Assessment of renewables for energy security and carbon mitigation in Southeast Asia: The case of Indonesia and Thailand

Highlights

• Energy sector of Southeast Asia (Indonesia and Thailand) is modeled.

• LEAP energy model is used.

• Least cost optimization method is used to estimate the future electric supply.

• CO₂ mitigation and electricity production costs are also estimated.

Abstract

Due to fast rising energy demand, Southeast Asia has become a larger energy consumer and bigger player in global energy markets. Energy security and environmental emissions reduction have become higher priorities to ensure energy supply at affordable costs, for continued economic growth and development. To address these issues renewable energy plays a vital role in the long-term future for sustainable development. This paper estimates and analyzes the renewable energy potential in the energy mix in two Southeast Asian countries, Indonesia and Thailand. The LEAP energy model is used to develop different renewable energy policy scenarios from base year 2010 to 2050. The results of the simulation show that a large proportion of electricity must be produced by renewables by 2050 if full potential of renewables is to be exploited. In this case, 81% and 88% of CO₂ emissions are reduced in Indonesia and Thailand respectively. In implementing renewables at large scale in both these countries the cost of production increases substantially.

Introduction

Energy security and climate change issues are huge challenges the world is facing today. This complex field of research extends beyond the range of core issues as well as into a number of other related issues, such as economic, environmental, technological, risk management, social and geopolitical.

In the context of global warming generated by the greenhouse effect, there is an urgent need to investigate how our energy needs can be fulfilled in a sustainable manner. Considering the fluctuating fossil fuel prices in the past and the fact that countries in the Southeast Asian region are richly endowed with renewable energy sources, these sources have become a very attractive option for electricity generation in this region [1].

The Southeast Asia region consists of ten countries: Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, The Philippines, Singapore, Thailand, and Vietnam. In these countries total energy consumption increased from 1999 to 2009 by an average of 4.2% per year. During the same period coal, gas and electricity consumption increased by 10.5%, 7.5% and 5.5% respectively [2]. Looking into the future from 2005 to 2030, energy consumption growth is expected to increase about 2.6-fold and carbon dioxide emissions are expected to quadruple due to heavy dependency on coal and natural gas [2]. For some of the smaller Southeast Asian countries, electricity consumption is expected to grow about 23-fold with respect to the current consumption rate until 2030 [3]. Due to fast rising demand for energy, renewables have been used extensively in the past few years in this region. The Philippines secured second rank in the world in terms of total geothermal electricity generation and Indonesia third. The Philippines was also second in total biomass power, while solar photovoltaics have shown rapid annual growth in Thailand [4]. Renewable electricity accounted for 17% of total supply according to the most recent data available from 2007 and this share was mostly from large-scale hydroelectric power plants. Geothermal power plants produced less than 3% of the Southeast Asian region’s power while biomass produced less than 2% and wind plus solar less than 0.5% [5].

Climate change is the key factor in the ‘ASEAN Plan of Action for Energy Cooperation 2010–2015’ which was adopted by the ASEAN Ministers on Energy in 2009. This action plan defined three priorities for the energy sector: energy efficiency and conservation; renewable energies; and clean coal technologies [6]. The energy efficiency and conservation plan aim to increase efficiency through regulations and market mechanism, reduce current energy intensity and invest in the new energy efficiency technologies. The renewable energy plan fixed the target to achieve 15% renewable electricity of total installed capacity. The clean coal technology plan aims to encourage the use of these technologies through regional cooperation [6].

The Southeast Asia economies are projected to grow annually by 5.8% from 2012 to 2030 according to Asian Development Bank reports [7]. Actual growth sometimes depends partly on future global economic growth, fuel price stabilization and the development of alternative technologies for replacement of oil and coal. A relatively lower projection is possible if global economic growth remains slow, fuel prices stay weaker and trade protection increases. Under both these scenarios, energy consumption in Southeast Asia is projected to increase, even at different rates, to empower the region’s economic growth. Under the higher projection scenario, consumption will increase by an average of 6.4% per year until 2025, and under the lower scenario an average of 5% per year [8]. To achieve these growth rates, installed capacity needs to increase in the range 20–40%, to add 168–192 GW. Coal and gas power plants are projected to make up 80–85% of these capacity additions [8]. These countries supply most of their own energy and occasionally export energy products to the world energy market. Because coal is a cheap and abundant source of energy in some Southeast Asian countries, especially Indonesia and Vietnam, it makes up a large proportion of the region’s energy mix. Coal is used to produce electricity for manufacturing as well as household uses. Petroleum, particularly subsidized diesel fuel, is used in transportation to some extent for power plants. On the other hand, natural gas exploration and production are rapidly changing the energy landscape in Southeast Asia. Gas-fired power plants have been the predominant source of electricity generation in Thailand and Malaysia since the 1990s and are now appearing across the rest of the region in the Southeast Asia, because of abundant and relatively clean fuel. Every country in the Southeast Asian region is planning to implement renewables in their energy systems. Indonesia and the Philippines have abundant untapped geothermal energy resources while Thailand and Vietnam can tap abundant hydropower potential in neighboring Laos. By contrast, nuclear energy faces a dilemma in many Southeast Asian countries, having suffered a setback after Japan’s Fukushima nuclear disaster in 2011 due to the earthquake and tsunami. While some of these countries are still expecting nuclear energy to become part of their energy mix, others have shelved their plans for nuclear power plants for the foreseeable future [9].

