FOREWORD
The Southeast Asia region will see rapid economic growth in the coming decades and energy use is set to grow significantly. Today, the region stands at a crossroads. On the one hand, it can pursue a path of continued reliance on fossil fuels, most of which come from non-indigenous sources, increasing the region’s emissions and exposure to volatile and increasingly expensive global commodity markets. On the other, the region could utilise its ample, affordable, indigenous renewable energy resources to lower energy costs, reduce emissions and drive regional economic development. This second edition of the Renewable energy outlook for ASEAN was developed in collaboration the ASEAN Center for Energy (ACE) and the ASEAN Renewable Energy Sub-sector Network. It is guided by IRENA’s World energy transitions outlook and builds upon the first Renewable energy outlook for ASEAN, released in 2016, by incorporating a net-zero pathway and a longer-term perspective to 2050.

The energy mix in ASEAN will transform significantly in the 1.5-S. Renewables, both direct-use and from renewable-based electrification, will make up two-thirds of energy demand. Electricity, which is largely renewable based in the 1.5-S by 2050, makes up 52% of final energy demand. Meanwhile, overall bioenergy use will need to more than double and will be crucial in some end-use sectors, such as industry. This report also assesses a scenario called the Transforming Energy Scenario (TES), which is less ambitious than 1.5-S and considers the readily available, and affordable, technologies at the expense of slightly higher emissions (around 1 gigatonne [Gt] vs 0.7 Gt for 1.5-S). While both the PES and TES require removal of CO2 emissions through carbon management solutions, TES would require about 50% more removals to enable net-zero emissions.

Industry energy demand will increase 3.6% per year. In the 1.5-S, the sector will become considerably less reliant on fossil fuels, which currently dominate the sector’s energy supply. Instead, industrial process heat will transition towards the use of electricity, biomass and green hydrogen. A wide mix of technologies are necessary for industry, which includes hard-to-electrify industrial processes and feedstock requirements. ASEAN industry can also benefit from the technologies found in the 1.5-S. With a significant supply of critical materials needed for many energy transition technologies, the region could become a powerhouse of manufacturing. The transport sector will see two parallel paths, one focused on electrifying modes such as passenger road vehicles, and another that will require cleaner fuels. The car fleet will need to grow to more than 100 million battery EV cars and almost 300 million electric two- and three-wheelers. Biofuels are also important for some modes, such as freight, aviation and inland shipping. Meanwhile, hydrogen and its derivatives are important for international shipping. The building sector’s energy demand will grow nearly 3% annually, reaching 10 EJ by 2050 in the PES. Space cooling will dominate energy demand in buildings, growing from 17% share in 2018 to almost half in 2050. The share of cooking energy demand will fall below 20% mainly due to the phaseout of traditional biomass and the transition towards clean cooking technologies, mainly liquefied petroleum gas (LPG) in the PES and electrification in the 1.5-S. Overall electrification, and more stringent energy efficiency standards and technology, will reduce the building sector’s energy consumption by 27% in the 1.5-S compared to the PES, with electricity becoming the dominant fuel consumed in the sector.

The significant level of growth in renewable electricity in the 1.5-S requires flexibility of the power system, particularly in transmission and storage assets. Tailoring consumption to when the sun is shining with smart charging of EVs and power-to-X helps harness the most solar resources while alleviating the need for additional storage. Hydropower and bioenergy help to balance supply and demand. Batteries will have a key role to play starting in the 2030s and beyond but will be deployed this decade in some applications. Given the need for sizeable power assets, strategic considerations need to be applied in carrying out capacity expansion plans to operate the system by 2050. Potential issues can be addressed by opting for more circuits of lower capacity in the case of transmission lines, rather than a few larger ones, and by adopting fastfrequency reserves for small and medium grids in the medium term and large grids in the long term. Also in the long term, the system should be planned to enable it to cope with fewer synchronous power producers, with grid forming inverters likely to play a leading role. Importantly, the full potential of renewables requires open markets and the alignment of regulations between national transmission system operators (TSOs). The former ensures that the least-cost merit order based on short-run marginal cost is followed across the region, and eventually also is followed even for ancillary services. Common regulations secure reliability across the region by setting norms for the provision of services (energy, regulation, reserves), the amount to be procured at each time scale, and the practices followed by TSOs. The region should also significantly expand transmission capacity in the 1.5-S, including both crossborder interconnectors and domestic transmission lines.

