Electricity demand in the region is expected to grow an average annual rate of 5.4% till 2030
[SINGAPORE] Growing demand for energy in South-east Asia, coupled with supply risks, is set to increase pressure on electric power systems in the region, indicated a new International Energy Agency (IEA) report released on Tuesday (Oct 6).
“The Asean region is facing a widening set of electricity security challenges due to a tightening supply and demand balance, changes in the generation mix with more variable renewable energy (VRE) and constrained electricity networks,” said the Asean Energy Security Review.
Electricity demand in the region is expected to grow by an average of 5.4 per cent a year till 2030, driven by rising cooling, data centre and industry needs, said the report.
Indonesia is expected to drive the largest share of the growth in demand, or about 40 per cent, followed by Vietnam at 26 per cent.
At the same time, energy supply remains sensitive to fuel market and geopolitical developments.
Continued reliance on imported liquefied natural gas (LNG) and coal for power generation could see power generation costs and wholesale electricity prices and retail tariffs rise till 2030.
LNG consumption rising
Natural gas as a whole contributes close to one-fifth of Asean’s total energy supply. Reliance on LNG is also rising, with imports more than trebling between 2015 and 2025.
Between 2025 and 2030, gas consumption in Asean is expected to increase by around 18 per cent – or more than 30 billion cubic metres (bcm) per year – corresponding to an average annual growth rate of more than 3 per cent.
This will be significantly higher than the average recorded between 2015 and 2025.
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This growth is expected to be driven primarily by the power sector, with around 24 gigawatts of gas-fired generation capacity being added across the region. Gas consumption for power generation till 2030 will grow about 30 per cent, or 25 bcm a year.
Industrial gas consumption is expected to grow more modestly, while gas use in the energy sector is projected to decline as regional natural gas production and LNG exports continue to fall.
“While the baseline outlook points to continued growth in both fossil fuel and renewable generation, fuel market volatility could affect the cost, affordability and reliability implications of this expansion, particularly in systems with high import dependency,” the report said.
The scope for scaling up alternatives such as biomethane also remains limited over the medium term. Even under a supportive policy environment, biomethane production across the Asean region is unlikely to exceed 1 bcm by 2030.
Low-emissions hydrogen is also unlikely to achieve meaningful commercial-scale deployment across the region before 2030, despite “sustained policy interest and a sizeable project pipeline”, said the IEA.
Both supply and demand growth are expected to be limited over the medium term, due to high production and capital costs and the absence of schemes, binding targets and demand-side incentives.
Critical minerals increasingly important
Meanwhile, South-east Asia’s expanding supply of critical minerals such as nickel, cobalt and copper positions the region as an important source of additional supply to meet soaring global demand for clean energy technologies, said IEA.
The report added that although external partners will remain important, “expanding intra-regional trade, investment and value chain cooperation can support the creation of more diversified and resilient mineral supply chains” as well.
The region currently holds more than half of global nickel reserves, as well about two-fifths of bauxite reserves and about 17 per cent of tin reserves. It also hosts reserves of cobalt, rare earth elements and copper. These are critical for energy, transport, advanced manufacturing, electronics and other strategic industries.
While Asean has major opportunities for investment, industrial development and export growth, the report also noted that the region faces vulnerability due to factors such as supply concentration and exposure to changing trade policies.
With the Middle East conflict inflating energy and logistical costs for mining and processing operations, and global capital expenditure on critical mineral projects falling 9 per cent year on year in 2025, Asean has to “strengthen resilience across both mineral supply and downstream industrial supply chains”.
“For Asean, the main security question is therefore not only access to critical minerals, but how to capture more value from the sector for local communities and the economy while reducing exposure to concentrated global supply chains,” said IEA.
