Energy Security
Energy Security
Social Equity
Energy sustainability*) is based on 3 (three) core dimensions: (1) Energy security, (2) Social equity, and (3) Environmental impact mitigation. The development of stable, affordable, and environmentally sensitive energy systems defies simple solutions. These three goals constitute a trilemma, entailing complex interwoven links between public and private actors, governments and regulators, economic factors, national resources, environmental concerns, and the behaviors of individuals. It needs firm action to steer the national energy system onto sustainable energy path in achieving stable, affordable, and environmentally sensitive energy systems.
Energy Security: For both net energy importers and exporters this includes the effective management of primary energy supply from domestic and external sources; the reliability of energy infrastructure; and the ability of participating energy companies to meet current and future demand. For countries that are net energy exporters, this also relates to an ability to maintain revenues from external sales markets . Social Equity: This concerns the accessibility and affordability of energy supply across the population. Environmental Impact Mitigation: This encompasses the achievement of supply and demand-side of energy efficiencies and the development of energy supply from renewable and other low-carbon sources.
*) WEC Definition. Policies for the future 2011 Assessment of country energy and climate policies, WEC 2011.
Cross border transaction: the ability of the state or of market player, to draw on foreign resources and products that can be freely imported through ports or other transport channels and through cross boundary energy grids which are supported by enabling environments that need to be established. Adequate national and regional strategic reserves to address any transient interruption, shortage, or unpredictable surge in demand.
Attracting large-scale investment in new low carbon electricity-generation sources and associated transmission and distribution networks, together with more sustainable transport infrastructures Deployment of low-carbon & carbon-free energy technologies, greater role of renewables (indigenous), promote greater efficiency in energy production (supply side) & energy use (demand side), and provide efficient transmission and distribution systems.
Move the energy system towards using low carbon energy sources, to improve national energy mix by geographic and fuel supply diversity through government -industry partnerships.
Ensuring the security of energy supplies and the resilience of energy infrastructures so that energy is both available and affordable during the transition to lowcarbon energy systems
Encouraging the R&D through international cooperation and collaboration focusing on lowcarbon & carbon-free energy technologies and taking into account of the role of intellectual property rights, and to promote demonstration project in key areas.
1.2 1.3
1.4
During the APAEC 2004-2009, the 10% target to increase the installed RE-based capacities for power generation was met. As of 2008, the RE installed capacity of the ASEAN region was 37,100 MW (by WEC definition). The APAEC 2010 2015, Action 1.1 of Program Area 5 stipulated to achieve by 2015, at least 15% based on WEC definition of RE additional RE installed capacities in power generation mix.
Actions which complement Action 1.1 include: i) the promotion of technical cooperation to complement efforts on RE targets of ASEAN Member States, ii) the promotion of national RE programs, available market and feasibility studies to investors, project developers, power utilities and funding institutions and iii) monitoring RE installed capacity additions bi-annually.
Strategic Goals
To pursue the aspirational goal of reducing regional energy intensity of at least 8% by 2015 based on 2005 level To achieve higher end-use energy efficiency for all sectors through regulatory and market approaches, where appropriate To enhance institutional and human capacity emphasizing the development of energy efficiency technology and service providers in the ASEAN region To encourage private sector participation, especially financial institutions to support EE&C investment and implementation
Total primary energy consumption increased from 252 MOTE in 1990, 339 MTOE in 1995 to 511 MTOE in 2007 or 3.6% per annum. Under BAU, it will growth 4.5% per year from 2007 to reach 1,414 MTOE in 2030. Coal will have the fastest annual growth as demand increases in power generation, but oil will remain as the major source of energy.
In the APS, the growth of primary energy consumption will be at a slower 3.6% per annum to reach only 1152 MTOE in 2030, 18.5% lower than in the BAU scenario. This is the result of imposing EE&C action plans and saving targets of the member countries. Primary energy intensity will decrease by 29.7% to 408 TOE/million USD.
Increased at an annual rate of 3.8% from 186 MTOE in 1990, to 241 MTOE in 1995, and to 375 MTOE in 2007. Under BAU Scenario, Final Energy Consumption in ASEAN will grow at an average annual rate of 4.4% from 375 MTOE to 1,018 MTOE in the period 2007-2030. The transport sector consumption will grow the fastest during the period with annual growth rate projected at 5.6% driven by the increasing per capita income.
