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Why digital grids are pivotal to Southeast Asia’s energy transition

Gregory Poussardin

Partner, Power & Utilities Consulting, Ernst & Young Consulting Sdn Bhd

6 minute read 26 Nov 2024
Related topics
Energy and resources
Power and utilities
Industrials
Technology
Infrastructure

The shift toward digital grids paves the way for a resilient, efficient ecosystem that can meet evolving demands in the energy transition.

In brief

  • Power networks in Southeast Asia must be modernized and more flexible to meet rapidly growing energy demand.
  • Empowering customers and more decentralized, efficient energy systems that are future-proofed against evolving demands are crucial.
  • Strategic investments and collaborative efforts can help the region develop the new energy ecosystem.

Southeast Asia’s energy demand is projected to increase by 45% between 2023 and  2050, almost three times faster than the expected rise in global energy demand over the same period. This increase is fueled by population growth, economic expansion and the industrial sector’s rapid development. As the region transitions from a reliance on fossil fuels to embracing renewable energy, Southeast Asian countries are contributing to the global renewable capacity, marking a shift toward environmental stewardship and bolstering economic and social resilience.

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Utilities companies in the region are diversifying their asset portfolios, investing in renewable energy, energy storage, carbon capture, energy efficiency and e-mobility initiatives. This multifaceted strategy is laying the groundwork for a pivotal shift in energy generation, with a focus on maximizing capacity.
 

The modernization and enhanced flexibility of power networks through digital technologies are essential for integrating renewable energy sources, optimizing demand management and maintaining a stable, efficient power supply.

Empowering customers to be active contributors in the new energy ecosystem

Digital transformation holds significant potential for Southeast Asia’s energy transition. Ongoing large-scale smart meter deployments and the rise of Internet of Things (IoT) technology implementations are expected to facilitate real-time network monitoring and enhance demand-side management significantly.

Digital technologies are central to the evolution toward modern, highly flexible power networks. They provide the capabilities for real-time grid monitoring, demand-side management, integration of expanding renewable energy sources, decentralized energy resources (DERs) and customer-based assets, also known as customer energy resources (CERs). Various types of DERs and CERs are progressively being deployed across Southeast Asia. These include solar farms, battery storage facilities, wind turbines, combined heat and power units, rooftop solar panels, community and residential batteries, electric vehicles, smart meters, and smart inverters.   

The potential of advanced analytics, artificial intelligence (AI), machine learning and maturing digital-twin technologies is also actively explored to reshape energy demand prediction and renewable energy optimization. This can offer insights into grid operations and aid utilities in performance monitoring, anomaly detection and outage prevention. Consequently, power networks are becoming more adaptable and responsive, allowing them to meet the dynamic needs of the changing energy landscape.

Deployment of these technologies, alongside the anticipated emergence of distribution system operator (DSO) models in Southeast Asia, is paving the way for a novel energy ecosystem in the region that is resilient, efficient, dynamic and customer-centric. In this transformative landscape, digital networks serve as the backbone, empowering stakeholders and facilitating seamless connectivity across all facets of the new energy paradigm.

This, coupled with new, agile operating models, can allow power network companies to evolve into energy connectors that deliver enhanced value to their customers and unlock new service offerings. In such models, utilities leverage their vast amount of data to feed mobile apps and online platforms to provide customers with detailed insights into their energy consumption and help them reduce their carbon footprints.

For instance, innovative budget management, proactive outage notifications and energy eco-management features are pioneered through customer-facing applications. Such solutions are expected to help transform homes into “local power stations”, where consumers and their DSOs can control distributed energy assets, such as solar panels, electric vehicle chargers and residential batteries. This customer-centric approach is expected to play a significant role in achieving net-zero targets as it empowers individuals to contribute actively to a more sustainable energy ecosystem.

Deployment of advanced analytics and AI, alongside the anticipated emergence of DSO models in Southeast Asia, is paving the way for a resilient, efficient, dynamic and customer-centric energy ecosystem in the region. 

