Electricity demand in Southeast Asia (SEA) is expected to grow at a 3.7% annual rate, twice the global average, during 2016-2040, driven mainly by increasing population, urbanisation, rising income and improved electricity access. Electricity demand is expected to grow the fastest in Laos at 17% per annum during 2014-2025, followed by Indonesia and Cambodia at 11%. To meet the rising electricity demand, installed power generation capacity is expected to more than double from 241gigawatt (GW) in 2016 to 566GW by 2040.
Conventional power outlook
Conventional power from fossil fuels is expected to continue dominating, although their share will decline from 77% in 2016 to 63% by 2040. Coalfired capacity is expected to more than double from 66GW in 2016 to 160GW by 2040, reflecting the relative affordability of the technology. However, more efficient coal-fired capacity (i.e. supercritical, ultrasupercritical) is expected to account for ~70% of all new coal capacity additions such that more efficient plants will constitute about half of total installed coal capacity by 2040.
Renewable energy outlook
Renewable energy sources accounted for 23% of SEA’s installed power generation capacity in 2016, of which 72% was from hydropower and mostly from large hydropower (hydro) plants. The share of renewables is expected to increase to 37% of total installed capacity by 2040, driven mainly by increasing cost competitiveness and supportive renewable energy policies.
With hydro capacity increasing >150% from 2016-2040, it will remain as the dominant source of renewable energy. However, hydro’s share of renewable capacity is forecasted to decline from 72% in 2016 to 50% in 2040, as wind and solar photovoltaics (PV) are expected to grow faster at 14% and 11% per annum respectively. As a result, solar PV is expected to account for 25% of all renewable capacity by 2040 from 7% in 2016. This is on the back of favourable government policies as well as lower investment start-up costs for solar energy. With the robust prospects in the renewable energy segment, we see attractive funding and investment opportunities.
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