Modelling ASEAN cross-border transmission with TZ-APG

How our new open source model is filling data gaps

System Modelling

Southeast Asia’s cross-border transmission and electricity trade can be summed up in three words: fragmented, limited, and uneven. While eight out of ten countries are registering cross-border transactions every year, the partnerships vary significantly in depth and breadth. Reported data is incomplete and inconsistent between the trading partners; we estimate that intra-ASEAN electricity trade accounts for just 3.6% of the region’s annual demand. With only a few exceptions, import capacity is not considered as a component in long-term national power plans. Nevertheless, there are a range of projects under discussion across Southeast Asia that could transform the role of the region’s cross-border transmission. We explore the opportunities these bring in our latest report 'From Vision to Voltage: Open Source Modelling of the ASEAN Power Grid'.

The state of ASEAN cross-border transmission

The Greater Mekong Subregion (GMS) remains the heart of regional power exchange. Aided by geography, Lao PDR has been rising as the export hub with links to Thailand, Myanmar, Vietnam and Cambodia drawing from rich hydropower resources. This has earned Lao PDR the designation of the “Battery of Southeast Asia”. Cambodia and Thailand are also prominent beneficiaries, with electricity imports occupying 12-17% of annual domestic demand. In other parts of the region, however, cross-border traffic is very limited: Brunei Darussalam and the Philippines are isolated power systems, Malaysia and Singapore did not trade bilaterally until 2023 despite a decades-old transmission link, while Malaysia’s Sarawak only exports a negligible amount to Indonesia’s West Kalimantan.

Bilateral transactions continue to dominate the regional trading landscape. Cross-border transmission lines are mostly unidirectional and disconnected from the local grids, having been cost-optimised to deliver electricity from dedicated power plants to the importing country. Both the generation projects and accompanying transmission lines are backed by long-term offtake agreements, rendering them commercially feasible. This so-called IPPs-to-grid model is what supports the GMS development, as sponsors from Thailand and Vietnam have financed and developed power projects in Lao PDR to supply to their national grids. This template is being replicated in the Singapore-bound renewables projects from Riau Islands (Indonesia) and Ba Ria – Vung Tau (Vietnam).

As a result of this approach, Southeast Asia’s grid network has thus remained fragmented and cross-border trade, albeit deepening, has had limited impact in strengthening national grids and regional system integration.

This reflects the slow progress of the ASEAN Power Grid initiative, which was first launched by member states in 1997. It aimed for a regionally interconnected power system like the one observed in the European Union. While bilateral activities began to pick up in the 2010s amidst rising economic growth in the region, the adoption of multilateral trade has been less straightforward. The first of such arrangements, the LTMS-PIP, was endorsed by the four member states back in 2014, but the first transaction involving all four countries was only piloted in June 2022. Operational challenges remain. The scheme’s extension in 2024 was even delayed by three months, reportedly due to disagreements between the parties over transmission charges.

Some of the friction that has slowed the APG initiative is due to the differences in the structure, governance and technical configurations of Southeast Asian power markets. As a result, grid-to-grid and market-to-market integration requires substantial regulatory reform, such as harmonisation of grid codes, sharing data and information, designing a common framework for wheeling charge, and enabling third-party access to the national grid in the case of vertically integrated state utilities. Reflections from the LTMS-PIP scheme suggest cautious optimism towards future advancements in Southeast Asia’s grid connectivity and system integration. The region is learning by doing, one step at a time.

Our TZ-APG model simulates grid-to-grid integration between regional power markets. While it is not designed to be an accurate depiction of the existing cross-border trading landscape, the modelled results provide useful insights on the impact of changing import capacity, whether via bilateral or multilateral arrangements, on a country’s power system development pathways and resulting trade-offs.

Policy and user guidance for TZ-APG

TZ-APG is a live model with an ASEAN coverage that focuses on regional transmission. It can be used to model the region’s power system as a whole, or to model individual countries. The first iteration – TZ-APG v1 – is a starting point for our regional work, and the associated findings illustrate the type of questions and issues that TZ-APG model can help to address.

Moving forward, there is an opportunity to use the TZ-APG model and layer the results to offer complete and strategic insights to facilitate transmission planning and investment in Southeast Asia. This includes the assessment of:

The impact of new grid or import capacity on a country’s power system outlook and performance. This would be of particular relevance in countries where local governments are advancing transmission investments and import approvals.
The “green” credentials of a transmission candidate. TZ-APG could support global initiatives focused on financing green grid infrastructure by modelling the prospects of a transmission candidate in facilitating renewable energy flows between chosen nodes.
Electricity and transmission costs. With further iterations, the costs of power export, wheeling, and import can be better represented to provide insights on the financial implications of regional interconnection.

Given the dynamic policy environment and market priorities in ASEAN, energy systems models and scenarios need to constantly adapt and improve. The TZ-APG model set-up is flexible and scalable, with the ability to incorporate new data inputs, constraints, and other configurations. This allows us to simulate the impact of new policies or investments as they emerge in the region.

Within the next 6-9 months, TransitionZero will conduct new model runs to incorporate improved input data covering demand growth, renewables potentials and profiles, and renewables cost; new constraints such as fossil fuel plants’ operating parameters; and extended modelling horizons with more ambitious net zero emissions targets for 2040 and 2050.

The TZ-APG v1 model is available for download today, along with our report 'From Vision to Voltage: Open Source Modelling of the ASEAN Power Grid', looking at the regional and thematic findings under four different grid scenarios.

Read part three in our series on transmission in ASEAN; ASEAN’s no-regret transmission corridors according to TZ-APG.

Download TZ-APG v1