Event Reports

ENERGY SECURITY IN ASIA

by Johannes Vogel

The Role of Electricity in the Energy Transformation

The large economies in East Asia have begun with a comprehensive reorganization of their energy sector. They want to decrease their dependence on resources from other regions and structure their grid more efficiently. The electricity sector plays a crucial role in this process. In a joint breakfast seminar of KAS RECAP and Chatham House, Antony Froggatt, a researcher at Chatham House/London spoke about the prospects for the region.

Energy Economics in East Asia faces numerous challenges. The demand for electric energy is rapidly increasing. New technological solutions open up possibilities for clean production, storage and smart distribution of electric energy. In his presentation, Antony Froggatt outlined the main developments and discussed implications for politics and business.

Energy consumption: Increasing energy efficiency in private households and industry could be seen in developed countries for decades. Asia is now trying to catch up with the deployment of a more efficient use of electrical power. For years the total consumption of electrical energy in Europe slowly but steadily decreases. Due to the rapid growth of the economy, the population and prosperity in Asia, energy consumption will still grow. The introduction of electric (private) transport systems in Asia will gain momentum, but this sector will only count for a small part of total energy consumption in the foreseeable future.

Technical and technological developments: Rapid scientific progress has a broad impact on the energy sector. Although wind power, solar energy and geothermal energy have been part of national energy systems for years, they have not been able to compete with cheap coal. Due to a rapid decline in prices for the construction and operation of solar systems, this option has become more and more attractive for Asian economies; a sharp rise in investment in renewable energies in East Asia can be observed in recent years. New storage technologies provide new opportunities for a more flexible use of electrical energy. Digitalization becomes a significant factor in the efficient redesigning of the energy sector. Digital grid management, the use of smart e-meters, and big data analysis of electricity supply and consumption will help to optimise energy markets.

Political and economic conditions: The political decision-makers in East Asia are determined to transform their national energy systems into more sustainable ones – following to some extent the European example: States are liberalizing their markets, with Japan having almost completed this process. Subsidies and guaranteed purchase prices for electrical power support companies. However, creating value becomes more difficult, while companies from other industries, such as software houses or car manufacturers, are playing an ever more important role in the energy sector. It is up to decision-makers and regulating authorities in East Asia to use this potential through an appropriate legal framework and to promote energy security.