting conditional approval to projects, encouraging investors in exporting countries to meet higher standards than domestic regulations may require and to avoid projects with unmitigated negative impacts.

Coordination with national utilities in exporting countries on the issuance and trading of renewable energy certificates would also be crucial to tracking the broader impacts of electricity imports. The certificates could eventually be sold to private companies that use large amounts of energy and are trying to meet their renewable energy goals.

Singapore alone cannot guarantee change, but it can inspire and support the regional conversation on a greener ASEAN energy grid. While electricity demand in Singapore is limited compared to that of its neighbors, as an early adopter you have the opportunity to explore standard setting and build consensus around the regional scale of energy trading.

Singapore is already a hub for technical training programmes through its universities, the Singapore Cooperation Programme and the Third-Country Training Programme with numerous international partners. Focusing future training series on renewable energy certification standards, renewable energy grid integration and system-scale planning would help pave the way for a greener and more resilient regional energy system aligned with ASEAN interests.

Courtney Weatherby is associate director of the Southeast Asia program and a fellow in the Energy, Water, & Sustainability program at the Stimson Center in Washington, DC. This commentary was first published on the ISEAS – Yusof Ishak Institute commentary website fulcrum.sg.