Asean power grid could unlock 25 GW of renewable capacity, lowering Singapore's electricity costs: Rystad Energy

Business Times

2 days ago

[SINGAPORE] A regional power grid that allows for electricity trade between Asean nations, if fully realised, could unlock up to 25 gigawatts (GW) of renewable and energy storage projects, based on research by Rystad Energy.
The projects, spanning hydropower, solar and offshore wind, would be worth more than US$40 billion in investment across the region, and benefit Singapore the most, said the energy research firm on Tuesday (Jun 3).
However, realising the regional power grid blueprint, which was first brought up in the late 1990s, will not be smooth sailing.
'Singapore stands to benefit the most from South-east Asia's emerging regional grid, but realising these gains will require coordinated, win-win cooperation with supplier countries, many of which may see limited direct advantage in linking up with another market,' said Raksit Pattanapitoon, lead renewables and power analyst of Asia Pacific at Rystad Energy.
For neighbouring countries, where land is more abundant but power demand is less concentrated, Raksit noted that Singapore can leverage its financial strength and partnerships to unlock the infrastructure capital needed.
He added that grid resilience, with strong interconnections and sufficient grid-connected storage, must be a key priority, as highlighted by recent blackouts in the Iberian Peninsula.
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'Cost-effective alternative'
Singapore relies heavily on natural gas for power generation, with gas currently accounting for 96 per cent of its power mix, according to Rystad Energy's report.
The Republic has been using combined-cycle gas turbine (CCGT) plants that burn natural gas to generate electricity, and use the resulting hot exhaust to produce steam that drives a secondary turbine.
Rystad Energy's analysis shows that electricity imports via the power grid would offer a 'more cost-effective alternative to building new domestic CCGT capacity'.
While these projects are already more affordable than building a new gas CCGT, they are even lowering the cost of electricity with higher efficiency of energy usage, as proxied by load factor, said Raksit.
The Energy Market Authority (EMA) requires projects to achieve an annual load factor of at least 60 per cent within five years of commercial operation, ensuring a steady and dependable power supply for the nation, noted Rystad Energy, highlighting the projects developers' 'strong economic incentive' to exceed the 60 per cent benchmark for the load factor.
'Developers of these import projects are sizing the installed capacity to exceed EMA's minimum 60 per cent load factor and seem to be aiming for near 100 per cent load factor,' Raksit shared with The Business Times.
The analysis shows that raising the load factor target from 60 per cent to 100 per cent can substantially lower the average cost of electricity generation over the lifetime of a power plant, or the overall levelised cost of electricity (LCOE), by spreading transmission costs more effectively and unlocking capital expenditure efficiencies through economies of scale.
'This impact is particularly significant (for renewable energy imports) in countries such as Malaysia (Sarawak), Cambodia and Vietnam, where long transmission distances amplify cost-optimisation benefits. Hydropower projects, in particular, benefit from these scaling effects, resulting in even-greater cost reductions,' stated the report.
Solar-plus-storage hybrid systems can already achieve load factors above 90 per cent, both technically and economically. Rystad Energy noted that such systems, with both a battery-energy storage system (Bess) and necessary backups, can reach the level of reliability required by Singapore's EMA and could be comparable to other dispatchable energy sources.
Nevi Cahya Winofa, analyst of renewables and power research at Rystad Energy, said: 'Current cost analyses indicate these hybrid systems could deliver lower LCOEs than many in the industry currently anticipate.'
She added that Singapore must proactively identify and secure unique advantages to maximise shared value in the emerging regional power grid.
EMA, on Friday, granted the sixth conditional licence to a low-carbon electricity import project, after raising the import target to around 6 GW by 2035, up from the initial target of 4 GW announced in 2021.
The Singapore government would be open to more electricity imports beyond the current 6 GW target as the country's energy needs grow, EMA's director of energy connections office Faith Gan told BT.