Total CO2 emission in the APS will be about 679 million tons of Carbon equivalent (Mt-C), 24% lower than the BaU scenario (895 Mt-C).
ASEAN will continue to be heavily dependent on fossil fuels especially oil in the future. The rapid growth of electricity demand will also be a driving force in increasing use of fossil fuels especially coal. One of the most effective ways of meeting future demand is improving energy efficiency as shown by the APS results. In this regard, ASEAN might to revisit their energy efficiency programs to optimize the benefits that could be derived from them. Another sustainable way to meet increasing demand is to accelerate the development of clean energy such as renewable and alternative energy. ASEAN needs to improve the energy investment climate so that it will become more conducive to investors. ASEAN should also continue to strengthen regional cooperation especially in sharing best practices in energy development and utilization including energy efficiency.
Hydro 79.18%
Wind 0.06%
Solar 0.15%
Goethermal 2.26%
Goethermal 14.59%
Solar 0.17% Hydro 75.07% Wind 0.13%
Hydro 14.21%
Wind 0.02%
Solar 0.03%
Country
Policy Examples
Target New and Renewable Energy share of 25% in the national energy mix by 2025. Instruments Tariffs for Renewable Energy projects with capacity below 10 MW on Small and Medium Scale Power Generation based on grid connectivity and location. Incentives The Government borne the VAT of geothermal project during its exploration stage. Government guarantee for Indonesia State Electricity Corporation (PLN) payments to power developers on a case-by-case basis.
Indonesia
Target The National Renewable Energy Program targets an additional RE capacity of almost 10,000 MW by 2030.
Philippines
Country
Thailand
Instruments Feed-in adder for Very Small Power Producer and Small Power Producer. Feedin tariff scheme is being envisaged to replace the feed-in adder.
Incentives Import duty exemption for equipment related to Renewable Energy Exemption on corporate income tax (tax holiday) for RE manufacturers.
Renewable Energy Support Mechanisms for Bankable Projects (Study Report, March 2012)
Bankable Projects
The analysis of survey results reveals key attributes of a bankable biomass and solar PV projects. Bankable projects are those projects that generate sufficient benefits and attract bank financing. The survey results bring to light the following attributes: Well-defined objectives such as catering to the growing electricity markets, addressing the agro-industrial waste disposal issues and to some extent as a social service through the companies corporate social responsibility (CSR) Technologies are mature, components and expertise are locally available, and fuel supply is sustainable. Capacity building is undertaken and supported internally within the company Project owners and power off-takers have strong financial standings and highly credit worthy. In addition to the market and grid access frameworks, key mechanisms are the fiscal incentives and feed-in tariffs. Financial mechanisms are important but they are not as important as the incentive mechanisms. With the impact of the combination of incentives measures, sound project economics with financial indicators at par or even higher than other projects in the market.
Inception stage. Countries at the inception stage of RE market deployment are dependent on fossil fuels to meet their energy demand. Often, fossil fuels subsidy policies remain from the countrys legacy to stimulate economic development and to ensure affordability of energy for poorer households. RE exists only as first examples and is deployed as demonstration or pilot projects. The initial formulation of regulations and policy on RE exists, but is not yet effective to pave the way for RE growth. Moreover, the cost of RE technology is above the cost of competing alternatives. At this stage, a country is challenged to formulate effective policies, provide stimulus packages and establish institutional capacity required to initiate and monitor RE market deployment. Take-off stage. At take-off stage, deployment of RE grows. Awareness of the importance of RE as alternative sources to fossil fuel is increasing, marked by the enforcement of policies and regulations that promotes RE. Most often in the take off stage, the country faces significant challenge to establish a predictable long-term support environment to generate investors confidence and appropriate incentives while managing the cost of promotional policies. Consolidation Stage. At this stage, the cost of RE technologies achieves a competitive playing field, and there is an important share of RE among the electricity sources in the country. Deployment grows towards the maximum practicable level, which is close to the realizable potential for the country.
