Southeast Asia aims for 18 GW of pumped storage by 2033

Pumped hydropower will play an increasingly important role in the energy transition in Southeast Asia. This mature, large-scale energy storage technology has the potential to increase grid reliability as fossil fuel generators are phased out in favor of renewable sources. Pumped storage capacity in Southeast Asia is projected to grow from the current 2.3 gigawatts (GW) to 18 GW by 2033, representing an almost eight-fold increase in less than a decade and attracting an estimated total investment of between $12 to $70 billion.

Since 64% of the region’s energy generation comes from fossil fuels, reliable and green energy storage solutions are crucial to increasing the flexibility of the power system, especially as more renewable energy sources such as solar and wind are integrated. A 2.7 GW pumped storage plant is currently under construction, with the remaining 13.3 GW in various stages of development. This expansion will diversify the renewable energy landscape in the region, currently centered on the Philippines and Thailand. While Thailand currently boasts the largest existing capacity, the Philippines will soon surpass it, with approximately 5.7 GW of capacity in the pipeline.

Other countries in the region investing in pumped storage include Vietnam and Indonesia, which boast approximately 4.5 GW and 4.2 GW of pending capacity, respectively. Thailand will also contribute to the region’s growth by 2033, committing an additional 1.6 GW to development.

Pumped hydro is emerging as a promising solution to meeting the growing demand for energy storage needed to maintain grid reliability as Southeast Asia embraces more diverse renewable sources such as solar and wind power. Nevertheless, policymakers and developers must implement effective risk management to address the various challenges and uncertainties inherent in operating pumped storage, ensuring their smooth integration into the region’s energy landscape.

Nevi Cahya Winofa, Renewables and Energy Analyst, Rystad Energy

Find out more with Rystad Energy Renewable energy sources and energy solutions.

Policymaking has played a key role in the short term, especially with policies favoring pumped storage driving this dynamic. For example, the Philippine Department of Energy (DOE) actively regulates energy storage technologies, including pumped storage. In the upcoming Green Energy Auction Program (GEAP 3), scheduled for the second half of 2024, the Department of Energy plans to offer 3.1 GW of pumped storage capacity. Similarly, Vietnam’s National Power Development Plan No. 8 (PDP 8) aims to achieve 2.4 GW of pumped storage by 2030, with projects such as Bac Ai and Nihn Son already underway. Moreover, Indonesia, Thailand and other regional countries are making progress on pumped storage within specific policy frameworks.

State-owned utilities dominate pumped storage projects in much of Indonesia, the Philippines, Vietnam and Thailand. This trend is clearly visible in Southeast Asia’s three largest developers, all of whom have significant government ownership. Indonesia’s state-owned utility company PLN is a leading developer in the region, with 3.7 GW of pumped storage projects in the pipeline. High upfront costs and a long time to return on investment make pumped storage projects less attractive to private companies. Additionally, the licensing process can be unpredictable, extending project timelines and increasing risk for potential developers.

However, the Philippines is bucking this trend. Unlike its neighbors, the country has a separated electricity market, which means there is competition in both power generation and distribution. This competition causes volatility in wholesale electricity prices, which may fluctuate more significantly than on regulated markets. This provides an economic incentive for pumped storage, making it a more attractive option for developers in the Philippines.

Pumped hydropower is a method of storing hydropower used in power systems for load balancing. It works by pumping water from a lower reservoir to a higher reservoir, thereby storing energy that can later be used during periods of increased electricity demand. Cheap excess off-peak electricity typically powers pumps, and the stored water is released through turbines to generate power when needed.

Pumped storage projects are highly dependent on specific geographic conditions, which creates obstacles in site selection and land acquisition. Many potential sites are in rural areas that lack necessary infrastructure such as transmission lines and road access for construction purposes. These deficiencies can lead to increases in project costs and schedules, straining project finances. Moreover, acquiring land for these projects is complicated because they are often located in protected areas such as forests, river systems or urban zones, requiring strict compliance with environmental regulations to avoid delays.

Despite these challenges, pumped storage projects offer significant socio-economic benefits to the regions where they are implemented. In addition to ensuring a stable supply of electricity, they can stimulate infrastructure development, improving the accessibility of the area. In addition, these projects generate jobs, with particular benefit for residents during the construction and operation stages, thus stimulating the region’s economy. Maximizing these benefits requires effective risk management strategies that include strategic planning, thorough preparation, precise execution, and continuous evaluation by both developers and decision makers.

Communication

Nevi Cahya Winofa
Analyst for renewable energy sources and energy
Phone: +62 811 884 8899
[email protected]

Kartik Selvaraju
Media Relations Manager
Telephone: +65 8779 4619
[email protected]

About Rystad Energy
Rystad Energy is an independent energy research and business intelligence company providing data, tools, analytical and advisory services to the global energy industry. Our products and services cover energy fundamentals and global and regional upstream, oilfield and renewable energy services, tailored to analysts, managers and executives alike.

Rystad Energy is headquartered in Oslo, Norway, with offices in London, New York, Houston, Aberdeen, Stavanger, Rio de Janeiro, Singapore, Bangalore, Tokyo, Sydney and Dubai.