According to WETO, bioenergy makes up over 50% of renewable energy use globally today. Achieving the netzero goal will not be possible with renewable electricity and energy efficiency alone. Bioenergy will represent 25% of total primary energy supply globally by 2050 in IRENA’s 1.5°C Scenario (IRENA, 2022b). In ASEAN, bioenergy plays an important role today, and that will continue. In absolute terms, the increase will be from around 2.7 EJ (primary) in 2018 to 7.6 EJ by 2050 in the 1.5-S. In 2018, around 14% of final energy came from bioenergy sources in the region, with a little under half from traditional sources of bioenergy. By 2050 in the 1.5-S, the share will increase to 19%, with all traditional uses of bioenergy replaced with modern bioenergy. Scaling up bioenergy use will therefore be crucial for the region to meet its energy and climate goals, and doing so must coincide with bioenergy use that is sustainable and affordable (IRENA, 2022c).

When considering a wider cost perspective that includes fuel costs, operation and maintenance (O&M), and financing costs, over the period to 2050 the region will spend USD 28.3 trillion on its energy system in the PES. Of the transition scenarios, TES has the lowest cost, at USD 27 trillion, but it also has the highest emissions. Of the 1.5-S cases, RE90 is the lowest cost – USD 28.1 trillion – around USD 0.16 trillion lower than the PES, and 1.5-S RE100 has the highest cost – USD 29.4 trillion – or USD 1.1 trillion higher than the PES. The Southeast Asia region must act now to reverse its reliance on fossil fuels, more of which are coming from non-indigenous sources, thereby increasing exposure to volatile and increasingly expensive global commodity markets. The region should transition towards energy transformation pathways utilising ample, affordable and indigenous local renewable energy resources, using technologies applicable to the energy supply and enduse sectors, while respecting the context, status and characteristics of each country and the region as a whole.

This engagement resulted in regional and country-based visions and strategies for the energy transformation pathway. Outcomes include proposing technologies applicable to the energy supply and end-use sectors while respecting the context, status and characteristics of each country and the region and considering activity level parameters and investment needs; identifying data and information gaps and providing recommendations; and supporting the development of energy transition strategies through workshops and outreach, and the provision of inputs to energy sector planning.

METHODOLOGY AND PROCESS
The analysis is based on a technology modelling framework called REmap. This includes a detailed, bottomup demand analysis for end-use sectors (industry, building and transport) for all ten AMS, and power system capacity expansion planning and operational analysis using an industry-standard modelling tool, PLEXOS, in combination with a supplementary power system flexibility analysis using FlexTool. One power system model was developed for ASEAN that represents all countries individually, and two more detailed power system models were developed for Indonesia and Malaysia within the same regional model. The models draw on unique IRENA datasets for resource endowment and technology cost data. In addition, an assessment of associated costs, investments and benefits was conducted. The work was performed in close collaboration with countries’ energy experts through a series of multi-stakeholder consultative workshops and expert meetings.

THE ROADMAP FOR ASEAN

In 2020, ASEAN was home to around 680 million people, with a regional GDP of nearly USD 3 trillion (United States dollars). This report uses GDP growth rate projections from the government studies and plans that form the basis of the PES. It is necessary to align the GDP growth from these studies with the energy demand projections that form the basis of the PES. Based on those projections and scenarios, by 2050 the region’s population will increase to slightly over 800 million inhabitants, and regional GDP will more than triple to over USD 11 trillion, increasing at a compound annual growth rate of 4.6%.

