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ASEAN Power Grid: Focus on multilateral power trading [free access]

April 10, 2017

Association of Southeast Asian Nations (ASEAN) is one of the most dynamic and fastest growing economic regions in the world, and the incorporation of the ASEAN Economic Community (AEC) in December 2015 is expected to further fuel this growth. The region’s gross domestic product (GDP) is projected to grow by at least 4 per cent per year on average over the next five years, but growth could be as high as 6 per cent, provided ASEAN moves towards greater integration, where member states continuously implement domestic structural reforms to raise their productivity and competitiveness under the framework of the AEC. ASEAN as a single economy is forecast to become the fourth largest economy in the world by 2030, behind only the United States, the European Union and China.

 

AEC has been formed to transform the ASEAN economy into a region with free movement of goods, services, investment, skilled labour and capital. The ASEAN comprises 10 members—Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam. AEC aims to establish ASEAN as a single market and production base, making it more dynamic and competitive with new mechanisms and measures to strengthen the implementation of its existing economic initiatives; accelerate regional integration in priority sectors; facilitate movement of business persons, skilled labour and talents; and strengthen the institutional mechanisms of ASEAN. It will help connect the less developed economies with the more developed ones, bringing about a more equitable economic development across the region.

 

Electricity demand in ASEAN is expected to grow by 4 per cent to 6 per cent per year between 2016 and 2020. Regional energy cooperation will not only help meet this growing energy demand but also support regional economic growth and security. This has been clearly recognised by the AEC and efforts to create a well-connected, competitive and resilient ASEAN energy network are underway. A key component of this energy integration is the creation of an inter-linked grid network—ASEAN Power Grid (APG)—amongst the ASEAN member countries.

 

In 2003, the Heads of the ASEAN Power Utilities/Authorities (HAPUA) completed its first ASEAN interconnection Master Plan Study (AIMS I) and concluded that it was uneconomical to create an ASEAN grid. The study recommended 11 bilateral interconnections to be constructed by 2019. Later, in 2010, HAPUA conducted a second study (AIMS II), which was more ambitious and concluded that it was economically viable to establish the APG. As per the new study, the APG involves linking the 10 ASEAN countries by implementing 16 high voltage transmission projects comprising 31 cross-border lines. 

 

The APG has also found a key place in the ASEAN Ministers on Energy Meeting’s (AMEM) new ASEAN Plan of Action for Energy Cooperation (APAEC) 2016-2025 released in 2014. To realise the APG, the plan aims to first encourage cross-border bilateral interconnections, then gradually expand to sub-regional connections, and finally to a fully integrated ASEAN power grid system. Based on the success of the first five years of the plan (2016-20), ASEAN members will work on planning the next five years (2021-25) to embark on multilateral trading in the APG.

 

Global Transmission Research provides an update on the current status of the projects and progress on multilateral trading under APG. This is based on the presentations made by ASEAN Centre for Energy and HAPUA at a recent GTR conference on ‘Power Transmission in South East Asia’.

 

Status of APG

As of March 2016, of the 31 high voltage transmission lines proposed to create the APG, 13 lines were already in operation. Another four links are under construction and are expected to be completed by 2020. Nine cross-border links are planned for operation during 2020-25 while another five projects are yet to be confirmed.

 

Two of the most recent projects to be completed in 2016 were the Sarawak (Malaysia)–West Kalimantan (Indonesia) and the 220 kV Xekaman 1 (Laos)–Pleiku 2 (Vietnam) transmission lines. The Sarawak–West Kalimantan project entailed the construction of a 120-km-long, 275 kV line between Bengkayang in the Indonesian province of West Kalimantan and Mambong in Sarawak. The Xekaman–Pleiku project involved the 191-km-long line to link the Xekaman 1 substation in Laos to the Pleiku 2 substation in Vietnam.

 

Two more APG projects are planned to be completed by 2020, namely, Sarawak–Sabah–Brunei and Thailand–Lao PDR. Under the Sarawak–Sabah–Brunei project, the Sarawak–Brunei line is operational, while the Sarawak–Sabah line is expected to be completed by 2020, thereby completing the interconnection project. The Thailand–Lao PDR project entails the construction of three interlinks, namely, the Udon Thani 3–Nabong (converted to 500 kV), the Ubon Ratchathani 3–Pakse–Xe Pian Xe Namnoy and the Khon Kaen 4–Loei 2–Xayaburi lines by 2019.

 

It is expected that by 2025, there will be up to 19,576 MW of cross‐border power purchase and 3,000 MW of energy exchange through the cross-border interconnections established under the APG. The integration of the ASEAN network is also likely to result in a net saving of USD788 million and a reduction in installed capacity by 2,013 MW.

 

Table 1: Future/proposed interconnections under APG

No.

