Synergizing Top-Level Designs for Green Power Connectivity

By Guo Xixian

On March 16,2023, Singapore’s Keppel Energy Company signs a long-term power purchase and export agreement with Cambodia’s Royal Group Power Company on the import and sales of 1 GW of electricity from Cambodia,Singapore’s largest cross-border electricity trade contract to date.(KEPPEL ENERGY)

The extremely high temperatures this summer left many with lingering fear. Adequate power is the foundation for national economic and social development,and the importance of green power development is evident.

China and ASEAN countries have a similar energy consumption structure, demand for energy transition, and resource endowment with complementary advantages.Stronger power connectivity has become a realistic and the best option for countries in the region to coordinate their green power resources towards sustainable development.

Importance of Coordination

This summer, demand for electricity surged with the record high temperature of 44.1 degrees Celsius in Vietnam. Large-scale industrial transfer in the country brought about excessive power consumption. The continuous drought led to dead water levels in dammed reservoirs, resulting in insufficient hydroelectric generation capacity.Furthermore, insufficient thermal coal inventory limited the capacity of coal power generation. All of these factors led to large-scale rotational power outages in Vietnam,forcing many industrial parks and firms to suspend production.

Gu Baihe, an associate researcher with the Institute of Science and Development under the Chinese Academy of Sciences, called the energy crisis in Vietnam a reflection of lagging power grid infrastructure construction behind the development of the manufacturing industry.This imbalance of supply and demand between infrastructure and economic development is a relatively common phenomenon in many Southeast Asian countries.

Since Southeast Asia has grown into one of the most dynamic economic regions in the world with an increasingly high level of industrialization and urbanization, its demand for energy and electricity has grown rapidly. Most Southeast Asian countries are at an early or middle stage of industrialization,with manufacturing as a pillar industry, the healthy development of which requires a reliable and stable supply of energy. Therefore,an energy transition is the key path forward.

Fossil energy remains the main source of energy consumption for ASEAN countries, accounting for nearly 80 percent of the total.The rest is renewable energy,primarily hydropower. ASEAN countries possess a wide variety of renewable energy resources.However, they differ in resource endowment and development conditions. A mismatch between green power production capacity and consumption demand has persisted.

Qin Yun, assistant director of the International Cooperation Research Institute at the Energy Development Research Center(Lancang-Mekong Research Center) of China Southern Grid, commented that Laos and Myanmar are rich in hydropower resources, but their demand for energy is relatively low, meaning that their renewable energy resources endowment cannot be fully transformed into economic advantages. Due to a lack of power grid infrastructure and flexible adjustment resources,Laos has to pay a high price for electricity imported from its neighbors such as Thailand during the dry season. In Vietnam, a power resource mismatch separates the north and south. The load centers form radiation circles around Ho Chi Minh City and Hanoi. Gas and photovoltaic power are mainly concentrated in the south,while hydropower is mainly concentrated in the north. Due to a lack of south-north power transmission channels, the problem of wasted energy in the south persists despite power shortage in the north. Many other countries are grappling with similar problems.

Solar energy, wind energy,and other renewable energy sources are known for their instability. If the adjustment capacity of power systems is not improved simultaneously with the development of new energy,renewable energy sources like wind, solar, and water will be abandoned and leave a negative impact on the sustainable development of the new energy industry. Presently, most ASEAN countries have insufficient power grid infrastructure.And any future growth of the installed capacity of renewable energy power generation in ASEAN will make the problem of power consumption even more prominent.

Qin Yun thinks that to overcome these difficulties,ASEAN countries must strengthen their power connectivity and international energy cooperation towards efficient allocation of clean energy.

Phasing out coal and embracing renewable energy and interconnected regional power grids is a necessary step to achieve the goal of net zero emissions, said Francesco La Camera, director-general of the International Renewable Energy Agency (IRENA), at the 2023 Berlin Energy Transition Dialogue.

Strengthening Grid Connectivity

Grid connectivity is possible if the UHV (ultra-high voltage)backbone grid is patched into regional countries’ power grids at different voltage levels.Connectivity of transnational grids would make coordination of the development,transmission, and utilization of renewable energy power in the countries along the transmission lines possible to effectively improve the ability of different regions to complement each other and adjust surpluses to ease shortages and ensure the reliability and stability of power grid systems.

Workers in Dongxing, Guangxi, restore power to Vietnam through the 110-kV Shengou-Mong Cai power transmission line after a 7-year interval, according to a bilateral electricity trade agreement signed between Guangxi and Vietnam on May 23, 2023. The restoration is expected to significantly ease the power shortage in northern Vietnam.(CCTV NEWS)

In 2015, ASEAN formulated the ASEAN Plan of Action for Energy Cooperation (APAEC)2016-2025, which encouraged construction of 16 power grid connectivity projects including 45 cross-border transmission lines. As of 2019, seven of 16 key power connectivity projects of the ASEAN Power Grid had been completed.

As the largest electricity importer in ASEAN, Thailand’s net import of electricity reached 28.68 Terawatthours (TWh) in 2021, mainly from Laos. Laos is the largest electricity exporter in ASEAN, with 31.15 TWh of net export of electricity in 2021,mainly to Thailand and Vietnam.In June 2022, Singapore’s Energy Market Authority(EMA) announced that it would import electricity from Laos.The announcement marked the official beginning of the Laos-Thailand-Malaysia-Singapore Power Integration Project(LTMS-PIP), an important step in the construction of the longplanned ASEAN Power Grid. In March 2023, the EMA approved Keppel Electric’s plan to import low-carbon electricity from Cambodia and Laos through interconnected grids.

