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Oxford Business Group

Oxford Business Group

Oxford Business Group (OBG) is a global publishing, research and consultancy firm, which publishes economic intelligence on the markets of the Middle East, Africa, Asia…

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Emerging Markets Could Become World Leaders In Solar Exports

  • A handful of projects propose exporting solar energy from Indonesia to Singapore.
  • Morocco is another emerging market with the potential to export renewable energy.
  • Exporting renewable energy could provide emerging markets with economic opportunities.
  • Concerns remain that renewable energy exports could hinder local energy transitions.

As demand for renewable energy grows globally, several emerging markets are positioning themselves as leaders in exporting solar power. Most notably, Indonesia appears to be leading the charge. In recent months five giant solar power-export projects have been proposed in the country.

One project, announced in mid-April, saw Singaporean renewable energy provider Quantum Power Asia and Berlin-based Ib Vogt agree to a $5bn deal to export solar power to Singapore.

The proposal involves constructing a 3.5-GW solar park and a 12-GWh battery storage facility across 4000 ha of land on Indonesia’s Riau Islands. The generated power would then be exported to Singapore via an undersea cable.

Another agreement was announced in January, when Masdar, a UAE company focused on renewable energy, signed a memorandum of understanding with Singapore-based Tuas Power, French energy group EDF and state-owned utility Indonesia Power to explore the potential of exporting solar power from Indonesia to Singapore.

The consortium will investigate the possibility of developing 1.2 GW in solar capacity along with storage facilities and potentially connecting the project to the grid in Singapore.

While national authorities have yet to approve these projects, they underline the demand for renewable energy imports in developed countries like Singapore, as well as the potential for emerging markets like Indonesia to capitalise by developing solar power-export industries.

At present, Singapore generates 95% of its electricity from imported gas, although the government announced last year that it aims to import up to 4 GW of low-carbon electricity, equivalent to 30% of its demand, by 2035, thus presenting export opportunities for countries like Indonesia.

Not only would exporting renewables create a whole new export industry, but it would also result in the construction of large-scale projects that would create jobs locally, as well as develop local supporting infrastructure, such as roads and rail, and technical know-how.

Emerging market leaders

Given global demand for low-carbon energy, several countries outside of Indonesia have also explored the possibility of exporting renewable energy.

As part of Singapore’s energy-import approach, Singaporean company Keppel Electric and the Laotian state-owned energy firm Électricité du Laos signed a deal in September 2021 to import 100 MW of renewable hydropower from Laos to Singapore, via Thailand and Malaysia, as part of a trial project.

Meanwhile, Australia is looming as a potential competitor for ASEAN countries in renewable energy exports.

Australian company Sun Cable has outlined plans for a $A30bn ($21.3bn) mega-project that would send solar energy from Darwin in the country’s north to Singapore via a 4200-km subsea cable.

Related: U.S. Oil Rigs Dip For First Time In 9 Weeks

Australia has natural advantages, including plenty of unused land for a 12,000-ha solar plant and favourable weather for solar power generation. Yet Singaporean energy industry officials are concerned about the cost of the project, which could potentially play into the favour of South-east Asian nations like Indonesia and Laos.

Elsewhere, Morocco is another country that holds significant potential to export its renewable energy sources.

Since 2009 the country has dramatically increased its renewable energy capacity, boosting its solar power by 16-fold and wind power by six-fold up to 2020.

Although the country missed its ambitious target of having 42% of its total installed power capacity from renewables by 2020, reaching 37% instead, the progress has nevertheless been encouraging. Indeed, the government has pledged to further increase renewables’ share in the electricity mix to 52% by 2030, comprising 20% solar, 20% wind and 12% hydro.

This significant rise has also increased the country’s capacity to export its renewable energy to Europe.

Morocco already has two electricity cables connecting it to Spain, with plans to construct a third. Meanwhile, in April UK company Xlinks announced plans to build a 10.5-GW combined solar and wind plant with on-site battery storage, as well as a 3800-km subsea cable, capable of sending electricity generated by solar and wind to Spain.

Energy transition concerns

While there are undoubtedly substantial economic and infrastructural benefits for emerging markets to export renewable energy, there are also some concerns that the focus on exports could negatively affect their domestic energy transitions.

For example, Indonesia has only around 210 MW in installed solar capacity, one of the smallest solar footprints in the world. Although planning has begun for solar projects with up to 17,000 MW in capacity, just 3300 MW of this is expected to be used by the local market, with the bulk to be exported abroad.

This would leave Indonesia highly dependent on coal-fired energy, which could not only lead to detrimental health impacts for the local population, but also harm the country’s efforts to reduce emissions and meet its Paris Agreement commitments.

There are similar concerns in Morocco, with a report released by the Heinrich Böll Foundation, an NGO affiliated with the German Green Party, raising concerns that if Moroccan solar- and wind-generated electricity is exported, domestic power would be generated primarily from coal-fired plants.

Furthermore, an export-heavy approach raises concerns about wealthier, developed countries achieving their climate goals at the expense of emerging markets.

Indeed, Malaysia recently banned the export of renewable energy, citing the need to develop its own renewables industry and address its own climate goals first.

Given the renewable energy potential of countries like Indonesia and Morocco, along with the economic and climate benefits associated with exporting green energy, policymakers in emerging markets will be looking to strike the right balance between capitalising on the market opportunities while still prioritising their own energy transitions.

By Oxford Business Group

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Leave a comment
  • Nissi Nwaozuzu on May 31 2022 said:
    The article discusses the potential for emerging markets to export renewable energy.

    It highlights the benefits of such a move, including the economic and climate benefits, but also raises some concerns about the impact on domestic energy transitions.

    I think that exporting renewable energy could be an excellent way for emerging markets to boost their economies and help meet global climate goals.

    However, they mustn't neglect domestic energy needs.

    I agree with Oxford Business Group that they must balance export opportunities and ensure that renewable energy is used to meet domestic needs.

Leave a comment




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