Transitioning ASEAN: A Renewable Energy Hub
According to “The Renewable Energy Transition”, a report published by global auditing firm KPMG, there are approximately 70 million ASEAN citizens without access to reliable electricity. The good news is, there is a huge potential for renewable energy in these countries and governments are increasingly turning to solar and wind energy to address the issue. Additionally, the report noted that consumers are driving the green agenda forward and new funds are entering into ASEAN’s renewable energy market. These trends bring us nothing but hope for ASEAN in becoming a renewable energy hub.
In an article series titled “New Drivers of the Renewable Energy Transition”, KPMG listed the four drivers that will make ASEAN the new hub for renewable energy deployment, innovation, and investments in the next decade. They are:
1. ASEAN’s huge renewable energy potential
It is undeniable that ASEAN holds a huge renewable energy potential, but what’s important for us to know is that technology is the key to tap into its potential. With technological innovations such as higher solar power efficiency and floating solar panels, renewable energy is now more accessible than before. Moreover, technological advancement is also one of the major reasons why the overall costs of wind and solar energy have been on a steady decline in recent years, making renewable energy to become an increasingly attractive option for decision-makers, be it in the public or private sector. Additionally, the growing emphasis around environmental, social, and governance (ESG) factors also play a crucial role in determining risk and return, further driving more corporations to make the transition and adopt renewables.
2. Governments looking to increase renewable energy uptake
According to the APAEC (ASEAN Plan of Action for Energy Cooperation) 2016-2025, ASEAN aims to collectively increase its total installed capacity of renewables to 23% by the year 2025 in the ASEAN Energy Mix. To achieve this goal, each ASEAN member has allocated necessary financing to reduce energy consumption and intensity, developed several outcome-based strategies as well as implemented policies to encourage the development of renewable energy and increase energy efficiency. Take Malaysia for example, the government has introduced the Net Energy Metering (NEM) scheme which allows users to consume electricity generated from solar energy and then sell excess solar-generated energy to Tenaga Nasional Bhd (TNB) to offset the electricity that their premises have consumed from the grid at the end of the month. Another example would be of the Philippines who has recently completed a 2MW solar-battery micro grid project in Mindoro to provide electricity supply in other off-grid areas across the country.
3. Consumers are looking for cleaner energy sources
Since fossil fuels are finite resources, their prices inflate or deflate depending on the supply and demand globally. Renewable sources, on the other hand, are an infinite source of energy which are also environmentally friendly. As more and more people realize this, consumers and communities are increasingly recognizing and rewarding businesses which choose to operate responsibly. Companies supporting green energy and businesses having environmental credentials are able to attract and keep better employees, grow their customer base and improve business results, thereby creating more value for their shareholders. The establishment of RE100 in 2014 – a collaborative, global initiative uniting more than 100 influential businesses committed to 100% renewable energy – is a prime example of how consumers are helping to boost demand for renewable energy. Among the companies in the group include Google, Microsoft, Coca Cola and IKEA – all of which have a strong presence in ASEAN. Fact is, corporations without a clear vision and road map to a sustainable future will have a hard time securing their places as winners in the long run.
4. New funds continue to flow into ASEAN renewable markets
In ASEAN, the collaboration of international organisations with government agencies to develop and implement renewable energy projects has generated more value for the renewable energy sector. For example, Asian Development Bank worked with Melaka on its Green City Action Plan roadmap, which included structuring bankable projects for solar energy and street lighting, setting up a database to track indicators in environment and economic growth, and conducting training in urban development, environment planning, and knowledge sharing. Besides that, The World Bank, Asian Development Bank (ADB) and Japan Bank for International Cooperation are leading the way in renewable energy investment in the region, which has helped to bring prices down. While prices have often been a key concern, falling costs and rising demand are the main force helping to push the industry forward.
As and when the general public are made aware of the benefits of using clean energy sources, it will greatly drive the development of the renewable energy sector as an alternative to conventional energy sources like fossil fuels. With its huge potential in renewable energy, we hope to see ASEAN's aim of achieving its goals by 2025 become a reality and eventually become the new hub for renewable energy deployment, innovation and investments.
The Renewable Energy Transition by KPMG
New Drivers of the Renewable Energy Transition by KPMG