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It has been nearly a year since the COVID-19 pandemic crashed
Southeast Asian (SEA) power market. Unfortunately, the market has
yet to revive, and it is now being offered with low carbon market
opportunities, which adds volatility to the power market's
growth.
According to published power market data, the power demand still
showing a sluggish recovery in first quarter (Q1) of 2021, compared
to the same period of last year. The figure below illustrates the
year-on-year (y/y) power demand growth rate between 2021-2019
(now-to-normal scenario) and 2021-2020 (now-to-COVID-19 scenario).
As the average power demand growth rate in Q1 was compared between
two scenarios, it was found that only Myanmar experienced power
demand growth of 3.3% y/y and 2.8% y/y, respectively. While
Malaysia suffered a 2.8% y/y decline as compared to normal
scenario, it also saw a 0.5% y/y increase when compared to the
post-COVID-19 scenario. Meanwhile, the power markets in Singapore
and Thailand are yet to recover, with declines of 0.4% y/y and 5.3%
y/y for normal scenario; and dipped further down to 1.8% y/y and
9.5% y/y for post-COVID-19 scenario, respectively.
Myanmar's power demand rebounded in January,
with increment of 7.7% y/y (normal) and 6.4% y/y (post-COVID-19),
signaling a strong recovery from the COVID-19 pandemic. However,
the military coup on 1 February had an adverse effect on power
demand. The power market data up to 7 February indicate a negative
effect on power demand, showing decline of 1% y/y (normal) and 0.9%
y/y (post-COVID-19). As the Myanmar's military declared a one-year
state of emergency, the future of the power market looks bleak.
In Malaysia, average power demand rose by 0.5%
y/y (post-COVID-19) in Q1 of 2021. Malaysia's power market
experienced weak demand in the first two months of 2021, with
declines of 4% y/y and 3% y/y, respectively, but rebounded to 8.6%
y/y in March. This demonstrated a recovery in power demand from the
worst of the COVID-19 first outbreak. However, the power market was
still a long way from recovery, in which it still recorded an
average 2.8% y/y (normal) declined. Although the King declared a
state of emergency from 11 January to 1 August, it seems to have
had little impact on the country's economic activities.
Singapore, on the other hand, is seeing steady
rise in power demand in Q1 of 2021, with a 1.8% y/y (post-COVID-19)
decline. Over the first two months, the power demand remained
stable, declining at a rate of 2.7% y/y and 2.1% y/y, respectively.
Following March 2021, the y/y fall in power demand was narrowed to
0.4% y/y, signaling that the country was on track to recovery.
Nonetheless, as compared to normal scenario, Singapore's power
market just fell by 0.4% y/y. This suggests that the country was
soon recovering from COVID-19 pandemic. Furthermore, as the country
with the highest COVID-19 vaccination rate in SEA region, it was
expected to quickly regain momentum in power market growth.
Meanwhile, Thailand's power market remains
gloomy, with average power demand dipping by 9.5% y/y
(post-COVID-19) in the Q1 of 2021. Because of the latest COVID-19
outbreak in January 2021, a more stringent COVID-19 control measure
was enforced, causing economic activity to slow. The normal
scenario comparison still held an overall 5.3% y/y decline,
indicating the power market was crashed hardly even before the
pandemic. March power market data was still unavailable, but they
are estimated to be stay below pre-COVID-19 lockdown levels owing
to the country's poor economic outlook.
Low carbon market initiatives
Climate change awareness is growing in the SEA region, with the
aim of combating climate change and reducing greenhouse gas (GHG)
emissions. In Thailand, the authorities in energy and environmental
development are teaming up in March 2021 to establish long-term
strategies heading for net-zero carbon emissions. And Indonesia is
in the process of completing its second NDC and plans to submit it
in April 2021.
Furthermore, the recent announced Vietnam's third revision of
draft power development plan (draft PDP 8) for 2021-30 continues to
prioritize renewables while gradually reducing coal -fired plants.
By 2030, wind and solar capacity combined with account for 28% of
the national total, doubled by 14% planned in PDP7 revision.
For the first time, the Philippines' Meralco awarded a new
20-year power supply contract to an LNG-based power plant. The move
to integrate LNG into the country's energy mix represents a shift
away from coal toward gas, to comply with the recent moratorium on
new greenfield coal-fired power plants. The winner's historically
low levelized costs of electricity (LCOEs - 20% less than reserve
price at PHP 5.2559/kWh) signaled a potential price cut by using
LNG as power.
Lastly, the Myanmar's power expansion plan has falters in the
wake of the military coup, which unlikely to have immediate effect
on current power supply-demand balance but has already appeared on
ongoing power projects. This included delays and canceling awarded
solar projects, as well as suspending or canceling of planned hydro
and gas-fired power projects. The political chaos in Myanmar will
force the country's power development course to rely more on
indigenous resources.
Conclusion
The Myanmar's power market was being challenged by unprecedent
event, casting doubt on power development prospects. However, the
power demand in Malaysia and Singapore had begun to recover.
Despite a gloomy future for Thailand power market, the COVID-19
pandemic has not hindered the government's efforts to decarbonize.
The latest move by the Philippines and Vietnam showed the countries
favor to gas and renewables in their energy mix. Overall, this
could be a significant turning point for clean energy development
in SEA region, motivated by energy security concerns and emerging
opportunities in the low carbon market.
