Strong economic development and urbanization in Southeast Asia has led to strong growth in electricity demand across the board.
Unfortunately, the region faces low electrification levels, underdeveloped power grid infrastructure, and a lack of capital and technologies. In addition, governments and industries in the region are battling to keep up with new clean energy trends.
Nevertheless some emerging countries, such as Thailand, Malaysia, Indonesia, and the Philippines, are making plans to deploy smart grid technology so that power can be handled more efficiently and effectively.
While this region is currently behind other global regions in terms of smart meter deployments and regulatory frameworks, its smart grid market is growing and is expected to offer utility consumers a whole host of benefits. This is not to mention the enormous vendor opportunities, explains Research and Markets in its report, Southeast Asia Smart Grid-Market Forecast (2012-2022).
Pike Research estimates that smart grid revenue generated by the investment in transmission, substation, and distribution upgrades (as well as smart meters) will grow from approximately US$1.9 billion in 2011 to US$4.5 billion in 2020.
High economic growth rate calls for smart grid
There are already smart grid pilot projects in several countries throughout the region. This is in response to the high economic growth rates which will call for and sustain large-scale deployments.
As a region, Southeast Asia has the highest projected Gross Domestic Product growth rates when looking at emerging smart grid markets. Vietnam is currently the emerging market leader which is showing a potential growth of over 7% per year through the next five years.
By 2022, Southeast Asian countries will likely have an electricity demand profile similar to Latin American and Eastern European countries where large-scale smart meter deployments already exist.
Severe energy challenges
Southeast Asian countries face severe energy challenges as they work to sustain industrial development.
These challenges can be met through both traditional resources (such as new coal and hydro power plants and gas imports) and non-traditional resources such as renewable energy, energy efficiency and the smart grid.
Countries that are currently looking more towards renewable energy and energy efficiency are likely to set regulatory frameworks to support smart grid in the near term. These regulations are likely both because of the direct role that smart grid infrastructure plays in supporting these programs and because these programs are leading indicators of governments that will view smart grid as a solution for growing challenges.
Link between economic growth and smart grid
The link between overall economic growth and smart grid is critical in Southeast Asia.
The region’s current electricity consumption rates are among the lowest in the world, while distribution loss rates are comparatively moderate, offering less short-term savings potential compared with other global regions. Additionally, regulatory frameworks remain largely undeveloped in the region.
Even in the more advanced countries, deployments are still at the initial pilot level.
Long-term vision will see smart grid development
Southeast Asia's high economic growth rates imply that these indicators will not remain as significant barriers to smart grid for long. By the end of the decade, all countries in the region will be facing challenges that smart grid will be able to resolve.
As a result, many countries will begin investing large amounts in smart grid in the near to medium term. Strong policies supporting renewable energy and energy efficiency in countries such as Malaysia, Singapore, and Thailand show that smart grid investments are imminent.
Indonesia, the Philippines and Vietnam will all face similar challenges with high growth rates and must determine how best to incorporate smart grid infrastructure to meet these challenges.
By following the lead of Singapore and implementing associated renewable energy and energy efficiency policies like Malaysia and Thailand, all Southeast Asian countries can begin to invest in and benefit from smart grid within the next five-to-ten years, explains the Research and Markets report.