Indonesia and Malaysia stand out as stars in the ongoing saga of Southeast Asia’s economic ascent. Their shared vision of “greening” their power supplies and upgrading their energy infrastructure offers a template that can help guide the region’s wider goals of maximizing renewables, lowering energy prices and improving the reliability of power.
A steady supply of affordable power has served as the lifeblood of economic growth across the Association of South East Asian Nations (ASEAN). Indonesia, for its part, is growing especially rapidly, averaging gross domestic product (GDP) growth of about 6 percent per annum in recent years. Populated by about a quarter-billion people, its huge domestic market is predicted to drive the economy into the world’s top 10 over the next decade. While less populous, Malaysia’s 30 million people have meanwhile exported their way to the front of the region’s economies. Malaysian output per capita is South-East Asia’s third highest, trailing only those of Brunei and the wealthy city-state of Singapore.
Yet looking ahead, both Malaysia and Indonesia face a challenge common to the region’s fast-growing economies: how to satisfy their growing need for more electricity? Demand is growing rapidly. In Malaysia, grid planners expect power consumption to rise by 5 percent annually; in Indonesia, that rate will hit 9 percent, and ASEAN-wide, it’s expected to average 6 percent through 2030. By comparison, year-to-year growth in the U.S. is barely 1 percent.
Meeting these energy needs solely with a business-as-usual approach -- that is, by building more fossil-fueled power plants -- is no longer seen as the most efficient use of scarce capital, however. Planners in both markets are looking to add renewable sources too.
The potential is enormous.
Together, the two countries are estimated to have in excess of 100 giga-watts in untapped renewable energy potential, including solar, hydropower, biomass and geothermal, according to Asian Development Bank (ADB)’s Outlook 2013: Asia's Energy Challenge. That’s greater than the total amount of currently installed capacity.
From a relatively small share today, Indonesia has laid out plans to increase its renewables output by eight-fold, to 25 percent by 2025, according to REN21’s Renewables Global Status Report 2013. Malaysia’s plans are even more ambitious, pledging to boost renewables to 36 percent of national capacity by 2050, from around 2 percent today.
As this greener, cleaner vision unfolds, it’s time to move beyond business-as-usual with the grid, too. To harvest the most from these home-grown resources, as well as to use extant power plants more efficiently, tomorrow’s grid must be smarter than today’s.
Conventional grid technologies must give way to smart grid systems, which optimize the flow of electricity by combining digital sensors and interactive controllers at key points on the path from power plant along transmission wires and transformers to end users’ plugs. Advanced analytics at grid operations centers help orchestrate the flow, moving more power more efficiently while seamlessly managing renewables’ sometimes volatile output.
This digital upgrade will do more than simply extend the supply of electricity across a wider region. A smarter grid will also facilitate “green” energy flow, improve the efficiency of energy use, and spur economic growth with more stable, affordable power.
Here are some examples of how these technologies are helping to realize the promise of a greener, more advanced grid in Indonesia and Malaysia:
* Develop distributed energy. Early steps to transition to renewables are in many cases happening on a small scale, in micro-grids. Indonesia, for instance, is turning to small independent power networks to help solve the challenge of delivering electricity across its 18,000-plus islands. Rather than link them physically, it is building more than 100 small-scale grids, starting on Sumba, powered by a combination of solar, micro-hydro, and agricultural waste and backed up by both batteries and conventional diesel generators. The need is great. Due largely to their geographic isolation, some 63 million Indonesians -- roughly equal to the population of the U.S. states of California and New York combined -- lack access to reliable electric supply, according to the ADB outlook.
* Drive economic growth. Malaysia is betting on the export promise of smart grid technologies. Kuala Lumpur has unveiled a decade-long investment plan to extend a smart grid nationwide. Starting at a pilot site in Malacca, Malaysia hopes not just to open the door to more renewable energy in its own territory, but to incubate the capacity to manufacture, design and service advanced grid technologies to export across the region.
* Enhance regional grid stability and integration. Smarter grid links also promise to bring cross border-benefits. Today, few transmission lines connect Indonesia and Malaysia’s grids, despite lengthy borders spanning sea and land. On the island of Borneo, for example (which is divided among Brunei, Malaysia and Indonesia), the latter two countries are discovering the promise of interconnection. Next year, power will start flowing over a 230-megawatt line that links a hydroelectric dam in Malaysian territory to a neighboring Indonesian province. The influx of green power will let Indonesia’s utility mothball generators fuelled by costly oil and cut utility bills by 25 percent in the process. The link is a key step towards building out the ASEAN interconnection, a regional transmission network that will lead to more stable grid operations and lower rates across South-east Asia.
* Spur efficiency to achieve self-sufficiency. Rare among nations, Indonesia and Malaysia are blessed with energy supplies sufficient to meet the bulk of their domestic needs. As their economies expand, planners hope to keep up this track record, and avoid the need to import more energy. Improving the efficiency of energy use can do this while also enhancing economic competitiveness. In Malaysia, the government is taking the lead by fine-tuning building lighting, air conditioning and related systems in the nation’s capital, Putrajaya. Its trophy project, the Energy Commission’s Diamond Building, runs on half the power of a similar, conventional building. Utilities in both countries are exploring how demand management technologies can allow big energy users to throttle back briefly during periods of peak demand, to avoid blackouts and the need to build costly, seldom-used peak generating plants.
As Indonesia and Malaysia upgrade and interlink their grids, the region will benefit too. Their immediate neighbors Singapore and Thailand, as well as ASEAN peers Cambodia, Laos, Philippines and Vietnam, are all pushing ambitious projects to expand and green their power supplies. All stand to benefit from smarter, better connected and more resilient grids.
IBM is helping to accelerate this process, drawing on lessons learned over the past decade and working with utility partners in the US and grid planners in Europe who are re-making their grids to be more reliable and accommodate rising levels of renewables.
Indeed, these precedents suggest that if South-East Asia’s renewable energy build-out is paired with sustained investments in smarter grid technologies, benefits over the coming years will ripple beyond the grid. A smarter, greener electric system can deliver a healthier environment and power sustainable growth in jobs, exports and the wider economy.
Ricardo Klatovsky is the Vice President and Global Sales and Solutions Leader for IBM Energy and Utilities. He is responsible for helping energy companies transform their operations and particularly focuses on industry solutions for transmission and distribution, customer operations, and power generation operations. Santhosh Nair leads IBM’s Energy & Utility Industry Practice for ASEAN region