Powering Asia's next 100 million

Over one-fifth of Southeast Asia’s 600 million people do not have access to electricity. This lack of readily-accessible power means basic needs go unfulfilled and long-term quality of life remains low, with business productivity hindered in markets expected to drive the region’s continued economic growth.

As a result, companies and governments are realising the urgency in addressing shortfalls, taking positive steps toward powering Southeast Asia’s next 100 million people.

Efforts to drive higher electrification levels have already shown benefits across the region, playing a vital role in improving health and reducing poverty in key markets. Grid electrification has increased household incomes by at least 25 percent in Vietnam while rural electrification investment in Thailand has had a greater positive effect on poverty than any other form of public investment.

Increased electricity levels have also driven increased business performance, with reliable power access facilitating large-scale technical efficiency for firms in Indonesia.

Despite these proven advantages, a regional power gap persists due to a range of variables that include changeable political circumstance, ageing infrastructure and hefty investment requirements. While improvements are being made, countries like Cambodia and Myanmar still suffer from electrification rates of just 34 percent and 49 percent respectively.

The regional power picture, therefore, is characterised by varied long and short-term requirements across markets. This makes a definitive, one-size-fits-all approach impossible.

Solutions will depend on continued cooperation between governments and companies, who together must identify the optimal combination of long-term, strategic planning and immediate, tactical responses. Their approach will centre on:

• Driving greater collaboration between countries
• Addressing policy challenges
• Bridging the power gap through temporary power

Regional cooperation is already increasing, with thirteen new interconnections between countries’ power grids expected over the next decade. This drives enhanced reliability – particularly in locations far from potential suppliers – and lowers costs by allowing markets to take advantage of the cheapest resources and sharing reserve margins where possible.

Grid integration of this nature is a central objective under the ASEAN Plan of Action on Energy Cooperation for 2010-2015, and will continue to optimise available supplies on a more regional and collective basis.

Countries are also addressing policies that have created market distortions, such as fossil-fuel subsidies. Contrary to the intended goal of providing economically-viable energy supplies, these subsidies have created false pricing perceptions, deterred investment, and hampered renewables efforts.

By decreasing the dependence on such subsidies, utilities will have greater access to capital for modern infrastructure and efficient technologies.

Other policy development examples include Thailand’s plan to drive nuclear-powered electricity before 2030 and the adoption of renewables capacity and generation targets by most ASEAN countries. Indonesia, Malaysia, the Philippines, and Thailand also have financial support measures in place to accelerate renewables development.

Temporary power is also playing a vital role in eliminating immediate-term power challenges to help markets meet long-term goals. This flexible solution remedies erratic supply and reinforces inadequate grid capacity.

In addition, it delivers power to remote areas that lack easy access to electricity grids, within rapid timeframes not possible by more permanent solutions, allowing results of benefiting communities to make an impact promptly. This is particularly important in the context of Southeast Asia, where 80 percent of all people without electricity access happen to reside in low-density rural areas.

These measures have already helped to deliver electricity access to an additional 60 million people since 2002. Indonesia, Vietnam, Laos, and Cambodia have all significantly increased their own electricity access rates, while other markets have set ambitious but achievable access targets.

Despite this positive progress, though, there is more to be done, and it will be the solutions outlined here that continue to deliver sustainable electricity and power to Southeast Asia’s next 100 million.