The GCC Proposes an ASEAN Collaboration Following Difficulties In Regulating Energy Infrastructure

The GCC proposed the ASEAN Collaboration of Energy (ACE), aiming to standardize inconsistent and opaque wheeling fees while working closely with ASEAN member states.

Ministers of GCC, Russia, Australia, Vietnam, China, and Indonesia of the AMEM discuss their collaboration in APIRA. 

SINGAPORE: Concerns surrounding the regulation of cross-border energy infrastructure continue to grow while the ASEAN Ministers on Energy Meeting (AMEM) debates potential solutions, prompting the Gulf Cooperation Council (GCC) to put forward its proposed framework: the ASEAN Collaboration of Energy (ACE).

ASEAN countries, along with other regional blocs, have increasingly recognised the importance of establishing integrated electricity markets to accelerate electrification and cut carbon emissions. 

Emerging partnerships between ASEAN, the GCC and the European Union (EU) seek to promote regional cooperation frameworks aimed at harnessing the full potential of cross-border energy projects. 

The GCC minister proposed the ACE framework today to combat issues concerning wheeling charges. ACE aims to standardise wheeling charges for energy trade in ASEAN and enforce transparency of such charges through biannual ASEAN summit meetings and joint funding from observer states. Wheeling charges, the fees levied for transmitting electrical energy from generation points to consumption locations, have long lacked both transparency and standardisation, causing inefficiencies in energy transactions between countries. This comes after prominent discourse regarding how lack of transparency in wheeling charges within ASEAN has created a barrier to regional energy integration. 

Through the improvements in transparency, ACE will take into consideration the Gross Domestic Product (GDP) and the level of social unrest in setting wheeling fees. Summits hosted with ASEAN countries will also give less developed countries in the region a chance to voice their concerns about their economy, allowing more developed countries to support them via lower wheeling fees. 

The minister of the GCC has expressed interest in working with the minister of Korea in the construction and implementation of the ACE framework. The minister of Korea had previously proposed an Electricity Authority Regulatory framework to improve transparency in wheeling charges. 

In addition, ACE has also garnered support from countries such as the minister of Indonesia, who shared similar sentiments to the minister of GCC regarding the issue of cross-border energy infrastructure and regulating the mineral supply chain. 

Their shared views sparked a collaboration between ministers, leading to the incorporation of ACE into the minister of Indonesia’s framework, APIRA. 

The ASEAN Power Integration and Regulatory Authority (APIRA), spearheaded by Indonesia, is a collaboration of proposals from countries including Russia, China, and the US. Described by the minister of Indonesia as a “big umbrella”, APIRA works towards standardising technical regulations, grid safety protocols, power dispatch systems, and renewable energy certification across ASEAN.

The decision to incorporate ACE into APIRA came after discussions between the minister of GCC and Indonesia, where the minister of GCC evaluated the proposed solutions of all ministers thoroughly, and engaged in negotiations for “exclusive investments” into GCC. Through the incorporation of ACE as a subset of APIRA, ACE aims to be the roadmap for ASEAN countries to improve power trade, reduce economic losses, and integrate renewables while preserving national sovereignty. 

"ACE is about improving discussions between ASEAN member states and observer states.” 

– Minister of Gulf Cooperation Council 

Throughout council sessions, APIRA has incorporated many other minister’s proposals. Most notably, the minister of India’s Joint Open Standards Hub (JOSH) aimed to ensure less developed ASEAN member states have the capability to assess and submit accurate and consistent data to JOSH. This is done through leveraging private sector expertise and public-private partnerships. 

When asked about the impact of APIRA on Gulf countries, the minister of the GCC mentioned that observer countries such as Saudi Arabia can contribute their expertise on energy, and APIRA also allows for more foreign investments into GCC. 

One of the sponsors of APIRA, the minister of Australia, also added that Saudi Arabia and other Gulf nations are experienced with energy, especially in regards to non-renewable energy such as petroleum. They added that Saudi Arabia’s expertise on advising ASEAN member states on their development of downstream processing capability will be invaluable to APIRA. 

The minister of GCC had also repeatedly emphasised their stance on prioritising a multilateral and clean energy structure between ASEAN member states. They had also acknowledged their position as an observer state, and mentioned that the GCC could “pose ideas” while contributing to the standardisation of wheeling charges in close cooperation with ASEAN member states. 

“Saudi Arabia and Gulf nations can assist in capacity training programs in regards to exporting energy and energy sources to other countries.” – Minister of Australia

ACE represents a timely and pragmatic response to current wheeling fee policies and proves a worthy framework for ASEAN to take into consideration. 

However, without the voice of other ASEAN member states speaking on their support for ACE, whether the framework will be implemented remains undecided.

Bibliography 

PricewaterhouseCoopers. “Regional Electricity Trade in ASEAN.” PwC, n.d. https://www.pwc.com/sg/en/publications/regional-electricity-trade-in-asean.html.

Written by: Rebecca Wong Ixin, Cha Yu Han