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Roles of developing RE in increasing the Electrification Ratio

10 August 2020

By Wiratama Sungkono

Electricity is sometimes overlooked as an ordinary thing to have because most people have access to it throughout their entire lives. However, according to World Bank data in 2018, for 840 million people in the world, it still hangs in their wish lists. By 2030, based on the SDG (Sustainable Development Goal) 7, the society aims to ensure universal access to affordable, reliable, and modern energy services. Based on UN ESCAP (United Nations Economic and Social Commission for Asia and the Pacific) report about Energy and Development in the ASEAN Region, there are still 7,3% of the population that has not had any access to electricity the ASEAN region itself per 2016. This number seems small in a short glance, but 47 million people it is not just a statistic, but it is a harsh reminder.

According to World Bank, determining electrification status on a statistical basis goes further beyond the number of households within the electricity grid-connected area and the total number of homes, therefore several parameters need to achieve such as capacity, duration, reliability, quality, affordability, legality, and health and safety. But for most of the ASEAN countries, the definition is a lot simpler. Most of them define the electrification ratio as the ratio between the number of households within the electricity grid-connected area and the total number of homes.

Based on the ACE electrification ratio’s data in 2015, only two countries have reached 100% electrification ratio (Universal Access), consequently Singapore and Brunei Darussalam. Some of the countries such as Thailand, Vietnam, Malaysia, Lao, Indonesia, and the Philippines have reached above 85% electrification ratio (Near Universal Access). Two other countries subsequently, Cambodia and Myanmar, are still below 85% electrification ratio. From these data, we can infer that there are three groups of countries base on the electrification ratio.

Increasing the electrification ratio is not a simple thing to do because the countries would have to devise a strategy that would suit their unique institutional, social, and geographical, conditions. But overall, there are two identified challenges that exist in the above-mentioned groups of countries in terms of increasing the electrification ratio, which are geographical factors, and affordability.

The first challenge is a difficult geography to extend access, especially for rural and remote electrification effort. The dense tropical rainforests and the remoteness of islands where rural communities live are natural inhibitors to infrastructure development. This condition hinders the infrastructure development due to the difficult installation of utility poles and high voltage cable wires that are necessary to connect rural areas to the national grid. Moreover, based on UN ESCAP data in 2017, more than 50% population of the ASEAN Member States in which the level of ER is not yet reaching 100% (universal access) lives in rural areas.

The second challenge is affordability, which is usually becoming the issue for the last mile of electrification effort. For a country that is already reaching above 90% electrification rate, reaching universal access is indeed a great challenge. Sometimes this last-mile electrification is the most expensive and most prolonged compared to the effort of reaching the Near-Universal access itself. This conclusion is based on what was occurring in China and Mexico. Based on what occurring in China from 2012 to 2015, the last 3% of the electrification program (Electricity for All) to electrify 2,73 million people cost about 24.8 billion yuan (approximately US$4 billion). The overall effort to reach the 97% electrification ratio of China that was mainly done by grid connections and extension of it. However, the last 3% needs various efforts such as incorporating the off-grid solutions to support the grid connections. Therefore, it needed reliable funding and an accurate selection of appropriate technology.

To help overcome some of these challenges in increasing the electrification ratio, Renewable Energy (RE) could come in handy. For the fifth year in a row, net additions of renewable power generation capacity globally clearly outpaced net installations of fossil fuel and nuclear power capacity combined. Based on IRENA climate change and renewable energy release in 2017, renewable energy currently accounts for 19% of global energy supply, having risen by 0.17% per year over the past five years. Based on the ACE database, renewable energy sources accounted for 14,3% of the region’s total primary energy supply in 2017, producing about 180 TWh. There is some significant gap of 8.7%of the 2025 target based on the APAEC 2016 – 2025 documents, which is 23%. Based on UN ESCAP data and AEDS (ASEAN Energy Database System) per 2016, the majority of renewable energy electricity output in ASEAN comes from hydropower which produces about 130 TWh (equivalent to 72% of total ASEAN RE mix). Other RE sources such as solar, wind, waste, biomass, and geothermal are also contributing to the mix. The avenue to further increase the RE energy mix is still very much an open door because ASEAN regions untapped RE potential is still numerous. For example, World Bank data showed that global geothermal power generation potential in Indonesia and Philippines combined for between 70 to 80 GW, but only 15% of known geothermal reserves are exploited for electricity production, generating roughly just 13 GW.

Incorporating RE as a means of increasing electrification ratio obviously will increase the RE energy mix in ASEAN so that it could help to achieve the 23% mark in 2025. However, another important thing to add is the use of RE could overcome the challenges that existed in electrification effort. The first advantage of using RE is the flexibility to be used as an on-grid and off-grid electrification solution. This is proven by the various scale of electrification projects ranging from Vietnam’s Dau Tieng Solar Power Complex that produces 600 MW hours of electricity to microgrid projects by Akuo Energy in Indonesia’s East Kalimantan villages that produces 1.2-MW hours of electricity. This advantage could tackle both geographical factors and affordability because the use of RE could be an off-grid solution that does not rely on centralized grid and could be scale according to the local demand in order to make it affordable. The use of RE could also maximise local resources potential.

The second advantage is the resiliency of RE. RE systems are less sensitive to the negative effects of volatile prices of fuels because the system has local independence in energy. RE is locally produced, managed, and maintained, so it does not rely on imports once the project is operational. This resiliency is proven by the increasing demand for RE generation in COVID-19 lockdown period by 3% compared to the start of 2019 while in the demand fossil fuel electricity decreased.  This advantage could tackle the affordability issues on RE in terms of generating cost. Moreover, based on IRENA study of renewable power generation costs in 2019, the average cost of generation from RE is on par with fossil fuels in the range of $0.05/kWh to over $0.15/kWh.

The effort of increasing electrification ratio by incorporating RE will be different for each country because of various reasons ranging from geographical factors to local resources therefore there is no single solution for this effort. To make sure the efforts do not go begging there are several general actions that each country needs to take. First, they should identify their biggest challenges in terms of reaching the aspired electrification ratio. After identifying these challenges, the next thing they need to do is to identify the solutions which could be applied by incorporating RE into the strategy. This will then create a beneficial solution for the challenges of increasing the electrification ratio because the advantages of RE that have mentioned above such as flexibility and resiliency would be directly utilized. Applying these solutions is the next important step to take. Moreover, supporting these efforts with the overall policy and framework of electrification is an important complement to make sure these efforts are working. For example, in terms of the flexibility of RE in providing on-grid and off-grid solution needs to be adjusted with the overall policy and framework of electrification. For example, if most of the burden of electrification is on the hands of public-owned and vertically integrated national utilities, accommodating the off-grid non-centralised solution into the national strategy would not be as straightforward as it sounds. Another example would be the RE resiliency in each country would be different based on the local resources and local framework of electrification strategy.

If the necessary steps are done, RE could play a big role in increasing the electrification ratio of the ASEAN member states because of the flexibility and resiliency that RE offers. Not only that, by incorporating RE to the overall electrification effort, it will also help ASEAN to reach the aspirational target of RE in overall energy mix at 23%.

 

Pic by: pasja1000 | Pixabay