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Present policy and legal aspects of renewable energy in SEA
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Present Policy and Legal Aspects of Renewable Energy in Southeast Asia

ASEAN Centre for Energy
Jakarta, Indonesia

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1.0 Policy and Programmes on Renewable Energy

In Southeast Asian countries, the use of renewable energy (RE) for electricity generation is an integral part of the national energy plans. The policy framework and strategies to promote renewable energy projects connecting with the electricity distribution grid system are set against the backdrop of the national energy policy.  Overall, the aims of the RE policy of the countries are to enhance security of energy supply, to diversify energy mix, and to contribute to climate change and sustainable development programmes. Very few countries in Southeast Asia have designed appropriate policies for RE.  Polices to be effective, it needs all-out government support and up-front financial resources are thus required to conduct policy formulation for NRE.

Recently, three policy developments are changing the landscape of RE development in the ASEAN Member Countries. First, there has been a shift in emphasis from the large national enterprise approach to the small and medium enterprise (SME) approach that opened up the private entrepreneurs to independent power producers (IPPS), among which are small power producers (SPPs).  Second, the SME approach has led to a market driven, more commercial approach resulting to the expansion of SPPs using a variety of NRE systems based on indigenous resources. And, third, the remarkable demand growth for NRE in rural off-grid areas that now currently provides a big opportunity for developing dedicated and small-grid size power systems. 

Table 1 summarises the major programmes and RE policy of the ASEAN Member Countries and the ASEAN through the ASEAN Centre for Energy and New and Renewable Sources of Energy Sub-sector Network (NRSE-SSN).  The programmes and policy statements are described in the Policy Fact Sheet.

Country

Programme Focus/RE Policy

Brunei Darussalam

Focus on hydropower and solar

Cambodia

Focus on biomass, solar & micro hydro

Indonesia

Small power purchase tariff and pre-electrification programmes; Promotion of local manufacturing capability; and Focus on hydro, biomass, solar, geothermal, and hybrid

Lao PDR

Focus on biomass, solar, wind, and micro hydro

Malaysia

RE as fifth fuel policy; promote small-scale grid connected and decentralised RE systems for rural electrification; R&D on solar, hydro and systems manufacturing; and Focus on biomass cogen

Myanmar

Commercialisation of solar, wind, biomass and micro-hydro systems for rural applications

Philippines

Village rural electrification; Credit programmes; and Focus on solar, wind, biomass and micro hydro

Singapore

Efficient use of municipal solid wastes for large-scale power generation

Thailand

ENCON Fund; Full-scale demonstration projects for proven RE technologies and promotion of industrial applications; Grid-connected RE systems through the small power producer programme; and Manufacturing schemes for biomass energy

Vietnam

R&D on RE systems for rural applications; and Market models for stand-alone/hybrid

ACE/ASEAN and NRSE-SSN

Develop ASEAN manufacturing capabilities in RE; Create a policy and institutional framework for RE; Promote intra-ASEAN cooperation on ASEAN made products; Establish ASEAN NRSE standards; Promote the application of renewable energy for rural electrification; and Promote ASEAN-EU PRESSEA

2.0 Institutional Set-up

2.0 The energy departments/ministries of the Member Countries have overall responsibility over energy policy. The implementation of various RE programmes and projects for grid power interconnections are, however, vested in the hands of power utilities and independent power producers. RE institutions are still in development. The key actors in the RE industry of the Member Countries are briefly described in the Policy Fact Sheet.

3.0 Legal Framework/Regulations

The broad use of RE technologies for grid power applications faces a number of barriers, such as; policy and legal. Current institutional arrangements and policies generally limit opportunities for investment in RE grid power applications. Existing government programmes and incentives are not enough to facilitate the entry of new service providers due to regulatory defects. 

Indonesia, Malaysia, Philippines, and Thailand have existing/planned regulatory instruments/legal framework for the development of RE. But to some extent, the existing regulations, directly and indirectly, are generally vague that pose a serious legal impediment to investments in RE. 

In the Philippines, for example, both the domestic and the international private sectors have experienced difficulties to develop RE projects in the country. The array of laws, regulations, policies (official and unofficial), and procedures (formal and informal) are severely limiting the entry of fresh capitals into the power sector for RE projects. Foreign investors and developers on RE technologies are unlikely to develop new projects until an Omnibus Energy Bill is passed or clear and attractive interim conditions are developed. Existing laws and related regulatory instruments of the Member Countries on RE will be examined on what extent they could encourage the development of more RE grid electricity supply systems.

4.0 Impacts of Restructuring of the Electricity Supply Industry

Many countries of the ASEAN are restructuring their respective electricity supply industry that may impact significantly on the development of RE for grid-based electricity generation.  The policy implications of the ESI restructuring in the Member Countries on RE grid electricity supply are briefly described in the Policy Fact Sheet.  

5.0 Clean Development Mechanism and Proposed Institutional Set-up

Clean development mechanism is acceptable to the ASEAN countries. All ASEAN countries have programme towards increasing renewable energy share in their energy mix for energy supply security, rural electrification and poverty alleviation and environmental impact mitigation. All ASEAN countries have programmes to adopt low CO2 emission options such as replacing oil and coal with gas and adopting clean coal technologies. Developing ASEAN countries will benefit from CDM by reduction in cost of energy development through GHG emission avoidance on voluntary basis. Right to industrial development is not impaired by right to sell emission reductions.  The initiative to develop institutional set-up and proposed plans and projects of the countries on CDM are briefly discussed in the Policy Fact Sheet.  

6.0 Possible Contribution of RE IPP Projects towards Rural Development
 
The development of renewable energy is expected to make a positive contribution to the ASEAN countries� policy to enhance rural development. While individual renewable energy developments are unlikely to provide large number of jobs, such jobs can be significant in rural areas where job opportunities are limited. Additional job creation could be expected during the development and construction phase of RE projects. Although such job creation may occur over a short period of time, their economic benefits, however, may be locally significant. Some manufacturing capacity may also be developed locally where the scale of development is significant. A mature regional market for renewable energy technology has the potential to establish and support manufacturing activity, contributing to the local economy by providing local employment and also offering export potential. Such economic benefits should be taken in the policy aspects of RE development and planning.

Last modified 09/12/03    Top