Sembcorp and Regional Power Corridor in Southeast Asia

Sembcorp Utilities, a subsidiary of Sembcorp Industries, received conditional approval from Singapore’s Energy Market Authority (EMA) to import 1.3 gigawatts (GW) of low-carbon electricity from Vietnam and Malaysia on 26 October. The Business Times The Star This project, known as the Vietnam-Malaysia-Singapore (VMS) initiative, is set to commence operations in 2035.

What Happened: The VMS Initiative Facts

The VMS initiative proposes using Vietnam’s offshore wind resources alongside solar and battery energy storage infrastructure in Malaysia. The renewable electricity generated in Vietnam would be transmitted through Malaysia and supplied to both Malaysia and Singapore, with Malaysia acting as a transit and recipient country for the regional power flow, according to the consortium’s statement The Star. The consortium includes Sembcorp Utilities, Malaysia’s national oil company Petronas, Malaysia’s state utility Tenaga Nasional, and Vietnam’s national oil company Petrovietnam Technical Services Corporation The Business Times. This 1.3 GW project is the fourth cross-border low-carbon electricity import project Singapore has with Malaysia; Sembcorp Utilities previously received approval for importing 300 megawatts (MW) from Johor and 1 GW from Sarawak The Business Times.

What It Means for Regional Energy

The VMS initiative supports unlocking South-east Asia’s renewable energy potential and strengthening cross-border energy connectivity, contributing to the advancement of the Asean Power Grid, a multi-decade effort to link all 11 member countries of the economic bloc for cross-border electricity trade The Star. Minister for Energy, Trade and Industry (Energy and Industry) Tan See Leng announced the EMA’s approval at the Singapore International Energy Week on Monday The Business Times.

Options Side by Side: Interconnection vs. Import

Plans are also underway for a new 2 GW interconnection between Singapore and peninsular Malaysia, with marine subsea surveys scheduled to begin this month The Business Times. The existing link allows up to 1 GW of bi-directional electricity flows, while the VMS project focuses on importing 1.3 GW of low-carbon electricity through a regional corridor The Star. EMA has established a working group with Malaysia’s Energy Commission to harmonize renewable energy certificates for cross-border trade to ensure corporate offtakers have access if the Malaysian projects begin commercial operations The Business Times.

Our view is that the conditional approval signals a measured approach, balancing the ambition for renewable energy imports with the need for competitive pricing relative to other decarbonisation pathways, as stated by Dr Tan The Business Times.

Energy infrastructure and regional trade agreements are managed through national regulatory frameworks.

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