With energy demand growing more than double the worldwide average, the Association of Southeast Asia Nations (ASEAN) will get 49% of its power from coal by 2035, up from 31 percent in 2011, IEA has reported in its Southeast Asia Energy Outlook. Gas among the 10 member states will drop to 28% from 44%.
Abundance and affordability are factors driving the trend, according to IEA executive director Maria Van der Hoeven. “As long as fuel-price differentials continue to favor coal over gas by a significant margin,” she said at a Bangkok news conference, according to Bloomberg News, “Southeast Asia’s power generation is set to be dominated by coal.”
These developments buffet plans by Indonesia, the world’s No. 1 thermal coal exporter, to its double output by 2035. Coal is the fuel source for 75% of power-generating capacity being built by ASEAN’s the IEA said.
Malaysia buys 68% of its power station coal from Indonesia and 17% from Australia, for example, while Jakarta-based PT Bumi Resources Tbk , is Indonesia’s top coal producer. Swiss-based Glencore Xstrata Plc, the world’s leading exporter of thermal coal, meanwhile, scaled back its Australian operations as 2013 prices fell.
Coal power costs will be 30% cheaper than gas in Southeast Asia, the IEA forecasts, assuming prices of $80 a metric ton for coal and current $10 per million British thermal units for natural gas remain steady. “A comparison of costs demonstrates a strong advantage for coal-fired plants under a wide range of prices,” the IEA said, adding that gas will have the No. 2 spot.
Overall, Southeast Asia’s energy demand will rise to 1 billion tons of oil equivalent by 2035, representing more than 10% of the world’s growth in energy usage, according to IEA data; thus coal consumption will triple, growing 4.8% annually.