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Despite slowing economic growth, Southeast Asia is on its way to become a net energy importer, the International Energy Agency said in its annual Southeast Asia Energy Outlook.
The agency notes the fast rise of fuel demand as the main driver of this trend. Currently, demand for fuels in Southeast Asia is rising a lot faster than local production of crude oil and this will tip the region into net importership for the first time in history.
Electricity demand is also on the rise as Southeast Asian economies expand access to electricity to their citizens. By 2030, according to the IEA, there will be universal access to electricity in Southeast Asia. This means the countries in the region have 45 million more people to add to their grids and this will lead to a surge in demand for energy.
Amid these trends, adoption of renewables is growing but not fast enough. Since 2000, the IEA said in its report, hydropower supply in the region has risen fourfold, accounting for 18 percent of the energy mix, but solar and wind still only account for 15 percent of Southeast Asia’s energy generation capacity. However, costs of renewable power deployment are falling and governments are beginning to work on stimulating greater adoption so deployment may accelerate in the coming years.
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All in all, the IEA has forecast that under a stated policy scenario, which is based on existing policies and targets, energy demand in Southeast Asia will increase by 60 percent by 2040 as the regional economy doubles in size. Meanwhile, the population of the region will rise by some 120 million people, many of whom will live in cities.
Oil demand in this period will top 9 million bpd. That’s up from 6.5 million bpd today. A lot of this oil will be imported and this will lead to hefty bills. By 2040, the IEA warned, Southeast Asia will be booking an annual net deficit in energy payments of around $200 billion.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.