The power generation in Southeast Asia is expected to grow at a CAGR of more than 5% during 2020 - 2025, majorly driven by thermal power. Factors such as increasing population and power consumption are resulting in the growth of the power market. With growing power demand, several new projects are under construction and planning stage, which is driving the market significantly. However, due to the COVID-19 pandemic, delay in thermal power projects is expected to hinder the market growth.
- With the largest share in electricity generation, coal is leading the market. Due to the easy and cheap availability of coal, the source is expected to continue its dominance during the forecast period.
- The energy demand in the Southeast Asian region is expected to grow by two-thirds between 2019 and 2040, thereby leading to massive investment in new energy generation and transmission, creating ample market opportunities for thermal power generation.
- Indonesia is one of the largest economies in Southeast Asia, and witnessed the highest power generation in 2019. With upcoming and planned thermal power projects, the nation is expected to dominate the market.
Key Market Trends
Coal-Based Thermal Power Plants to Dominate the Market
- The rising power demand across different nations in Southeast Asia and the affordability of coal for power generation is resulting in the dominance of coal for power generation during the forecast period.
- Indonesia is the leading market for the power sector. Despite its goals to increase the renewable share to generate 23% of electricity from renewable sources by 2025, thermal energy, especially coal, is expected to due to ongoing and planned capacity expansion plans.
- Countries like Vietnam and Thailand are witnessing a continuous increase in electricity generation from coal. Vietnam reported 52 TWh in 2015 while 112 TWh of electricity from coal in 2019.
- According to IEA, the primary energy demand in Southeast Asia in the Stated Policies Scenario by coal is expected to rise to 216 Mtoe in 2030 and 270 Mtoe in 2040.
- Although due to environmental concerns and increasing interests towards natural gas and renewable energy, the growth rate of coal-based thermal plants is decreasing, the already operating plants and few upcoming plants are expected to drive the coal thermal power.
Indonesia to Dominate the Market
- Indonesia, the largest economy in Southeast Asia and the electricity sector of the country, is highly dependent upon fossil fuels for electricity production, on lignite and bituminous coal mainly. Although not the same as coal, natural gas is also expected to remain an integral part of the country's energy mix.
- In 2018, Mitsubishi Hitachi Power Systems, Ltd. (MHPS) completed unit 1 construction of a natural-gas-fired power generation power plant that was built in Indonesia. Under the Jawa-2 Project, PLN planned to construct an 880 megawatts (MW) plant comprising two gas turbines combined cycle power generation systems. Thus, such projects are expected to drive the thermal power market.
- Out of the various sources of generating conventional thermal power, most of the energy came from coal, in 2019. Coal contributed approximately 66% to the conventional thermal power electricity generation, producing 177 terawatt-hours (TWh) of electricity in 2019.
- In 2018, PLN planned to invest USD 6.26 billion in 2019 in the Indonesian power sector, with the most investment for the 35 GW project. In 2019, to secure the raw materials for its power plants, it planned to acquire a coal mine, as it is targeting to obtain 30% to 40% of its source coal supply from itself in the coming future.
- In 2017, the expansion of the Tanjung Jati B coal-fired power plant started. After completion, the plant is expected to have a total installed capacity of 4640 megawatts (MW). The expansion project is expected to complete by 2021. This clearly shows the country's increasing conventional thermal power in the country.
- With increasing power demand, power generation is also growing. Indonesia generated 279 TWh of electricity. To meet the growing demand, new projects are expected during the forecast period and drive a considerable market.
The Southeast Asia thermal power market is moderately fragmented. Some of the major companies include Electricity Generating Authority of Thailand, Indonesia Power PT, Electric Power Development Co., Ltd, Vietnam Electricity, and Malakoff Corporation Berhad.
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