The question of whether the pandemic serves as an opportunity or threat to the ASEAN transition from coal to renewables remains debated.
Understandably, governments may choose to direct efforts toward economic recovery as soon as the current situation settles. It is therefore not impossible that they will fall back on coal power to help boost their economies, in terms of providing cheaper electricity as well as continuous employment. In fact, several countries have already realigned state budgets and slashed renewable energy funds to reallocate for what they consider as more pressing problems.
Governments will be overwhelmed with economic priorities and may sideline sustainability programs currently in place. Likewise factors from, labor restrictions and to supply chain disruptions have postponed renewable energy projects, which combined, could make see Asia delay around 150GW of projects. The cost will also add to the burden as material supply shortages bite, thus, leading to an inevitable increase in prices. Even individuals will rethink their priorities; the Indonesian PV market has plunged while EV markets globally have slumped as consumers struggle to look beyond only essential spending.
On a more positive note, the energy shift can remain a possibility if factors such as government support, financing and credit terms, demand, and cost are in line with this vision. As the world battles the virus, renewable energy proves its resilience and even registers growth in demand as opposed to fossil fuels. Most countries report 18 to 25 per cent drop in energy demand due to movement restrictions in place. Analysts estimate that the total energy demand for 2020 will suffer a significant drop. Renewables, on the other hand, have spiraled mainly because of cheaper operating costs and the completion of existing projects.
While normalcy is the primary goal of governments after COVID-19, building the future cannot be disregarded. Southeast Asia cannot afford to go through another crisis, neither of health nor of climate. A sustainable energy system – one that provides employment and reduces reliance on carbon – can stimulate the region’s economic growth. With some positive signs that governments across ASEAN will not be turning their backs on a greener energy future, what will the role of the corporate buyer be in driving the region’s energy transition?
An increasing number of MNCs had committed to the RE100 initiative prior to the COVID-19 pandemic, there was a potential for these C&I buyers to have the ability to positively impact the energy transition and indeed maybe even government policy across the region as they shifted both their own operations, and those of their supply chain, to low carbon energy solutions.
As we search for the new normal, what will the role of corporate power buyers be in driving the ASEAN energy transition? Which organizations are considered winners and losers in this situation? Will green initiatives such as RE100 remain a priority, despite regional government priorities? How do green corporate buyers see the “new normal”? In any case, does it translate to a “green normal” as well? Can the renewable energy market handle the energy transition given the economic disruptions and supply chain restrictions? What is the current investor appetite for renewable projects? Are Renewable Energy Certificates (RECs) still attractive and the right tool in driving a lower carbon future? Does the rise of digitization equate to the acceleration of a cleaner energy future for Southeast Asia?
The answers to these questions will influence the success of ASEAN’s energy transition, so long as government strategy and policy act as the enabler.
Watch the recording of the webinar HERE to hear what industry leaders had to say to these important questions featuring:
- May Liew, Head of Sustainability and Open Innovation, SP Group
- Ashwin Naranayan, Head of Special Projects, Malakoff Corporation Berhad
- Vincent Bakker, Co-founder & CFO, Positive Energy Ltd
- Adrian Wong, Partner, CMS Law