ASEAN Centre for Energy (ACE) is currently developing the 7^th ASEAN Energy Outlook (AEO7), a biennially flagship energy outlook of the ASEAN Member States (AMS). The recent Ministerial Meeting, the 39^th ASEAN Ministers on Energy Meeting (AMEM) held on 15 September 2021, noted that the work on AEO7 is commenced.

AEO7 team leader, Dr Zulfikar Yurnaidi, who is also a Senior Research Analyst of ASEAN Climate Change and Energy Project (ACCEPT) shared the key aspects of AEO7 development, including on the integration of energy-climate nexus, regional connectivity, and Covid-19 impact.

General improvements

AEO7 continues in utilising the LEAP (recently rebranded as Low Emission Analysis Platform) as main tool for the modelling work. Much of the framework and structure is based on the 6^th ASEAN Energy Outlook (AEO6). Various improvements, though, are underway. The first will be update of the base year, moving from 2017 to 2019. We also plan to do more “reality check” for the 2020-2021 period. The team is also exploring the potential of expanding the projection period from 2040 to 2050. A beyond 2050 was considered, but this would rely on the AMS consultations.

Second, the sector representation will be expanded to be more complex, allowing for wider range of scenario components. We believe this will be useful for AMS as well. Potential improvements include the disaggregation of industry sector into sub-industries and/or processes. Similarly, bottom-up representation is planned as well for commercial sector. Moreover, technological representations across supply-demand sectors will be updated as well. But of course, this will hugely depend on the data availability and usage of key assumptions; all in consultation with AMS.  Third, we plan to introduce optimisation. Especially in the power sector, of which we had good experience from the regional power study. This is a challenging, but potentially very interesting and useful, capability to be included in the AEO arsenal.

Additionally, AEO7 will be developed accounting several key considerations. First, the window to achieve regional targets set in 2025 is getting tighter. And with that, another cycle of ASEAN Plan of Action in Energy Cooperation (APAEC) is coming. Second, energy-climate concerns and its impact on energy transition. Third, the roles of regional energy connectivity and cooperation. Fourth, the post-pandemic economic recovery, which can potentially bring either energy consumption rebound or green recovery, or something in between.

The energy-climate nexus

Through the support of the ACCEPT, the AEO6 has improved the energy-climate consideration in the AEO, including the inclusion of the “Sustainable Development Goal (SDG) scenario”. The issues of energy-climate have become more prevalent in recent years. These include the growing net zero pledges, energy transition, and others.

AEO7 is designed after all AMS submitted their updated NDC in between 2020 and 2021. We clearly note the aspiration of AMS in meeting the Paris Agreement target through NDC. Such targets will be reflected in AEO7 by integrating the most updated policies and measures in NDC to AEO7 scenarios. However, we will closely discuss the parameters of modelling with AMS, as AEO is a joint product between ACE and AMS. Adopting the main philosophy in collaborating, consulting, and harmonising AMS perspectives in developing the AEO7, energy-climate nexus consideration is indispensable to see how the energy sector might evolve for the next 10-20 years, and potentially beyond.

The regional connectivity

The regional connectivity is a vital component in the development of AEO7 as it is regarded as a key enabler to accelerate energy transition and to solve energy challenges. Beyond modelling, the ideas of regional connectivity will be seamlessly integrated in the AEO7. These include power trading as well as the sharing of resources, responsibilities, and knowledge In principle, each country has its own strength and therefore unique energy transition path; but as a region, AMS are heading towards the same regional goals.

The other important aspect of regional connectivity is the ASEAN Power Grid (APG). Noting the successful completion of the ASEAN Interconnection Masterplan Study (AIMS) III, we are working closely with the AIMS III team to ensure that the results and insights are well synchronised with AEO7 model. The topics include the expansion of grid interconnections and the power trade between AMS.

The impact of Covid-19

Similar with AEO6, we assess the impact of Covid-19 in Gross Domestic Product (GDP) and other economic variables. However, as AEO6 was developed in 2019 or the beginning of pandemic, the AEO7 will have different set of assumptions that reflect the impacts in past 2 years, which is worse and longer than we initially expected. Good news is, we have seen the positive traction on the development of RE.

Despite of the resiliency of RE during pandemic, AEO7 will also evaluate whether it increases the possibility of meeting the regional RE target. For example, how the solar boom in Vietnam might boost the attainment of regional RE share as per its Power Development Plan (PDP). Beyond the Covid-19, we will see the energy security, accessibility, and affordability as the priority of ASEAN in national and regional level. However, the arising challenge is to use the chance to push forward the green recovery by translating it into actionable policy and strategies. Thus, in AEO7, we aim to incorporate the balance between economic recovery and sustainability.

Personal note in leading AEO7

The development of AEO7 is a very challenging task since we have limited time and resources amid a lot of big ideas. Even so, it is still an interesting and enticing work, as modelling is my core, and how I got my PhD. I am blessed as well with good team to accompany me in working on the data, examining equations, playing with models, assumptions, and parameters, debugging the tools, and analysing results.

My main target is to successfully deliver the best AEO7 to the AMEM next year. But I believe it can improve my comprehensive knowledge and expertise in the regional energy sector and modelling. Further, we will do our best to design the AEO7 so it can develop various follow up studies. Especially, providing strong building bloc to the next AEO, stated to be released in 2024, especially in assisting the AMS policy makers in designing the next cycle of energy cooperation blueprint, and even beyond.

The interview was prepared and conducted by Shahnaz Nur Firdausi and Jeihan Kartika Hapsari, intern at Sustainable Energy, Renewable Energy, and Energy Efficiency (REE) department, under the guidance from Monika Merdekawati, Technical Officer of REE department of ACE.