Grid reliability challenges under the energy transition in Asia Pacific

More frequent grid reliability events have been reported in Asia Pacific markets, and the trend will continue.

Over the past few years, the impact of variability and uncertainty in net generation is being felt in many power systems globally. Particularly in Asia Pacific, we have witnessed several grid events (e.g. Taiwan and Japan) that led to either system critical conditions, high prices in spot markets, renewable curtailments, or even blackouts in some cases.

The impact is becoming prominent as systems are increasing the share of renewable capacity (including hydro) in the overall generation mix and adding behind-the-meter (BTM) generation. Meanwhile, the nature of the electricity demand profile is also changing with the increasing share of household and commercial segments, which will add to the already exacerbated situation.

Power market regulators and operators need to rethink the power system operations, planning criteria, and market structures as countries make headway in the energy transition (reaching more than 60% of renewable generation in the overall generation mix by 2050). If left unchecked, the frequency of grid events would increase in the future.

The challenges for power systems in Asia Pacific are significant

There are a few unique factors that make energy transition challenges on power grids even more significant for Asia Pacific countries: robust demand growth, a lack of generation and demand flexibility, developing infrastructure, and the lesser maturity of the power market structure, etc. As per the analysis, Pakistan, Bangladesh, and Indonesia can be categorized as "high-risk" markets, while Australia, Singapore, South Korea, and Japan as "low-risk" markets.

Grid frequency violations and renewable curtailments are common market indicators for assessing energy transition risk

Although low reserve margins, load shedding, or blackout events have a higher social impact, the risks only emerge in a few markets. The grid frequency violations and renewable curtailments are common in most of the markets.

The majority of the countries in the Asia Pacific region are focused on harnessing the flexibility of conventional capacity along with the deployment of short-duration (intraday) energy storage options. These may not be sufficient and may require countries to look at other options as well.

Power systems across APAC need to adopt an unconventional approach of harnessing flexibility via demand-side activity, grid reinforcements, changes to market design, inclusion of storage, and sector coupling (e.g., EVs, hydrogen production, large heating/cooling systems, etc.)

Learn more about our Asia-Pacific energy research and insight.

Ashish Singla is an associate director, Climate and Sustainability at IHS Markit.

Allen Wang is a director, Climate and Sustainability at IHS Markit.

Posted on 02 September 2021

This article was published by S&P Global Commodity Insights and not by S&P Global Ratings, which is a separately managed division of S&P Global.