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Growing Momentum of LTMS-PIP and Its Impact on Regional Integration

Authors: Akbar Dwi Wahyono, Prihastya Wiratama, & Beni Suryadi

Editor: Rinda Rufaidah
16 October 2023

ASEAN has made significant progress in the development of Multilateral Power Trade in recent years. It is a testament to the region’s commitment to enhancing energy connectivity.

Around a year ago, Singapore commenced the two years of trial import of renewable hydropower from Lao PDR in cross borders power trade deal involving multi-country. The trial project saw the import of up to 100 MW of hydropower-sourced electricity from Lao PDR all the way to Singapore by wheeling through the existing interconnections in Thailand and Malaysia, the project often referred to Lao PDR, Thailand, Malaysia, Singapore – Power Interconnection Project (LTMS – PIP).

This electricity import made up about 1.5% of Singapore’s peak electricity demand, as of 30 April 2023, a total of 265.73 GWh of electricity has been traded since the first power flow from Lao PDR to Singapore. With those numbers, it proves that the project is both technically and economically feasible to trade electricity across long distances and that cooperation on cross-border electricity trading among countries in our region could be beneficial to all parties involved.

Considering the complexity of the deal involving four governments and four business entities, the success of the project has received the appreciation of many. The publicity of this accomplishment was also exceptional, the Energy Ministers from LTMS countries celebrated the successful commencement of the project during the 40th ASEAN Ministers of Energy Meeting (AMEM) hosted by Cambodia in September 2022. As a result, the expectation is high among the ASEAN Ministers to see the project as a pathfinder for more energy-connectivity efforts in the regio

Lesson learned from the achievement set by LTMS Countries to keep the momentum going

The key question now is how the rest of the ASEAN Member States (AMS) can capitalise on the momentum generated by LTMS and further enhance ASEAN power connectivity.

First, let’s examine the factors that drove the success of LTMS-PIP. Strong intergovernmental support and cooperation emerged to be the major push.  The LTMS PIP was initiated by the four countries in September 2014 through the ASEAN Economic Community and ASEAN Power Grid and has been officially approved by governments of the ASEAN Member States involved in the ASEAN Vision 2020, and eventually, announced its commencement at the 40th AMEM 2022. During this interval, there were three LTMS Ministerial Meetings convened at the annual AMEM where three Joint Ministerial Statements were issued, reaffirming shared commitment to advancing multilateral cross-border power trade in ASEAN. In the 3rd Joint Statement of the LTMS-PIP issued on 15 September 2022, LTMS Energy Ministers welcomed further discussion on the enhancement and future plans of the LTMS-PIP to support continued multilateral power trade.

Witnessing the development of ASEAN Power Grid (APG) progress, as of now 8 operation lines out of 18 key power cross-border interconnections are in place and could reach 7,7 GW out of the 30,7 GW total target for interconnection capacity, the shared commitment among the LTMS Ministries has received as a growing momentum.

The Chairmanship of ASEAN Indonesia 2023, under the direction of the Indonesia government, takes a lesson learned to grasp the momentum of last year’s LTMS-PIP commencement to push for another shared commitment from the Ministers and energy sectoral bodies, especially with the Heads of ASEAN Power Utilities/Authorities (HAPUA), through a similar approach of LTMS in calling for strong intergovernmental support and cooperation to initiate new multilateral cross-border power trade in ASEAN.  This initiative calls for more AMS to establish new MPT projects to bridge the gap by connecting the north, south, and east sub-regions based on the recommendations under ASEAN Interconnection Masterplan Study (AIMS) III.

The second takeaway is LTMS-PIP has the ability to manage and overcome many challenges encountered. The fact that these LTMS countries also dealt with their own challenges, however, through the establishment of LTMS Working Group and Task Forces have proven to be efficient in tackling the challenges, and the risks are also shared together, particularly in dealing with Technical, Regulatory, Commercial and Tariff structure issues.

In terms of challenges from the respective country, Lao PDR, as an energy importer, has its dams decreased in delivering full generation capacity during the dry season while the country is still in the process of strengthening their national grids to allow more diversified resource of renewable energy amidst the low carbon power system committed by the AMS.

Meanwhile, Thailand and Malaysia, as wheeling countries, faced challenges in quantifying the value of wheeling charges, in granting the third-party access to the nationals’ property and translating them into a legal document, which requires a lot of effort and understanding among different parties. They also dealt with the technicality of the project by ensuring the infrastructure within the country was sufficient to evacuate the electrons from Lao PDR all the way to Singapore. A 110-kilometer-long 300 kV HVDC powerline between Thailand and Malaysia serves as the highway for these cross-border electricity transfers.

The LTMS-PIP continues to showcase that multilateral power trade can be achieved for this region because of the AMS members’ strong commitment to cooperation and shared determination, even though some problems still exist while complete mechanism for enabling regional power trade has yet to exist.

LTMSPIP paves the way for greater connectivity in ASEAN Power Grid (APG)

Based on the mandate from the ASEAN Ministers on Energy Meeting or AMEM, ASEAN Centre for Energy (ACE) has played a crucial role in supporting the ASEAN Member States in implementing the ASEAN Power Grid through various activities, such as joint studies, capacity buildings, and bridging the collaboration with various Dialogue Partners (DPs) and/or International Organisations (IOs) to support the efforts.

One of ACE’s major undertakings is the development of the ASEAN Interconnection Masterplan Study version 3 or AIMS III Phases 1 and 2, adopted at the 39th ASEAN Ministers on Energy Meeting back in September 2021, which set out the transmission infrastructure needed to support multilateral power trade in ASEAN and renewable energy integration into the APG.

Since then, we have seen the growing momentum in the development of cross-border interconnections in the region, which has now become one of the key priorities in ASEAN energy transition.

18 existing and potential new cross-border interconnections are now under intensive discussion among the AMS, and the success of LTMS-PIP is proof that it’s timely and crucial for AMS to strengthen the partnership. ACE is an honour to be part of this history, including the new Feasibility Studies on the cross-border interconnection between Indonesia and Malaysia that are jointly initiated with PLN and TNB, which could be a further stepping-stone for APG by building upon its growing momentum. The APG will be realised progressively as a result of Member States collective efforts, and the LTMS-PIP will pave the way for greater interconnection, energy security, and sustainability in ASEAN region.