Potential for Energy Efficiency Improvements in SE Asia

Energy Efficiency measures maximize the use of existing energy supply, deferring costly investments in the creation of new energy capacity. Increased Energy Efficiency also results in attractive savings on energy bills and even reduces GHG emissions. The industrial and commercial buildings sectors offer large opportunities for realization of energy savings. A variety of barriers, mainly driven by a lack of understanding of Energy Efficiency, continue to inhibit Energy Efficiency investments in these sectors. These barriers, whether perceived or real, have to be overcome through innovative solutions at the earliest if large-scale adoption of Energy Efficiency has to take place in the near future.

The annual savings potential in six countries in South-East Asia is estimated to be around US$1.4 billion, with the industrial sector contributing about US$0.9 billion and the commercial sector contributing US$0.5 billion. This would require an investment of US$6.7 billion: US$2.9 billion for the industrial sector and US$3.7 billion for the commercial sector.

The most significant driver of savings potential is the prevailing energy tariffs, while investment potential is a function of the size of the economy and the energy intensity of the dominant industries. Singapore, Philippines, Thailand and Malaysia appear to have the most favourable regulatory environment and also the most sophisticated Energy Service Companies (ESCOs). Investors may gain from focusing on these countries initially before expanding into Indonesia and Vietnam. In terms of financial returns, Singapore and Philippines appear to be the most attractive investment destinations, reiterating conventional wisdom that market-based energy tariffs make the transition to a low-carbon economy more commercially feasible.

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