Explore how Smart Grids Market has Unlocked Investment Opportunities in the ASEAN Region
The development of a country’s energy infrastructure is an important parameter to evaluate its growth. In the present decade, a country’s energy infrastructure is adjudged as equipped when it comprises of minimum setup and elements to integrate advanced technologies and to improve infrastructure. The minimum elements include the electrification status, grid connectivity, transmission and distribution substations to monitor the electricity supply, high capacity transmission lines, capacitor banks, and step up and down transformers, among others. Countries in the ASEAN region are also working toward ensuring these elements in their respective power grids. According to the data provided by the United Nations Economic and Social Commission for Asia and Pacific (UNESCAP) 2016, the electrification percentage of all the ASEAN countries have improved in the past decade.
The source of power generation in the ASEAN countries has been a mix of conventional and renewable energy. For instance, countries such as Indonesia, Brunei, Vietnam, and Thailand depend heavily on conventional sources for power generation. On the other hand, countries such as Myanmar, Laos, and Malaysia are dependent on hydropower for the generation of electricity. According to ASEAN, plans of action for energy cooperation (APAEC) 2016-2025, the countries are focusing on developing energy sustainability and enhancing the energy infrastructure with established connectivity. Moreover, the transmission and distribution infrastructure is also planned to be upgraded in order to reduce T&D losses.
The electricity demand in these countries has also increased owing to the increasing population and urbanization. As a result, the ASEAN countries have started incorporating solar and wind energy sources in the energy mix. Moreover, these countries are dependent on distributed generation systems, which are used as a source of power supply by injecting the surplus electricity to the grid during the time of peak load. In order to implement these emerging requirements and advancements in infrastructure in the grid, the smart grid is a pre-requisite for the same. A smart grid uses two-way communication for the smooth and transparent supply of electricity from generators to consumers, thereby ensuring reduced power disruptions and improved power quality. In order to enhance the existing energy infrastructure by setting up a smart grid project for a country, the existing energy infrastructure should be capable of integrating the smart grid associated hardware and software components in the grid.
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Moreover, for smart grid hardware and software to work, communication, and IT infrastructure also play a crucial role in integrating all the product offerings with the IT infrastructure using communication protocols. The network infrastructure helps to communicate the smart grid products within themselves, which, in return, helps the power utilities to gain real-time insights about the flow of electricity, time of peak demand, integration of distributed generation units in the grid, reduce T&D losses, and transparent energy consumption and billing, among others.
The rising share of renewable energy in the energy mix across ASEAN countries has propelled the need for increasing usage of smart grids. Moreover, there is an essential concern for transparent energy consumption and billing to track the pattern of energy consumption of consumers. In countries such as Singapore and Malaysia, there is a huge availability of renewable energy. As a result, the smart grid market currently exhibits a stable growth. However, the smart grid market in countries such as Thailand, Vietnam, and Indonesia is anticipated to display huge growth prospects supported by innovative technological advancements in the energy sector. The ASEAN smart grid market is expected to progress at a healthy rate in the future, supported by the gradually growing affinity to reduce transmission and distribution (T&D) losses and integrate distributed generation systems in the electrical grid.
The rapid market penetration of the smart grid for the ASEAN countries has led to the enhancement of the ancillary services, load management, integration of surplus electricity into the grid by the prosumers with a specific focus on smart grid technologies such as energy storage systems, advanced metering infrastructure, transmission and distribution automation, and wide-area monitoring system, among others. The power utilities of the ASEAN countries such as Tenaga Nasional Berhad, Electricity Generating Authority of Thailand, Manila Electric, Lao PDR, and Ministry of Electricity and Energy, among others are increasing their investments in smart grid technologies, to improve operations and reduce downtime. For instance, in June 2019, World Bank invested $537million in the Ministry of Electricity and Energy of Myanmar for the enhancement of the existing electrical grid of the country.
Amongst the ASEAN countries, Singapore has been declared as the smart nation, owing to its advanced energy infrastructure, smart mobility, enhanced safety, making the country more focused toward digitalization, thereby assuring smart, healthy, and safe living country for its residents. The energy infrastructure of Singapore has been developed the most amongst all the ASEAN countries based on the smart grid implementation, grid reliability, capacity of transmission and distribution network, and the average electrical system interruption duration index. Although the country is still dependent on conventional energy as a source for power generation, owing to the APAEC 2016-2025 initiative, Singapore has set up a target to install an additional 350MW of solar energy by the end of 2020. As of the first quarter of 2019, the country had 45GW capacity of renewable energy installation in the country. Since the 2016-2017, the country has started deploying smart meters in the country in order to ensure transparent electricity consumption and billing. As a result, Singapore is now equipped with a smart grid infrastructure to ensure a continuous supply of electricity to its end users.