Energy transition a tricky balancing act in Asia

From solar panels operated by Thailand-based BCPG in Japan to wind turbines in Phetchaburi province, renewable power has become a bigger player in the energy mix. Photo: BCPG

Shifting from fossil fuels to renewable energy sources is a noble goal, but doing so in Asia is a huge challenge, given soaring energy demand from the growing middle class and the need to serve tens of millions of others living in poverty.

Photo: Thanarak Khunton

Nearly two out of 10 people in the region still do not have access to electricity, noted participants at a recent gathering of energy policymakers in Bangkok.

They agreed, however, that tremendous opportunities exist for scaling up renewables, with waste-to-energy technology an especially promising approach, in the view of the Asian Development Bank (ADB).

"There is a palpable sense of the enormous opportunities ahead that can transform the energy scene. The region's energy intensity has continued to decline but our enormous energy efficiency potential has yet to be fulfilled," said Shamshad Akhtar, the United Nations under-secretary-general and executive secretary of its Economic and Social Commission for Asia and the Pacific (Escap).

Speaking at the opening of the second Asian and Pacific Energy Forum in Bangkok, Dr Akhtar acknowledged that the growing recognition by governments, businesses and investors that a sustainable, low-carbon energy system is the only option to "safeguard our future".

Asia Pacific is projected to account for two-thirds of global energy use between now and 2040, so diversification is essential to ensure a sustainable supply, said Virasakdi Futrakul, deputy minister of foreign affairs for Thailand.

Delegates agreed that Asia Pacific has made remarkable progress on access to electricity, while renewable energy prices have already fallen below levels not expected to be seen until 2020. However, 622 million of the 3.6 billion people in developing Asia are still living without electricity.

Nearly half of those people reside in India, accounting for 24% of the country's population. China, meanwhile, says only 0.2% of its population is not on the grid, while the figure is as high as 70% in Cambodia, Myanmar and North Korea.

Across the 21-member Asia Pacific Economic Cooperation (Apec) region, energy consumption by 2040 is forecast to grow 35% from 8 billion tonnes of oil equivalent (Mtoe) consumed in 2013, according to the Apec Energy Demand and Supply Outlook Report.

Fossil fuels are projected to still account for 80% of Apec's primary energy demand in 2040, with carbon dioxide emissions from fuel combustion rising 24% from current levels, noted the report.

Electricity supply in Asia Pacific is still largely derived from coal, representing over half of the power mix. The contribution of renewables other than hydro is growing exponentially, but remains small. Nearly 2.1 billion people in the region still rely on traditional cooking fuels, with millions in rural areas still using wood, dung and charcoal.

The European Union, meanwhile, is aiming for 20% of final energy consumption to be from renewable sources by 2020 and 27% by 2030. That compares with an estimated 16.4% in 2015.

To reach the same levels as their European counterparts, Apec leaders agreed in 2014 on a series of actions to encourage the sustainable use of energy, including greater regional cooperation on cross-border infrastructure development and energy trade.

One of the main goals is to double the share of renewables in the Apec energy mix, including power generation, by 2030. Another is to reduce aggregate energy intensity (a common indicator of efficiency) by 45% from 2005 levels before 2035. Progress on the latter has been appreciable, with a 17.9% decline for the 2005-15 period.

Renewable sources represent a large share of final energy consumption in some economies such as Tajikistan, which tops the table at 41%, followed by New Zealand at 23%. Laos, thanks to its hydropower resources, has the highest share in Asean at 18%, compared with 8-9% in Vietnam and the Philippines and less than 5% in other member states.

But if biomass is excluded, the share of modern renewable energy sources is still low in many economies. Hydropower dominates in Asia Pacific but solar and wind are gaining popularity, mostly in China, Japan, India, Australia, South Korea and Turkey.

Solar capacity is, however, "growing at an exponential rate within the region" as prices of the technology plunge, Escap noted.

Awais Ahmad Leghari, federal minister for energy in Pakistan, says the pace of energy transition for developing countries largely depends on finance and technology transfer.

"Developing countries, such as Pakistan, are already doing whatever they can ... within the limited realm of their national budgets and traditional technological base," he said. "However, they cannot manage this transition without the help of the global community."

Mr Leghari suggested a regional data bank be set up for off-grid energy solutions to share knowledge and experience, along with a regional carbon market, similar to that of Europe, to promote a shift to low-carbon growth.

"We are interested in seeing ... a regional grid, similar to the European grid, to impart stability and we want countries like Australia, which has been the first to embark on grid-scale renewable energy storage systems, to share successful models and programmes they have implemented," he said.

"We are looking at resource commitment, especially for hydropower projects across the region, with reservoirs to try to mitigate the climate change effects on agriculture-based economies."

Acquiring technology in the shift toward renewables is not a big problem in Southeast Asia because in the digital world, information now travels very quickly, according to Yongping Zhai, chief of the Energy Sector Group at the ADB.

The development of a business model, in his view, is equally important in order to respect local conditions, community concerns and the position of the big utility providers in the country.

"If someone says that countries need technology or the region needs technology (for renewables), I think we should cite the success of Thailand in promoting renewable energy with the country's innovative pricing scheme, which ... has helped lower the cost of renewables in the country," he told Asia Focus at a separate event.

Thailand's Energy Ministry has set a target for renewables to represent 20% of installed capacity by 2036, with wind and solar at 3,000 and 6,000 MW, respectively. The country is moving rapidly toward these goals with wind power capacity tripling from 2014 levels to about 630 MW at the end of 2017. Solar capacity doubled to 2,700 MW over the same period.

Power plants fuelled by biomass, biogas and municipal solid waste have also grown, according to research by the Bangkok-based law firm Tilleke & Gibbins.

"The ADB has already sent our waste-to-energy experts to Bangkok to discuss with stakeholders how to attack this potential, because if we can convert waste into energy that would not only be good for power supply, but also very clean for the environment," said Mr Zhai.

The next challenge will be to come up with a business model, and the question is whether all stakeholders -- from government to businesses and power users -- will be able to share the benefits for the deal to work.

"A business model is equally as important as the technology used," he added.