Coal will be an important guarantor for sustained growth in ASEAN

8th Jun 2017

ASEAN Energy Insights

The World Coal Association (WCA), in collaboration with the ASEAN Centre for Energy (ACE), has published a report looking at energy in the ASEAN region[1].  The report ASEAN’s Energy Equation  provides analysis on the energy security and sustainable development opportunities that high efficiency low emission (HELE) coal technologies promote as identified in the ASEAN Plan of Action for Energy Cooperation (APAEC) 2016-2025.

We’ll be publishing a series of posts ‘ASEAN Energy Insights’ that take a deeper look at the report and explain its findings.

For our first post, we’re looking at how economic development and cleaner energy are interlinked in the ASEAN region.

The unprecedented pace and scale of economic development across the ASEAN region in recent decades has driven a surge in demand for electricity. Between 1990 and 2014, while the region’s economy grew by 5% per year on average, electricity generation grew by 7.4% reaching 843 terawatt hours (TWh) in 2014.

Natural gas has historically dominated ASEAN’s electricity supply. From 2010, however, there has been a transition in the ASEAN regional economies toward coal-fuelled power generation. As a result, the share of gas in electricity generation declined 5% between 2010 and 2014 (from 44%), while the share of coal in the same period rose from 27% to 34%.

Coal’s rise as the fuel of choice for ASEAN can be attributed to three factors:

  • Diversification

ASEAN countries have traditionally relied on one particular fuel source for electricity generation, which has often reflected the local resource endowment. In order to strengthen energy security, many ASEAN countries are attempting to reduce their dependence on any one source of energy.

  • Rising demand

Access to affordable power and economic growth are clearly linked. Over the last two decades, ASEAN countries have experienced economic growth, lifted tens of millions from poverty and created a “consumer class”. Demographic trends in ASEAN will have significant implications for the size and composition of the region’s energy use. The regional population will reach three quarters of a billion by 2040. Cities will also experience growth, with those living in urban areas projected to increase by more than 170 million. All sources of energy will be required to meet this growing energy demand.

  • Affordable delivery of electricity

Electricity prices play a pivotal role in driving economic competitiveness, as well as an important factor in social objectives for residential customers. Coal-fuelled power plants are among the lowest cost sources of energy to build and operate. Natural gas was, until recently, a cost competitor to coal but the removal of subsidies, price volatility and international competition has led to average gas prices being twice that of coal on an energy equivalent basis

ASEAN’s preference for coal is forecast to continue as it remains the most economic source of long-term baseload electricity generation.

[1] ASEAN countries are: Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, Philippines, Singapore, Thailand and Viet Nam.