In a bid to diversify its economy, bolster future earnings from oil and gas revenues, and support ASEAN integration, Brunei Darussalam has joined a number of regional initiatives in recent years, with the goal of reducing consumption and increasing the use of renewable energy over the next decade. Regional cooperation in renewables development is becoming increasingly common for Brunei Darussalam’s leadership, and the Sultanate has moved to the forefront of renewables research, after partnering with the US, Japan and a host of ASEAN neighbours in examining the viability of new projects and partnerships. However, both ASEAN and Brunei Darussalam remain heavily dependent on hydrocarbons to meet domestic demand, leading stakeholders to call for increased private sector involvement in renewables development. Small and medium-sized enterprises (SMEs) in particular will be critical for future renewables development, and while the government has moved to increase SME participation in the hydrocarbons sector, involving them in renewables development will be a critical next step.
In October 2015 energy ministers from across the ASEAN Economic Community (AEC) announced that they would endorse new targets to reduce ASEAN energy intensity by 20% by 2020, and increase the contribution of renewable energy to 23% by 2025. The new targets were developed as part of the ASEAN Plan of Action for Energy Cooperation (APAEC) policy series, which will be implemented in two phases, from 2016-20 and from 2021-25. Under the most recently concluded phase of APAEC, which spanned 2010-15, members had aimed to reduce energy intensity by 8%, while increasing the component of renewable energy in ASEAN by 15%.
The most recent five-year strategy was developed at a time of rising energy prices, with a number of ASEAN members, including the Philippines, Thailand and Singapore, standing as highly dependent on petroleum imports to meet domestic demand, and total petroleum consumption forecast to rise further by 2030, driven by rapid economic expansion within the AEC. Indeed, in a 2012 report, the Energy Collective found that primary energy consumption had risen in tandem with ASEAN economic growth, and is projected to continue rising as emerging ASEAN economies further industrialise.
The Energy Collective forecast that ASEAN GDP growth would rise by a compound average rate of 5.2% annually between 2007 and 2030, and that final energy consumption would expand by 4.4% annually over the same period, under a “business as usual” scenario, to reach 1.01bn tonnes of oil equivalent (toe). However, under an “alternative policy scenario” in which energy savings could be realised through renewables development, final energy consumption was forecast to reach 843m toe.
Although Brunei Darussalam is a net energy exporter with more than 90% of export revenues derived from oil and gas production, the Sultanate also stands to gain from reducing domestic hydrocarbons consumption, which would free up more oil and gas for exports, in addition to supporting ongoing economic diversification initiatives as outlined under Wawasan Brunei 2035, the Sultanate’s economic development plan. The Energy Collective reports that unlike ASEAN members such as Laos and Indonesia, which benefit from significant hydroelectric and geothermal potential, respectively, countries like Brunei Darussalam and Singapore have limited renewable energy resources. However, the government has increasingly moved to collaborate regionally and internationally in a bid to identify new opportunities. As such, the Energy and Industry Department at the Prime Minister’s Office has been supportive of regional energy initiatives, and in October 2015 released a statement welcoming the new ASEAN targets for energy intensity and renewable energy. The Sultanate has already set its own ambitious domestic targets, which include reducing energy intensity by 63% by 2035, and increasing renewable energy’s contribution to the mix by 10% over the same period.
As part of its drive to boost regional and international energy cooperation, Brunei Darussalam has increasingly sought new international research partnerships and regional energy agreements over the past decade. In 2013 the country launched a work stream called Renewable and Alternative Power Generation, which together with the Brunei National Energy Research Institute (BNERI) and the US-based National Renewable Energy Laboratory has worked to develop tools to identify the best areas in the country to establish new hydroelectric, wind and solar projects. In 2014 the BNERI also partnered with Japan’s Institute of Energy Economics to form the Energy Research Institute Network (ERIN), which comprises research institutes from 16 East Asia Summit countries. The BNERI chaired ERIN in 2014 and 2015. ERIN has also signed a memorandum of understanding (MoU) with the Economic Research Institute for ASEAN and East Asia (ERIA ) to collaborate on energy research activities. Between 2015 and 2017, ERIA will fund four ERIN studies, including one at the BNERI concerning the development of an eco-town model for the AEC, as well as studies on barriers to regional integration, integrative renewable energy technologies in the lower Mekong region, and sea lane security for oil and liquefied natural gas, to be conducted at the Australian National University, the Energy Institute of Vietnam and the Energy Institute of Japan, respectively.
Although large-scale renewable power projects are limited to the Tenaga Suria Brunei solar power plant at present (see analysis), other small-scale projects have received ASEAN recognition, and in October 2015 the Sultanate won second place in the ASEAN Energy Awards’ Renewable Energy Project: Off-Grid category for a 10-KW peak solar voltaic system installed at the Kampong Sukang prayer hall. Prior to 2011 the hall had relied on a diesel generator to meet its power needs – a costly, noisy and inefficient solution – with the Ministry of Religious Affairs later commissioning a local private contractor to install a photovoltaic system capable of generating 13,140 KWh of electricity annually, reducing carbon dioxide emissions by 18,400 kg. The system is capable of powering 13 fluorescent light tubes, up to six sets of ceiling fans and a portable audio system.
Perhaps most significantly for regional renewables development, officials announced in 2015 that they were considering reviving a stalled energy deal with Sarawak, which would see the construction of a new 200-MW hydroelectric dam. According to a report in the Borneo Post, the Bruneian government was set to receive a business plan and details of a proposal to jointly develop new hydroelectric dams in northern Sarawak, as well as a 40-km power transmission line connecting to Brunei Darussalam. The announcement followed the publication of a study conducted under an MoU between Sarawak Energy, and Brunei Darussalam’s Prime Minister’s Office and Department of Electrical Services in 2010, which envisioned the first phase of power exports moving from Tudan in Sarawak to Brunei Darussalam via the Sungai Tujuh border crossing.
Despite these positive steps, the AEC remains heavily dependent on oil and gas consumption to help meet domestic energy demand. Although the previous APAEC series, running from 2004-09, had seen ASEAN meet its target of increasing installed renewable energy-based power generation by 10%, local media later reported that the 2010-15 targets were not met, and more recent renewable energy targets could prove difficult to realise, as they require large-scale, capital-intensive projects and would likely require significant private sector participation to be commercially viable.
Private sector development of new renewable energy projects should also include SMEs, according to the Energy Collective, which reported in 2012 that many renewable energy projects in ASEAN countries are dominated either by government-funded pilot projects, or donor-funded projects with limited lifespan and reach – as was the case with Brunei Darussalam’s solar plant.
This could in part explain why the 2015 APAEC target was not met. Although SME participation in Brunei Darussalam’s renewables agenda has been limited to date, there are indications that the government is moving to embrace SMEs as it rolls out new energy projects. In February 2015, for example, LiveWIRE Brunei, under the umbrella of Brunei Shell Petroleum, launched a six-month pilot programme aimed at increasing the number of SMEs active in the oil and gas supply chain. This lends an optimistic outlook to SME participation in future renewables development, and should help the sultanate play an important part in regional renewables growth over the next decade.