Three countries in ASEAN's first multilateral energy deal

The scheme will see Laos sell hydropower to Malaysia using Thailand’s electricity grid.

Laos will sell 100MW of hydropower to Malaysia using Thailand’s electricity transmission networks from the beginning of next year, in ASEAN’s first multilateral electricity transaction.

The agreement was signed during the 35th ASEAN Ministers on Energy Meeting in Manila and marks the first step towards implementing the ASEAN Power Grid initiative, a $6 billion investment masterplan with 16 projects marked for development.

In the first phase of the multilateral trading scheme, the hydro electricity generated by Laos’s state-owned Electricite du Laos will transfer through the grid owned by Electricity Generating Authority of Thailand to Tenaga Nasional Berhad of Malaysia, for a period of two years.

Tenaga said in a filing with Bursa Malaysia that it is “under no obligation to purchase any minimum amount of energy from the Lao utility”. The electricity price regarding this transaction was not disclosed.

Prior to this multilateral transaction, there were cases of bilateral cross-border energy trading between Malaysia and Indonesia, as well with Laos and Thailand. The energy purchase and wheeling agreement is expected to be extended to Singapore at a later stage. However, Singapore’s electricity is sold under a market pricing mechanism, which makes it more complicated for it to join the scheme.

In addition to the ASEAN Power Grid plan focused on Southeast Asia, State Grid Corporation of China started a collaboration with Japan’s Softbank, Korea Electric Power Corporation and Russia’s PJSC ROSSETI last April to build the so-called ‘Asia Super Grid’, which aims to allow power trading across Northeast Asia.