ASEAN's 2023 electricity growth was entirely met by fossil fuels: renewable energy transition faces multiple challenges

ASEAN Power Growth: Fossil Fuels' "Victory" and Renewable Energy's Predicament

In 2023, the ASEAN region's electricity demand grew by 3.6%, equivalent to 45 terawatt-hours (TWh). However, according to the latest report from Ember, this entire increase was met by coal and natural gas power generation. Fossil fuels accounted for 74% of the regional power mix, with coal power making up 44%, while the share of renewable energy declined from 28% in 2022 to 26%. This trend not only exposes the lag in regional energy transition but also poses severe challenges to ASEAN's carbon emission commitments and sustainable development.

Emissions Surge: Indonesia and Vietnam as Key Drivers

The sharp increase in fossil fuel consumption directly led to a 6.6% rise in emissions from the ASEAN power sector, reaching 718 million tons of CO2. This increase of over 44 million tons represents the largest annual absolute growth since 2019. Among them, Indonesia and Vietnam collectively contributed approximately 78% of the additional emissions. As engines of regional industrialization and economic growth, these two countries' energy structures, heavily reliant on coal power, are difficult to reverse in the short term.

Weak Growth in Renewable Energy: Hydropower Hit by Climate, Insufficient Non-Hydro Additions

Although the installed capacity of hydropower in ASEAN increased by 0.5 gigawatts (GW), power generation fell by 21 TWh (a decline of 9.5%). This contrast highlights the high sensitivity of hydropower to drought and extreme weather. In 2023, many Southeast Asian countries experienced droughts, leading to a significant reduction in hydropower generation capacity. Meanwhile, non-hydro renewable energy (solar, wind, etc.) power generation only grew by 8.5 TWh, far from sufficient to offset the hydropower gap and meet new demand. Solar installed capacity increased from 11 GW in 2019 to 26 GW in 2023, mainly driven by the Vietnamese market, but the growth rate still lags behind the increase in regional electricity demand.

Cost Comparison: Cost Advantage of Renewable Energy Evident, but Deployment Barriers Persist

In Vietnam and Thailand, the cost of solar power has dropped to about 38-46 USD/MWh, lower than coal power's approximately 60 USD/MWh. Hydropower costs in Laos are even lower, at about 25 USD/MWh. However, the cost of bioenergy in Indonesia, Malaysia, and Thailand remains in the range of 59-98 USD/MWh, lacking competitiveness. Although cost reductions have made some renewable energy technologies economically advantageous, grid absorption capacity, land constraints, and policy uncertainties still hinder their large-scale deployment.

Regional Grid Interconnection: Slow Progress Constrains Renewable Energy IntegrationThe report specifically notes that regional grid interconnection is a key measure to expand the utilization of renewable energy. Solar and wind power outputs in ASEAN countries are complementary in terms of time and season, and cross-border electricity transmission can effectively balance supply and demand. However, only 8 of the 18 planned interconnection projects have been completed, with a cross-border transmission capacity of just 7.7 GW. The Lao PDR-Thailand-Malaysia-Singapore Power Integration Project (LTMS-PIP) remains the only multilateral electricity trading arrangement in ASEAN. This situation reflects the political, regulatory, and financing obstacles facing ASEAN in coordinating energy infrastructure.