The Vinh Tan Coal Power Plant Phase 1 BOT (build-operatetransfer) project in Binh Thuan Province in southern Vietnam.The project, built with investment from China Southern Grid, is expected to be Vietnam’s most advanced energy base. (LI JIAZHU)

At a Singapore International Energy Week event, Ngaim Shih Chun, chief executive of EMA,said that the LTMS-PIP serves as “a pathfinder towards realizing the broader ASEAN Power Grid vision and how countries can better integrate power systems across the region.”

Gu Baihe noted that ASEAN countries starkly contrast each other in resource endowment but have mutually complementary energy and markets. If the complementarity between supply and demand could be coordinated well, the potential would be huge.

Xin Bao’an, chairman of State Grid of China, said at the 14th Summer Davos Forum that the world’s largest clean power generation system has been built in China. He said that China leads the world in long-distance and large-capacity power transmission technology represented by UHV transmission and new energy grid-connected consumption represented by flexible DC power transmission. China has already traded electricity with Russia,DPRK, and its Southeast Asian neighbors such as Vietnam and Thailand.

In 2004, the 110-kV Hekou(Yunnan)-Lao Cai (Vietnam)power transmission line, China’s first power grid connectivity project with Vietnam, went into operation, which marked the beginning of China’s large-scale power transmission to foreign countries. In 2014, Myanmar first proposed construction of a 500-kV transmission line from Yunnan to Yangon to transmit power between the regions. In 2017, China and Laos signed a memorandum of understanding on establishing a strategic partnership on electricity cooperation. In March 2022, China Southern Grid and Electricite du Laos officially signed an agreement on power purchase through a cross-border 115-kV transmission line, which marked the beginning of twoway electricity trade between the two countries.

Qin Yun added that by August 2023, the grids of the China Southern Grid were connected with those of Vietnam, Laos,and Myanmar through 15-circuit transmission lines at voltage levels of 110 kV and above, which has effectively formed a pattern of mutual coordination and complementarity between the southern China region and the five Mekong River countries.She predicted that based on the power connectivity between China and the ASEAN countries,the China-ASEAN green energy network will become a model for world energy cooperation.

Gu Baihe said that China has fairly rich experience and advanced technology in renewable energy development.Over the last 20 years, the cumulative installed capacity of Chinese-funded power projects in Southeast Asian countries has continuously increased. China has become one of ASEAN’s most important partners in the energy transition.

Over the last 20 years, the cumulative installed capacity of Chinesefunded power projects in Southeast Asian countries has continuously increased.

Synergy of Top-Level Designs

Although power connectivity is consensus across all ASEAN countries, with many actively working on inter-regional power grid cooperation projects within their borders, the overall progress of power connectivity projects has been fairly slow.

The power grid infrastructure of Southeast Asia is relatively weak with aging equipment.In some countries, a complete backbone power grid has not yet been built. Power grid connectivity must adapt to large-scale, large-capacity, and long-distance transmission of clean energy as well as the intermittence and volatility of grid-connected operation, with fairly high requirements for the core technology of power grids.In addition to infrastructure and technical barriers, Gu Baihe explained that ASEAN’s market mechanism for electricity trade is not mature. Most ASEAN countries have not yet integrated their own power grid planning with ASEAN power connectivity planning. They don’t yet have stable power industry policy,and some differences in the electricity market structure and mechanism between different countries exist. Most current cross-border electricity trade is simply bilateral or one-way.

Qin Yun thinks that crossborder electricity trade in Southeast Asia will benefit greatly from policy guidance.Strong government support is an important foundation for power grid connectivity and electricity trade. In most ASEAN countries, the electricity industry is under vertically integrated management, lacking an electricity market mechanism.According to Gu Baihe,the ASEAN Energy Ministers’Meeting has repeatedly called for strengthening cooperation to achieve power grid connectivity and electricity trade among ASEAN countries.It released general provisions on technology, financing, taxes and prices, regulatory, and legal framework. The meeting has also formulated five-year action plans for ASEAN energy cooperation including construction of an ASEAN Power Grid.

At the same time, ASEAN member states have adjusted their domestic institutions and regulations to better promote construction of the ASEAN Power Grid. Last May, Vietnam approved the Power Development Master Plan VIII for 2021-2030 (Power Plan VIII, PDP 8),which made the requirements for connecting the country’s domestic power grid with the power grids of neighboring countries clear.

The Thai Ministry of Energy set up a special working group to strengthen the country’s power grid connectivity and upgrade its high-voltage power transmission lines to make Thailand a regional electricity trading hub. The Electricity Generating Authority of Thailand has signed a cooperation agreement with the Stock Exchange of Thailand to carry out in-depth research on the establishment of a wholesale electricity market and amend the laws and regulations on electricity trade and commerce.In October 2021, EMA released a plan to import four gigawatts(GW) of low-carbon electricity.Due to its high dependence on imported electricity, Singapore’s electricity import plan was directly affected by export bans by source countries such as Indonesia and Malaysia.Fortunately, after several twists and turns, the LTMS-PIP finally kicked off in 2022.

Qin Yun remarked that China Southern Grid is actively promoting regional power grid connectivity. However,since power grids are major infrastructure and an economic lifeline for each country,insufficient mutual trust among the countries in the region causes many difficulties when things actually happen in practice.

Qin argued that worries about constraint by China due to power connectivity are not grounded in reality. She said that in the areas with severe resource mismatches,it is impossible for each player to “fight its own battle.” Going solo on the issue will not achieve mutual benefits or win-win results. It will also inevitably drag the process of regional integration. Top-level designs to coordinate steps of an energy transition to ensure resources are shared alongside the benefits are even more important. She urged relevant countries to find ways to increase synergy in strategic planning and enhance mutual trust and cooperation.