How EY can help

  • Digital grid services

    EY Digital Grid helps power companies digitize their grids for a resilient, flexible, data-driven and sustainable energy system. Find out how.

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Future-proofing energy systems against evolving demands

To prepare for the new energy landscape and effectively manage intermittent energy sources, utilities companies are ramping up efforts in intelligent network deployments, grid automation, energy storage solutions, demand response programs, cloud computing and advanced forecasting tools. These initiatives are crucial for monitoring and controlling the grid more efficiently to help enhance energy management and customer service.

 

Power utilities in Southeast Asia are significantly increasing investments in enhancing network flexibility and strengthening grid interconnections. There is an increase in regional cooperation and cross-border grid initiatives, with the long-term goal of creating a regional grid that would help meet growing electricity demand and improve access to energy services in the region. For example, the ASEAN (Association of Southeast Asian Nations) Power Grid Advancement Programme launched in 2023 seeks to accelerate the development of such a grid and advance multilateral power trade.

 

Collaborations among governments, private-sector players, financial institutions and communities are essential for creating a resilient and sustainable energy narrative for the region. Joint R&D projects have expanded into cross-border collaborations that pool resources and intellectual capital to address some of the most pressing energy challenges. Resilience planning has emerged as another collaborative frontier, with stakeholders working together to help the region’s energy infrastructure adapt to future challenges.

 

These efforts are part of a broader strategic overhaul designed to future-proof energy systems against evolving demands. Additionally, the expected shift toward distributed ledger technologies for peer-to-peer energy trading and the exploration of collaborative energy communities offer additional innovative models for energy distribution and consumption. This further emphasizes the critical role of network infrastructure in the energy transition.

 

Shift toward a more decentralized and efficient energy system

The emergence of DSOs and proliferation of CERs are central to the strategic evolution of power networks across Southeast Asia. DSOs are expected to play a pivotal role in connecting renewable resources, enabling flexibility and empowering consumers. This shift is intrinsically linked to the expected rise of virtual power plants (VPPs), which aim to aggregate the capacity of CERs to enhance power generation and distribution. This, coupled with the game-changing potential of energy storage technologies (particularly batteries), means that VPPs are expected to leverage the digitization of power networks to provide a flexible and responsive energy supply. Consequently, this would mark a significant step toward a more decentralized and efficient energy system.

 

The digitization of power networks also increases the risk of cyber threats, making cybersecurity measures critical for a secure transition. Therefore, investing in advanced encryption, continuous monitoring and security audits will be key to protecting the grid and customer data. This emphasis on cybersecurity underpins the modernized, flexible power networks essential for the energy transition.

The future of power networks in Southeast Asia

Southeast Asia’s energy transition is a complex and multifaceted journey, marked by technological innovations, strategic investments and collaborative efforts. The next five to 10 years will be crucial for establishing a robust, efficient and sustainable energy framework in the region.

Through strategic investments in digital technologies, grid optimization and the transition toward a more decentralized energy system, the region is actively shaping a future that prioritizes sustainability and places consumers at the core of the energy landscape. This period will define how well Southeast Asia’s utilities industry can balance the demands of growth with the imperatives of sustainability and resilience, demonstrating the potential of a coordinated, technology-driven energy transition.

Summary

Southeast Asia’s rapidly growing energy demand and shift toward environmental stewardship require modern, highly flexible power networks supported by digital and smart technologies.

Through technological innovations, strategic investments and collaborative efforts, the region can develop a resilient, efficient and customer-centric energy ecosystem.

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    About this article

    Gregory Poussardin
    Partner, Power & Utilities Consulting, Ernst & Young Consulting Sdn Bhd
    Transformation architect. Passionate in guiding energy companies in their journey toward decarbonization, grid digitalization and retail reinvention. Curious mind, value shaper and continent jumper.
    Related topics
    Energy and resources
    Power and utilities
    Industrials
    Technology
    Infrastructure

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