Is ASEAN Going in the Right Direction on Clean Energy?

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Questions and Answers
Q1 For some countries in ASEAN that have high electrification rate, does ACE consider to implement RE in residential sector as distributed generation (DG) in the future?
A1 Yes, in the last five years, we have seen the growth of distributed generation in residential sector in some ASEAN Member States (AMS). Singapore and the Philippines have implemented net-metering mechanism to accommodate this. PLN, Indonesia’s state-owned utility, has issued a regulation (PT PLN’s Regulation of the Board of Directors No. 0733.K/DIR/2013 on the utilisation of photovoltaic rooftop electrical energy by consumers) that allows the Utility to buy electricity from their consumers. Malaysia and Thailand are considering to implement the net-metering in the near future. ACE has been actively initiating discussions with the AMS (government and utility companies) on the net-metering mechanisms. Several workshops have been conducted to exchange knowledge among the AMS. The report on the net-metering workshop could be downloaded here http://aseanrenewables.info/publication/report-on-regional-fgd-on-net-metering/
Q2 For the consumer dimension integration into the grid, how does ASEAN population participate in the development of clean energy? Is there any plan to promote the “Prosumer” (producer and consumer) concept to the ASEAN population (e.g. solar rooftop and electric vehicle)?
A2 Under the Advancing Policy Scenario (APS) of the 4th ASEAN Energy Outlook (AEO4), electric vehicles are expected to be popular in some Member States, such as Singapore, Malaysia and the Philippines. The policy makers are actively promoting this under their national plans.
Q3 I was wondering how you define the local content, which is always a challenge in this context.
A3

Local content is one of the important aspects for the AMS in the development of their national renewable energy policies. Today, there are already two AMS that have set the regulations and measures for local content (see Table).

ASEAN Member States Type of measure and sector(s) Details of the Local Content Requirements (LCR)

Law/

Regulation/

Programme

Year of implementation of LCR (status)
Indonesia Feed-in Tariff (FiT) bonus eligibility for solar 20% FiT bonus for 40% or more local content Ministry of Energy and Mineral Resources’ Regulation  No. 17 of 2013

It was implemented on 2013.

Update:

Supreme Court issued a decision requires the Ministry to revoke the regulation; (June 2014)

Malaysia FiT bonus eligibility for solar Bonus determined by type of local components used:
PV modules: +0.03/kWh
Inverters: +0.01 RM/kWh
Malaysian Renewable Energy Bill 2010 (ongoing)

In Indonesia, verification and approval procedures/mechanism for local content is managed by the Renewable Energy Division of the Ministry of Energy and Mineral Resources, while in Malaysia this issue is managed by the Sustainable Energy Development Authority (SEDA).

Q4  Could you shed some lights on the off-grid renewable energy potential and current state of market?
A4 The average electrification ratio in ASEAN Member States is 78.7% (2014), meaning that there are still around 100 million people who have no access to electricity. Most of the population that have not had electricity are living in remote areas, where the grid connection is difficult. Off-grid, whether using 100% renewable energy or hybrid is one of the best solutions for this. The technologies that are mostly utilised for off-grid are small hydro, solar PV (also solar home system), and hybrid (solar PV-diesel, micro hydro-diesel, etc.). Most of the off-grid rural electrification projects are funded by the government or by grants from international organisations, even though in some countries, like Lao PDR, private sector is also involved in these initiatives.
Q5 Is the target of overall reduction in total energy demand by 20 % by 2035 in Cambodia realistic? Cambodia is a relatively low income country that will probably grow fast. High growth and falling energy demand may be a challenge.
A5

The National Energy Efficiency and Conservation (E&C) Policy in Cambodia sets the energy savings reduction target of 20% by 2035 based on 2005 level.  The number is reflected in the sectoral targets: savings of at least 20% in the industry sector (garments), up to 50% in the household sector (household appliances), up to 80% in the energy sector (rural energy enterprises), and ranging from 30% to 50% in biomass energy (improved cook stoves and kilns).

This target is in line with the regional aspiration and the Government of Cambodia has shown a strong interest to ensure that the plan is implemented towards achieving the target. The cooperation on ASEAN regional level will allow Cambodia to tap the experience and best practices from other ASEAN Member States (AMS).

The ASEAN Centre for Energy (ACE) has undertaken some EE&C cooperation programmes in a way that supports Cambodia to meet their target. Some of the programmes are: capacity building on EE&C policy and regulations; EE&C database development; on-the-job training (OJT)-energy audit; EE&C promotion through energy audit in industry and building; EE standard and labelling & market transformation; as well as certification programme though ASEAN Energy Manager Accreditation Scheme and energy management handbook. Moreover, ACE is also building cooperation with dialogue partners and international organisations (DPs/IOs) to support Cambodia. Under the cooperation with Korea Energy Agency (KEA), Cambodia is expected to have their national EE standard and labelling system for refrigerators by this year.  This would help them to accelerate the implementation of their EE measures.

