Southeast Asia’s energy demands will require $2.7 trillion investment: IEA

As Southeast Asia continues to urbanize at a breakneck speed, the developing region is projected to see a massive growth in energy demand over the next 20 years. Expected to increase by a whopping two thirds by the year 2040, Southeast Asia’s energy demand will require enormous investment and infrastructure in the energy generation and transmission sectors.

The International Energy Agency has estimated that US$2.7 trillion will be necessary to meet the growing needs in Southeast Asia for energy supply, transmission and efficiency measures.

By just 2030, it is anticipated that the Association of Southeast Asian Nations (ASEAN) region will become the fourth largest energy consumer in the world. The installed energy capacity in the region will more than double, from 240 gigawatts to 565 gigawatts, meaning that Southeast Asia will be adding a larger quantity of energy capacity in the next 20 years than the current capacity of entire nation of Japan.

Currently, the Southeast Asian energy industry is dominated by coal. According to findings from a 2018 report published by CoalSwarm, a research institute based in San Francisco, California, ASEAN nations make up a quarter of the world’s top 20 investors in new coal capacity. Half of all the ASEAN nations made the top 20: Vietnam, Indonesia, the Philippines, Thailand and Cambodia.

Vietnam alone is projected to increase their coal generation by nearly five times, increasing from a little more than 10 gigawatts in 2014 to an estimate of more than 55 gigawatts by 2030. While the rest of the world is moving away from coal, Southeast Asia has great access to coal supplies and China is notorious for domineering state-owned energy enterprises that push coal investment in neighboring countries.

While coal still reigns supreme, however, liquid natural gas is a rising star in the ASEAN nations. Indonesia is on track to flip its traditional role as an exporter of LNG to become a net importer by 2022, Thailand is constructing a floating, offshore natural gas hub in a joint development area with Malaysia, and the Philippines is working on constructing a $2 billion LNG hub at Batangas Bay, the first in the nation.

Shekhar Ghosh is consulting editor, Indoasiancommodities.com. He has edited and written for publications like Business India, Business Standard, Business Today, Outlook and many other international publications. He can be reached at shekhar.ghosh@indoasiancommodities.in.

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