Support Mechanism
Type
Feed-in-Tariff (FiT) Premium-price FiT (Adder) Renewable Energy Portfolio Standard (RPS)
Description
FiT guarantees the generator of renewable electricity a fixed price per kWh at which electricity is bought. Adder provides an FiT payment above the market price for electricity generation. An RPS requires which requires a minimum percentage of generation sold or capacity installed be provided by renewable energy. Obligated utilities are required to ensure that the target is met, either through their own generation, power purchases from other producers, or direct sales from third parties to the utilitys consumer. Net metering is a voluntary arrangement where customers are allowed to sell excess electricity generated from qualified renewable systems back to the utility through their metered electricity connection. Under Priority Access utilities are mandated to provide priority grid connection to RE and/or place electricity from renewable energies at the top in merit order dispatch. In a competitive bidding approach, developers bid for Power Purchase Agreements (PPAs) from a utility or other contracting authority.
Market Mechanism
Net Metering
Priority Access
Competitive bidding
Support Mechanism
Type
State-run or state-funded Venture Capital
Description
Venture Capital (VC) provides equity funding for new technology, start up companies, new business models and takes greater risk and also seeks greater return from successful projects. A one-time grant to fund part of the upfront capital cost of RE projects.
Microcredit
Support Mechanism
Senior debt Debt Financing Mechanism (continued)
Type
Description
Senior debt is a long term debt instrument secured against first charged over the project assets and/or with corporate guarantee. Loan softening allows government lending institutions to offer loan terms such as longer loan tenor, an interest rate lower than the market rate, or repayment holidays over a period. Tax related incentives are given in a variety of forms such as tax holiday, reduced tax rate, exemptions, and production tax credits. Carbon tax is a tax levied on emissions from electricity generated from fossil fuels. Insurance provides coverage for investors, contractors, exporters and financial institutions intended to spur private investment in clean energy. Sovereign policy risk insurance provides insurance to private investors against sovereign or energy policy risk. Renewable electricity certificate is an instrument that tracks and registers renewable electricity production.
Loan softening
Tax related incentives Tax Code Mechanism Carbon Tax Risk Insurance Risk Insurance Mechanism
Formulate an integrated plan for renewable energy Develop a soft loan assistance program dedicated to RE projects Provide production subsidy based on generation Develop focused support scheme for small and of-grid RE projects Provide technical assistance for capacity building
Demographics A large share of the remaining rural households without electricity in ASEAN countries is located in the poor, remote and isolated areas. Policy Framework Most of the ASEAN countries have no specific policy framework for off-grid rural electrification. Provisions regarding off-grid rural electrification are usually included in the policies and plans for rural electrification in general, which most often focus on grid extension as the least-cost solution for many rural areas. Economics High levels of initial capital investments and lack of ability or willingness to pay by rural customers are some of the major issues that make it challenging to develop a business model for off-grid rural electrification. Business Models A large variety of business models for off-grid rural electrification exist in the ASEAN region, depending largely on local conditions and policy objectives.
Technology and Supply Chain Low quality leads to unreliable electricity supply, low plant load factor due to regular shut-down for system maintenance, and increase in operation and maintenance costs over the project life time in many cases became big barriers for sustainable rural electrification. Intermittent characteristic and resource availability Rural electrification technologies usually face strict limitations imposed by site specificity and seasonality of resources. Social Acceptance Local community involvement is an essential aspect in rural electrification projects. If a project is not well explained, accepted or appreciated by the community beneficiaries, sustainability can be hampered. Capacity on Operation and Business Management Insufficient capacities on operation and maintenance as well as business management are among the main reasons that can lead to the project failure.
Establish a legal framework to encourage the private sector to get involved in off-grid rural electrification. Properly set up the electricity tariffs for off-grid rural electrification. Avoid providing subsidies where market-based rural electrification approaches are feasible. Allow for long-term agreements between public and private partners (PPP). Avoid political interference in selecting business model for off-grid rural electrification project.