Project

System

Capacity (MW)

Type

Expected commissioning

1

Peninsular Malaysia–Singapore

HVDC

600

Power purchase

Post 2020

2

Su Ngai Kolok (Thailand)–Rantau Panjang (Peninsular Malaysia)

132/115 kV HVAC

100

Energy exchange

TBC

3

Khlong Ngae (Thailand)–Gurun (Peninsular Malaysia) (Phase II)

300 kV HVDC

300

Energy exchange

TBC

4

Sarawak–Peninsular Malaysia

HVDC

4x800

Power purchase

2025

5

Batam–Singapore

HVAC

3x200

Power purchase

  Post 2020

6

Philippines–Sabah

HVDC

500

Energy exchange

TBC

7

Sarawak–Sabah

275 kV AC

100

Power purchase

2020

8

Thailand–Lao PDR

 

 

 

 

Udon Thani 3–Na Bong

500 kV AC

269

Power purchase

2019

Ubon Ratchathani 3–Pakse–Xe Plan XE Namoy

390

Khon Kaen 4–Loei 2–Xayaburi

1220

Thailand–Lao PDR (New)

 

1,865

Power purchase

2019-23

9

Thailand–Myanmar

500 kV AC

11,709-14,859

Power purchase

2018-26

10

Tay Ninh (Vietnam)–Stung Treng (Cambodia)

230 kV AC

TBC

Power purchase

TBC

11

Ban Hat (Lao PDR)–Stung Treng (Cambodia)

230 kV AC

300

Power purchase

Post 2018

12

Thailand–Cambodia (New)

 

2,200

 

Post 2020

13

Sipitang (East Sabah)–East Kalimantan (Indonesia)

HVAC

TBC

Energy exchange

TBC

14

Sumatra–Singapore

HVDC

600

Power purchase

Post 2020

 

Note: HVAC: high voltage alternating current; HVDC: high voltage direct current; TBC: to be confirmed Data is as of March 2016.

Source: Presented by Heads of ASEAN Power Utilities/Authorities at GTR’s conference on Power Transmission in Southeast Asia

 

Strategies for multilateral trading

Given that progress has so far been focused on bilateral interconnections, the new strategy is to embark on multilateral interconnections. In the past, APAECs and both of the AIMS reports have been silent on the issue of building a regional power market. However, this has now changed, with the latest APAEC 2016-25 setting out the objective of introducing multilateral power trading in the first phase (2016-20) of this 10-year period.

 

In order to move towards multilateral trading, HAPUA is also accelerating the creation of three sub-regions under the AGP, namely, the Northern sub-system (Cambodia, Lao PDR, Myanmar, Thailand and Vietnam), the Southern sub-system (Indonesia, Malaysia and Singapore) and the Eastern sub-system (Brunei Darussalam, Indonesia, Malaysia and Philippines) by 2018.

 

A more recent initiative to enable multilateral interconnections is the Laos–Thailand–Malaysia–Singapore Power Integration Project (LTMS-PIP). The pilot project will be the first multilateral power trade facility in ASEAN. The objective of the project is to enable power trade from Lao PDR to Singapore by interconnecting the grids of Thailand and Malaysia. Under the LTMS project, existing interconnections [five 115 kV links between Lao PDR and Thailand, the 300 kV HVDC Gurun (Malaysia)–Khlong Ngae (Thailand) monopole, and the 275 kV Plentong (Malaysia)–Senoko (Singapore) link] among the four countries will be used to transfer up to 100 MW of electricity from Laos to Singapore. An agreement regarding project implementation is expected to be signed in September 2017. The project is expected to pave the way for other power integration projects in ASEAN.

 

Other initiatives

Works on harmonising technical codes and guidelines for grid planning design, operation and maintenance, needed for the successful operation of the APG, are also underway. In 2013, the HAPUA Working Group 2 (APG/Transmission), together with the Asian Development Bank (ADB), completed a joint study in this regard. HAPUA is increasing its efforts to harmonise the legal and regulatory practices and technical standards; identify possible financing models; and establish the APG Transmission System Operator Institution (ATSO) and APG Generation and Transmission System Planning Group Institution (AGTP) by 2018.

 

With respect to securing financing for proposed cross-border projects, HAPUA is conducting feasibility studies for individual project sponsors and is seeking guidance on implementing a market outreach programme to identify potential investors and creditors for developing the APG grid infrastructure.

 

On regulatory and legal issues, HAPUA is planning to cooperate with the ASEAN Energy Regulatory Network (AERN) to carry out various studies, such as on Taxation and Tariff for Cross-Border Transaction, and Regulation on Public-Private Participation in APG Projects.

 

Figure 1: APG’s sub-regional systems


feature1_528

Source: Presented by Heads of ASEAN Power Utilities/Authorities at GTR’s conference on Power Transmission in Southeast Asia

 

Summing up

The realisation of APG will depend solely on the involvement and engagement of various sectors and institutions of the ASEAN countries. The governments of the respective countries will play an important role in helping to overcome the regulatory, financial and technical challenges in project implementation.