Q6 What are the common challenges/problems for both renewable energy and energy efficiency? And what are the solutions?
A6

On Renewable Energy:

Each ASEAN Member State (AMS) has specific challenges in implementing renewable energy (RE) and energy efficiency (EE).   However, there are a number of common challenges/problems that they are facing:

  1. RE regulations/permit procedures; which are still complicated and inefficient in most AMS. There is a need to simplify and streamline permit procedures and to assign 1 (one) dedicated institution as a one-stop service for all regulations/permit procedures. For example, the one-stop service concept is applied in Malaysia with the assignment of SEDA for this purpose. While in Indonesia the Ministry of Energy and Mineral Resources is responsible for the whole permit procedure process, but the procedure is stationed in one place, the Investment Coordinating Board of the Republic of Indonesia. ACE has been assisting and supporting the AMS to identify the problems and find the solutions for permit procedures through focus group discussions, workshops, policy dialogues and sharing knowledge activities among the AMS. ACE, in cooperation with Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH, has been developing the RE Guidelines on Permit Procedures which compile all the regulations needed for RE projects. Some of the guidelines could be downloaded through the provided links below (Guidelines for Malaysia and Vietnam will be published in the 3rd quarter of 2016):
    http://aseanrenewables.info/publication/re-guideline-on-biomassbiogas-power-project-development-in-indonesia/
    http://aseanrenewables.info/publication/e-guideline-on-small-solar-pv-project-development-in-the-philippines/
    http://aseanrenewables.info/publication/e-guideline-on-large-solar-pv-project-development-in-the-philippines/
  1. RE financing; as there is still a gap of information for bankers and financial institutions in understanding the economic analysis of RE technologies, they are seen as expensive with high initial investments and high risks. Fir that reason, bankers are often reluctant to finance RE projects, not to mention that most of the current business models/proposals are considered not ‘bankable’ or not meeting the conventional financing criteria. ACE is currently conducting a Levelized Cost of Electricity (LCOE) study of three RE technologies (solar photovoltaic/PV, hydro and biomass) which will give better understanding on the main parameters that influence the LCOE, as well as provide the advises on the necessary policies for obtaining significant competitive level of RE technologies compared to fossil fuel. The report will be published in the 3rd quarter of 2016.
    ACE has also seen that there is a need for a training for bankers and project developers to give deeper understanding on RE technologies. For the bankers, so that they know the risks of RE projects.  For the project developers, so that they know how to develop bankable-proposals that meet banks’ financing criteria. ACE has conducted several trainings for bankers in cooperation with GIZ, especially for solar PV projects to help them understand more on the risks and opportunities of solar PV projects.

On Energy Efficiency:

In recent years, all AMS have adopted, or have been in the process of adopting EE strategies or action plans, by defining specific EE objectives. However, the level of development and challenge on energy efficiency and conservation (EE&C) vary from one country to another, such as:

  1. Energy security still remains the AMS’ national agendas that will continue to be heavily dependent on fossil fuels, especially oil. Nevertheless, ASEAN governments are seriously looking at EE. And rightly so, as EE is an untapped fifth fuel—that together with fossil fuels, nuclear, renewables and coal—can power ASEAN economies as they aim for sustainable economic growth, ensuring universal energy access for all and mitigating the onset of climate change.
  2. There is still a gap on the establishment of well-advanced policy, institutional and regulatory frameworks among the AMS. In general, Cambodia, Lao PDR and Myanmar need better-defined EE&C policies and actions. They need to strengthen their institutional, technical and financial capacities to be able to design and implement EE&C policies and regulations. For that purpose, ACE has undertaken some cooperation programmes that support capacity building and EE initiatives in those three AMS.
  3. According to AEO4, under the Alternative Policy Scenario (APS) whereby EE&C would be implemented, ASEAN’s total final energy consumption will grow at a lower annual rate of 3% compared to the 4.3% of annual increase under the business as usual (BAU) scenario. Under the APS, the energy savings potential of the industry sector will be around 25%, for transport 13.4%, and for other sectors 8%. Therefore, the EE&C policy and regulation of the AMS should incorporate all economic sectors.
  4. The economic instruments are also likely to be the common challenges for the implementation of EE measures. For example, the AMS still give high subsidies to their energy prices, which impede the uptake of efficient technologies for its investment return.
 Q7  What is the current progress of Green Building Code?
A7

ASEAN has renewed its focus on sustainability by pursuing green building initiatives to ensure the continued efforts on energy security and environment protection. In 2011, ASEAN started the discussion to introduce a new award for Green Buildings (GB) under its long-established programme, the annual ASEAN Energy Awards (AEA). Two categories were created: i) Small & Medium GB and ii) Large GB. The ASEAN Board of Judges (BOJ) and ACE received six entries from 4 AMS namely Indonesia, Myanmar, Singapore and Thailand during its first event. The awardees were selected based on the following criteria: EE (30%); RE (10%); water efficiency (10%); environmental sustainability (20%); indoor environment quality (20%); operation and maintenance & other green features and innovation (10%).

The trend of energy consumption index of buildings as reflected in the AEA green building competition is improving year by year; started from ~250 kWh/m2/year in early 2000 and ~75 kWh/m2/year in 2015 based on 2,000 hours of operation/year.  As set up under the new ASEAN Plan of Action for Energy Cooperation (APAEC) 2016-2020, the region is going forward on the development of green building codes which support the use of high-efficiency products. Some key action plans under the strategy are as follows: i) review existing and international experience of green building codes; ii) develop draft guidelines on ASEAN Green Building Code and Promotional Scheme on green building code; and iii) capacity building for designers and auditors.