Nearly all Southeast Asian countries have adopted medium and long term targets for carbon emission reduction and renewables. Indonesia, Singapore and Thailand announced CO₂ emissions reduction targets in support of Copenhagen Accord (UNFCCC summit in 2009) [10]. Interest in renewables varies considerably among the countries. Renewable energy targets are much more ambitious in some countries than in others, with Indonesia and Thailand at the forefront. The energy related CO₂ emissions have more than tripled since 1990 in line with population growth, rising living standards and growing share of fossil fuels in the energy mix. CO₂ emissions amounted to 1.2 Gt in 2011 which is 3.7% of the total global emission [11].

In Southeast Asia, Indonesia and Thailand have been specifically chosen in this study because they are becoming a very dynamic region in terms of rapid and continuing economic growth prospects, increasing energy demand and rising fossil fuel imports over the past two decades. Additionally, they have increasing concerns about environmental change such as GHG (greenhouse gas) emissions and regional air pollution, consistently low electrification rates in rural areas and a heavy dependence on fossil fuels and traditional biomass. At the same time, the region presents large potentials of renewable energy sources, though most of this remains untapped and the resource endowments differ greatly from country to country [10].

Indonesia is one of the leading exporters of steam coal in the world and also one of the largest exporters of LNG (liquefied natural gas) [10]. Oil production has been declining since 2004 and consequently will not be able to cover the rising oil demand in the future. Therefore, Indonesia becomes a net importer of oil. Of the two countries in the region Indonesia is one of those with abundant sources of geothermal energy that could be further developed [10]. The country’s total domestic electricity production was 188 TW h in 2013 which is a 40% increase from 2009. Fig. 1 shows the electricity generation by different fuels in 2013 in Indonesia [11]. Since electricity imports from Malaysia are negligible, net electricity consumption in 2013 was the same as electricity production. Electricity demand is projected to increase up to 287 TW h in 2018 and 386 TW h in 2022 with a compound annual growth rate of 8.3% [12]. In 2013, the residential sector was the largest consumer of electricity with 41% of total consumption, followed by 34% industry, 19% commercial and 6% public service [12]. Indonesia’s renewable target is 5% geothermal by 2025 and 5% biomass, hydro, solar and wind energy by 2025 [10]. This target also includes nuclear power which is a non-renewable energy source. There is also a target for biofuels of 5% by 2025 [10].

Power generation in Thailand is predominately derived from fossil fuels, mainly natural gas. Coal-based power generation, which accounted for about 20% of total electricity generation in 2011, was the second most important source of fuel, while the role of hydroelectric power generation was limited to about 4.8% [11]. Oil-based power generation plants had negligible role during the same period due to increasing replacement of oil-based power generation with natural gas and coal based power plants. Total installed electricity generation capacity of Thailand in 2011 was 31.8 GW. Combined cycle plants contributed the largest share of the capacity which was approximately 16.9 GW i.e. 53% [11]. The installed capacity of renewable energy was 2.2 GW i.e. about 6.8% of the total installed capacity [11]. Additionally, electricity imports from neighboring Laos increased from almost zero to about 1.5% of total electricity supply for Thailand in 2011. The imported electricity is mainly generated from hydroelectric power. Electricity generation by fuel types is shown in Fig. 2 [13]. The renewable target in Thailand is 19.1% in 2016 and 20.3% by 2022 [10].

In the literature, many studies have been undertaken for energy systems in Indonesia and Thailand. Mujiyanto and Tiess [14] investigate energy supply security for Indonesia up until 2025 by developing two scenarios for the energy situations which cover non-renewable and renewable resources for meeting energy demand. Martosaputro and Murti [15] discuss the wind power generation potential and its barriers in Indonesia. Recently Chang and Li [16] developed a linear dynamic programming model to estimate the impact of energy market integration and policy implementation for renewable energy in the Southeast Asia region. Kerdchuen [17] studied the opportunities and technology suitability of renewable energy generation in Thailand. Shrestha et al. [18] developed various scenarios and analyses of the energy system and its environmental implications in Thailand. The Southeast Asia energy outlook [11], developed by International Energy Agency, focuses on fossil fuel resources potential and energy efficiency policies.

None of these studies focuses on the renewable resources potential for Indonesia and Thailand even though there is a huge potential in these countries for renewable electricity generation. Some other studies in the literature focus only on the individual renewable energy resource in different economic sectors and not the integrated effects for the long-term future.

This paper focus on developments and prospects of renewable energy sources in Southeast Asian countries, especially Indonesia and Thailand, because they are the two largest energy consumers in the region. The LEAP energy model is used to simulate the different scenarios for renewable energy development. Three main scenarios, including reference scenarios, are developed for Indonesia and Thailand to estimate the proportion of different electricity generation power plants from the base year 2010 to 2050. The CO₂ emissions and the cost of electricity production are also estimated in different scenarios and compared.