Wärtsilä has revealed that renewable-based power systems, backed by grid balancing engines and energy storage, can enable Southeast Asian countries to reach net zero by mid-century whilst cutting the levelised cost of electricity (LCOE) by over 20%, when taking into account likely future carbon taxes.
The modelling, published in Rethinking Energy in Southeast Asia report, simulates the paths to net zero emissions in three major Southeast Asian power systems: Vietnam; the island of Sulawesi in Indonesia; and the island of Luzon in the Philippines.
Wärtsilä’s modelling shows how the lowest cost existing energy technologies can be deployed to meet future power demand. The modelling is based on varying levels of emissions, including scenarios simulating 50% and 80% emission reductions, as well as net zero emissions. The modelling also showed a ‘Business As Usual’ (BAU) scenario which did not restrict emissions. Critically, when factoring in the International Energy Agency’s (IEA) upper forecasted carbon prices, the studies show that the LCOE in these net zero power systems is at least 20% lower than the BAU scenarios:
- Vietnam’s net zero power system costs 20% less by 2050 than BAU. This would avoid nearly 28 billion USD per year in forecasted carbon taxes.
- A net zero system in Luzon, the Philippines costs 23% less by 2040 than BAU. This would avoid over 6 billion USD per year in forecasted carbon taxes.
- A net zero system in Sulawesi, Indonesia costs 23% less by 2060 than BAU. This would avoid over 1 billion USD per year in forecasted carbon taxes.
To achieve the major benefits of net zero power systems, policymakers and regulators need to incentivise the addition of more flexible capacity in Southeast Asia.
