With the spirit of achieving energy security and moving towards an integrated, competitive and resilient region, ASEAN energy cooperation in 2017 was driven towards enhancing regional connectivity through the programmes of ASEAN Plan of Action for Energy Cooperation (APAEC) such as the Trans-ASEAN Gas Pipeline (TAGP) and ASEAN Power Grid (APG). ASEAN’s golden jubilee last year also affirmed ASEAN’s transition into a cleaner region through the promotion of renewable energy (RE) and energy efficiency (EE).
Entering 2018, it is interesting to see what energy trends are in store for ASEAN throughout the year. As the first weeks of 2018 have passed, we get the opportunity to get a glimpse of what the occurrences can tell us in terms of energy sector in ASEAN this year.
- Global oil prices are climbing up
Referring to World Bank commodity forecast, global oil prices are likely to hike in 2018 to be around USD 56 per barrel and would continue to rise up to USD 70 per barrel by 2030. The price increment is said to be due to global supply concerns and robust economic growth in developed and emerging countries.
As ASEAN economy continues to grow, a higher energy consumption is expected in the region. Thailand through its Ministry of Energy’s Office forecasted that energy use will rise by 2.1% in 2018. Thailand’s oil consumption itself is estimated to advance by 2.2 per cent. This gives the impression that ASEAN demand for fossil fuels will still occur in ASEAN this year.
In fact, fuel prices had already climbed in the first quarter of 2018 in the Philippines. As oil price increases, the DOE and the Energy Regulatory Commission (ERC) should take steps to ensure that the increase does not necessarily affect the public negatively. As for Indonesia, the oil price hikes are contributing to the decision-making process of energy subsidies budget. In 2017, Indonesia’s subsidies for fuel and electricity had ballooned to IDR 97.6 trillion (USD 7.2 billion), higher than the budget allocation due to the mismatch between actual and assumed oil price. This indicates that the Government of Indonesia (GoI) should take into consideration the ongoing oil price increment this year to decide on energy subsidies. Despite the peaking oil price, the GoI stated that they will put efforts to maintain electricity price and certain fuel types in the first quarter of 2018.
- Changes in electricity price
Providing affordable energy to the people has become ASEAN’s agenda as it is one of the four pillars of ASEAN energy cooperation, and is expected to remain the region’s focus in 2018, especially for electricity.
Although some ASEAN Member States (AMS) may be challenged in maintaining electricity tariff by ruling out new policies and subsidies like Indonesia and the Philippines, Malaysia is committed to hold the electricity tariff at the same level until the next three years for domestic and commercial users.
In the meantime, good news is coming from Cambodia where government plans to bring down the cost of electricity for factories in agriculture sector. The rate is expected to be reduced to USD 12 cents/kWh upon full capacity operation of power plants under construction in Myanmar.
- Enthusiasm in ASEAN energy business is growing
Energy business seems to be more prospective this year with the increasing competition and participation in the sector, spotted in several ASEAN Member States.
This indication is shown in the Philippines, where The Philippine National Oil Co. (PNOC) received several proposals from foreign firms to join partnership with them to build the ambitious integrated liquefied natural gas (LNG) hub in the country, including storage, liquefaction, regasification and distribution facility as well as reserve initial power plant capacity of 200 MW. The project will become the country’s first LNG hub. The Philippines is looking forward to having the ground-breaking in 2018.
More investment flows are also expected in ASEAN. World Bank is ready to disburse USD 600 million of loan for Indonesia through Ministry of Finance to continue the development of renewable energy. Indonesian government is aiming to use the funds for financing five geothermal activities with combined potential power generation capacity of more than 370 MW.
- Continuous development of renewable energy
In Malaysia, more energy companies are diversifying its core business into renewable energy, mainly in hydropower and solar power. This is because the potentials are viewed as promising, looking at the market and financing climate created by the government in the past years.
Meanwhile, Indonesia starts exploring its ocean wave potential by developing a 10-MW marine and hydro-kinetic energy park in Nusa Penida in 2018. The country is engaging a Finland-based company, Wello, to begin this initiative in order to explore the possibility of tapping the 17-GW potential of energy from its ocean.
A remarkable achievement in renewable energy is also coming from the Philippines, as it is ranked to be the first in utilising solar power for electricity generation among the developing countries in Asia, according to a Dutch consultancy firm.
At a glance, the above indicators give a good predicament of how 2018 would be for ASEAN energy sector. To know more about the energy trends in ASEAN this year, check out our webinar on 23 January 2018:
Featured photo credit: energepic.com