Per capita annual electricity consumption in the region has increased over the last two decades, reaching an average of 1 630 kilowatt hours (kWh) in 2018; this is around one-fifth of the per capita electricity consumption in member countries of the Organisation for Economic Co-operation and Development (OECD). Per capita total final energy consumption (TFEC) in the region was an estimated 29.5 GJ in 2018 and is expected to increase 35% by 2030 and 210% by 2050 under current national energy policies (the PES), with the region’s per capita annual electricity consumption reaching 6 815 kWh. Myanmar, Lao PDR and Cambodia are the countries in which per capita electricity consumption grows the most.
These demographic and energy statistics demonstrate the need for integrated energy planning not only on the supply side (to cover rising energy demand in an optimal way), but also in the end-use sectors, ensuring the rational use of energy while also considering potential environmental and socio-economic impacts.

POWER SECTOR

OVERVIEW AND SCOPE
To be consistent with a climate-compatible world, the electricity sector will have to be thoroughly
decarbonised by mid-century across the ASEAN region. Accomplishing this will require accelerating the deployment in power generation of all forms of renewable energy technologies: wind (onshore and offshore), solar PV, hydropower, biomass and geothermal energy, among others. Wind and solar PV will lead the transformation, supplying up to 20% of total electricity generation by 2030 (from just over 1% today) in ASEAN. ASEAN’s power sector is a key source of emissions and spans a vast region which is operationally integrated to varying degrees and in some regions through an electrical interconnection system. The large share of coalfired generation means the power sector’s 649 MtCO2 of emissions in 2020 are responsible for the biggest share of energy sector emissions, with coal representing over 80% of the power sector’s emissions. The expansion of coal generation over recent and coming years means that the emissions intensity of electricity has been and will continue to be on an increasing trend in the near term. The scale of ASEAN’s emissions mean that it is a pivotal player in any global emissions reduction pathway.

These scenarios for the power sector were considered in a 35-node model of ASEAN as shown in the following figure, with 18 nodes in Indonesia, nine in Malaysia and one node for each of the remaining AMS. Malaysia and Indonesia are represented in more detail than other ASEAN countries because they are also the focus of national reports.

TECHNOLOGY VIEWS

This section goes into greater depth on some of the key topics and technologies that are crucial for the
transition in the ASEAN region. Many of these solutions are cross-sectoral, and they are discussed here in a wider context. However, many findings related to these solutions are.

ELECTRIFICATION IN BUILDINGS, INDUSTRY AND TRANSPORT
The share of electricity in energy consumption in the building sector increases from 46% in 2018 to 78% in the PES 2050 and 85% in the 1.5-S 2050. This is primarily due to an increase in the use of electricity for space cooling, appliances and cooking. In both residential and commercial buildings, space cooling is the most electricity demanding service, increasing from about 36% in 2018 to 57% in the PES 2050 and 53% in the 1.5-S 2050. This can be associated with the increased use of air conditioners and fans within the ASEAN states to meet the residential space cooling needs over the years. Although electricity demand remained consistent for appliances across all scenarios in each year, there is a significant increase in electricity demand for cooking from 2.5% in 2018 to 9.1% in the 1.5-S 2050. This is mainly due to the decrease in the use of traditional cookstoves and wider adoption of efficient electric cookstoves.

Nickel
Global nickel consumption amounted to about 2.4 Mt in 2019. The leading consumers were China and
Indonesia. Nickel demand is projected to grow substantially in the next few decades because of its widespread use in battery cathodes. For instance, lithium-ion batteries are typically composed of between 30-80% nickel. Alternatives to nickel, including lithium-iron-phosphate cathodes, could reduce demand for nickel. However, the technical performance of the available alternative battery chemistries is inferior. There are two main types of nickel deposits: sulphide ore bodies and laterite soils. The importance of hydrometallurgical processing of laterite soils is projected to increase. Nickel reserves are estimated at 89 Mt; resources in classical subsoil ore deposits are estimated at 300 Mt. There is an additional estimated 290 Mt in subsea nickel deposits. Nickel production from underground and open-pit mines was 2.54 Mt in 2019. Nickel demand is projected to exceed supply by 2025. Several factors will affect the supply and demand balance. They include the extent and pace at which EVs are adopted, the battery technology that becomes dominant in the industry, and the way suppliers respond to these changes.

INVESTMENTS, COSTS AND BENEFITS