Status of EE&C in ASEAN Measures to Promote EE&C Barriers & Lessons Learnt
Brunei Darussalam
Reduce energy Energy Efficiency intensity by and Conservation 25% in 2030 (EE&C) Act (2012) with 2005 as the base year
Cambodia
Under Preparation
Regulator y Framework
National Energy Policy Presidential Regulation No. 5/2006 Energy Act No 30/2007 Energy Conservation Govt Reg No 70/2009 Ministerial Regulation (MEMR) No. 13/2010 and No.14/2010 Currently developing the national strategy and policy on EE&C funded by the ADB and is in the process of selecting Consultant
EE&C Target
The National Energy Conservation Master Plan (2005); To decrease energy intensity by around 1% per year on average until 2020
Indonesia
LAO PDR
The proposed Policy is aiming at reducing energy consumption in Government Offices by 10%.
Promotion in Industrial and Transportation Sector EE&C Standard Labeling (households) ESCO International Cooperation.
Regulatory Framework
Gas supply Act (1993) Electricity Supply Act 1990 and (Amended) 2001 or Act A1116 The Energy Commission (EC) is the regulatory agency for the electricity and gas supply industry Myanmar Electricity Law (1984) Electricity Act 1948 (as amended in 1967) Electricity Rules (1985) The Petroleum Act (1934) and Petroleum Rules of 1937(as amended in 1946)
EE&C Target
The EE&C target is to reduce the electricity consumption by 10 % in the year 2020 compared to a Business as Usual scenario. Myanmar agreed to pursue the aspirational goal of reducing regional energy intensity of at least 8% by 2015 based on 2005 level
Malaysia
Myanmar
Regulatory Framework
The Energy Conservation Law was approved on June 1980 with 5 years activity The draft bill was extended on EE under consultation affectivity of the said law up to 1990 Energy Conservation Act came into force on 22 April 2013
EE&C Target
The National Energy Efficiency & Conservation Program (NEECP): to achieved energy savings equivalent to 10% of the annual final energy demand outlook from 2009-2030
Philippines
Singapore
To reduce energy intensity by 20% (2020) and 30% (2030) from 2005 level
Domestic Sector: to cut electricity consumption of household by 10 % dubbed as the 10 % Energy challenge, Electricity Vending system (EVS) Power Sector , Intelligent Energy System (IES) Green Mark building Labeling System Public Sector Energy Audit
Thailand
EE&C Target
National Energy Efficiency Program (VNEEP); To reduce energy consumption by 3-5% (2010) and 5-8% (2010-2015)
Vietnam
Lack of Awareness Non-existence or weakness of certain national regulatory frameworks Poor national response to EC Limited funding sources A potential lack of locally manufactured cheaper but energy efficient equipment A lack of benchmarking information regarding energy performance of various processes in different industrial sub-sectors The lack of reliable data available A centralized EE&C authority Financial incentives Limited private sector involvement Experience sharing, monitoring system and replication programs Supporting EE&C institutions and sharing of available resources and expertise Strong government support for EE&C needed; most EE&C initiatives are government-driven; EE&C target is vital
AEMAS was designed in 2004-2007 under the framework and funding of the EC-ASEAN Energy Facility Programme Subsequently endorsed during the 23rd SOME-AMEM held on July 2005 in Cambodia Establishment funded by European Union (1.7 Mil. EUR grant) under the Switch-Asia Programme Lead Project Beneficiary: ASEAN Centre for Energy 6 other partners acting as Country Coordinator for each ASEAN Member States + 1 partner handling technical support 10 associates composed of the EE&C-SSN FPs acting as Steering Committee + UNEP
AEMAS ENDORSEMENT
WHAT IS AEMAS
AEMAS STRUCTURE
Local Auditors
Audit
Award
Certify
Country Experts
Recommend
Country Coordinator
AEMAS CERTIFIED
TARGET
AS OF TODAY
103 103
3,500 2,500 12
127* 63
1,188 9 15*
AEMAS-EMGS
Motivation
Budget & procurement policies in favor of EE Demonstration of EE improvement
Energy Management System in place and documented
Real EE improvement; Energy Management System is sustainable
24-26 September 2013, Westin Hotel, Bali, Indonesia Conference Exhibition Minister-CEO Dialogue ASEAN Energy Awarding Ceremony
WWW.ASEANENERGY.ORG
Thank You