Importing and exporting electricity

Slowly but surely, the ASEAN is moving towards deeper integration of national economies into a single, unified regional market. By next year, for instance, various national payment systems are expected to operate under a shared digital framework that allows the use of any ASEAN member’s e-money anywhere in the region.

Further ahead, but already in motion, is the vision of an interconnected electricity grid that will allow one ASEAN member to sell or buy electricity from another. The idea is simple: surpluses can cross borders to strengthen energy security, not just domestically but regionally.

This is relatively straightforward for landlocked members such as Thailand, Vietnam, Laos, Cambodia, and Myanmar. The challenge is far greater for maritime states like the Philippines, Indonesia, Malaysia, Singapore, and Brunei. These countries require underwater or subsea transmission lines, which are capital-intensive, technically complex, and geopolitically sensitive.

The target for a fully integrated ASEAN Power Grid (APG) is 2045. That may appear distant, but in energy infrastructure terms, 20 years is not far at all. Planning for underwater cables, nuclear plants, and major grid upgrades must begin now, because all take years to design, finance, and build.

The ASEAN Power Grid is no longer just a dream; it is already being built. Just this year the ASEAN launched the ASEAN Power Grid Financing Facility (APGF) with the support of the World Bank and the Asian Development Bank. The APGF is intended to finance feasibility studies, project preparation, and construction of APG-related projects, with a special focus on subsea interconnection.

By 2045, the ASEAN envisions a web of cross-border links enabling regional electricity trade. The Laos-Thailand-Malaysia-Singapore Power Integration Project (LTMS-PIP), launched in 2022, has already proven that multilateral electricity trade in the ASEAN is feasible.

This initiative allowed Singapore to import up to 100 megawatts (MW) of renewable hydropower from Laos through existing grid connections in Thailand and Malaysia. That imported electricity accounted for about 1.5% of Singapore’s peak demand in 2023.

The next step is to extend such integration to Borneo and the Philippines, which are more isolated from the regional grid. For Manila, the most realistic projects are a Mindanao-Sabah subsea power cable, or alternatively, a shorter Palawan-Kudat link in Northern Borneo. Either would give the Philippines its first entry point into regional power trading.

But for either link to succeed, Philippine-Malaysia relations will be crucial. Despite the short geographic distance between Southern Palawan or Western Mindanao and Borneo, nothing can be achieved without close cooperation between both governments under the ASEAN framework.

Interconnection, however, is not a panacea. It is only a carrier. To import energy, another country must have a surplus. To export, you must have excess capacity. The Philippines therefore cannot treat interconnection as a substitute for building its own baseload. It is a complement, a regional insurance policy. Imports are possible only if you also have the capacity to export. This road cannot remain one-way forever.

Here is where Philippine capacity-building comes in. If interconnection is the regional insurance policy, then nuclear is the option for a domestic insurance policy. Both must proceed in parallel. I believe we need both, and soon, to secure energy for the future.

The Philippines needs power sources that run 24/7, regardless of weather, to complement variable renewables like solar, wind, and hydro. Today, coal provides most of the power mix, but it is largely imported. Malampaya’s gas is running out. Renewables are expanding, but intermittency remains a challenge.

Heavy industries, the growing information and communications technology sector, including data centers, and the services sector, especially BPOs, all require guaranteed baseload supply. Nuclear is not the only option, but it is one we must seriously consider.

One promising pathway I mentioned in a previous column is through Small Modular Reactors (SMRs). Unlike conventional large nuclear plants, SMRs generate 70-300 MW per unit, can be manufactured in modular sections, and deployed where needed. They can directly serve demand hubs in Luzon, Visayas, or Mindanao, or provide reliable power for off-grid islands and communities.

But the reality is that nuclear reactors still require imported fuel. We cannot produce our own enriched uranium. Most light-water SMRs need refueling every four years, while some advanced micro modular designs offer sealed cores lasting up to 20 years before replacement.

This makes it essential for the Philippines to select SMR or MMR vendors that bundle long-term fuel supply contracts into their reactor agreements. These contracts typically cover initial core loading, several reloads, and sometimes include spent fuel take-back options.

Since the Philippines does not mine uranium, and lacks facilities to convert or enrich it, we will have to import nuclear fuel periodically — much as we already import coal, oil, and liquefied natural gas. Crucial here is establishing a clear nuclear fuel supply policy and securing long-term contracts with trusted suppliers.

This is precisely why the Philippines cannot prioritize nuclear alone, nor maintain the status quo, without pursuing ASEAN interconnection in parallel. Nuclear, particularly SMRs, can help provide steady baseload for domestic needs. Interconnection offers flexibility by enabling imports of electricity during shortages, not just fuel. We can even export surplus power in the future.

Among the challenges is that a Mindanao-Sabah or Palawan-Kudat subsea link will require massive investment estimated at around $2 billion for a 300-500 MW line, including converter stations at both ends. This is where the APGF with World Bank and ADB can help.

Such a project will also require regional agreements on power prices, transmission charges, and dispatch protocols; environmental clearances, particularly for subsea cables traversing marine protected areas; maritime security arrangements to safeguard cables from piracy or sabotage; and, more important, clear Philippine control of its national grid, to reassure neighbors and financiers alike.

In an earlier column, I outlined a roadmap for nuclear capacity building. For ASEAN interconnection, the Philippines must immediately initiate APGF-backed feasibility studies for a Mindanao-Sabah or Palawan-Kudat link, or both. We must establish quickly whether interconnection makes technical, financial, and political sense, and how it can be achieved.

The imperative stems from the fact that coal is imported, gas is finite, and renewables are variable. And the present energy mix does not bode well for energy security. Nuclear, particularly SMRs, can serve as the domestic insurance policy, while ASEAN interconnection can be the second line of defense.

To be clear, nuclear is not the only option for capacity building. But it is among the alternatives to caseload coal and gas. Also, pursuing interconnection indirectly advances another critical objective: ensuring Philippine control of its transmission grid.

Cross-border projects will require absolute clarity on who owns, controls, and secures the Philippine power grid. I am certain foreign partners and financiers will demand this assurance before committing to multibillion-dollar interconnection projects.

If Manila gets both tracks right — domestic capacity-building and regional interconnection — then maybe by 2045, the Philippines may not just be importing electricity, but exporting it too. Along with this is a declining dependency on imported coal and oil.