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IHS Markit (now a part of S&P Global Commodity Insights)
published the Southeast Asia (SEA) power and renewable market
briefing for the second quarter of 2022 (Q2-2022). The report
discussed the power demand, supply, pricing, and major market
events in the quarter, as well as the latest proposed or enacted
policies and regulations. The report is now accessible to customers
via our
Connect platform.
Power demand growth trend in Q2-2022
Power demand recovery momentum continues in the second quarter
of 2022, with most SEA countries' power demand surpassing the
pre-pandemic levels (2019). However, the region is facing headwinds
from global fuel price hikes.
According to published power market statistics, power demand
growth in Vietnam, Singapore, and Thailand slowed down
significantly in Q2 compared to the previous quarter. The figure
below illustrates the power demand growth rates in 2022 versus
2021, which range from -2.7% y/y to 13.4% y/y for Q2. Furthermore,
regional power prices remained high in this quarter due to
persistently high fuel prices.
Malaysia has experienced the most significant
monthly demand growth (up to 14% y/y by June 2022), with average
2021-22 power demand in Q2 increasing by 5.5 % y/y, compared to
2.8% y/y in Q1. Because of the reopening of economic activities and
international borders for tourism, market recovery performance
remained consistent with the previous quarter. However, Malaysia
has the lowest recovery rate relative to its pre-pandemic level
across all markets (when comparing performance in the first six
months of 2022 and 2019 (H1-2022/2019)). With a 0.9% surplus in
power demand for H1-2022/2019, the country's power demand recovery
prospects remained uncertain.
Singapore is still on track for positive power
demand growth in Q2, albeit at a slower pace. Monthly demand growth
in 2022 slowed compared to 2021, averaging 1.6% y/y in Q2 versus
5.5% y/y in Q1. This is because the high commodities prices,
including power prices, resulting from high inflation, have caused
a slowdown in power consumption. Nonetheless, the average power
demand in H1-2022/2019 exceeded the pre-pandemic level (2019) by
5.3%. This was supported by the lower severity of the pandemic and
high vaccination rates, allowing economies to be more open than in
previous waves of COVID-19.
Vietnam led the monthly power demand contracts
in Q2-2022, with a contraction as low as 2.7% y/y in May 2022,
resulting in a downward trend of average growth of 0.7% y/y in Q2
compared to 5.8% y/y in Q1. The power demand fluctuated in Q2 due
to external economic shocks that slowed export-driven economic
recovery. Despite poor monthly demand performance in Q2, the
overall power demand in H1-2022/2019 surpassed the pre-pandemic
level (2019) by a whopping 13.6% across all markets. The remarkable
growth in power demand is being driven by the country's strong
economic growth, and Vietnam was deemed to be the top-performing
Asian economy in 2020—without a single quarter of economic
contraction.
Power demand in Thailand increased by 4.4% y/y
in April, with a slight decrease from the average of 5.0% y/y in
Q1. Power demand is gradually recovering as a result of the
recovery of business activities and the opening of international
borders for tourism activity from January 2022. Thailand's demand
from January to April 2022 has been suppressed by the high cost of
imported fuels, but still surpassed the pre-pandemic level (2019)
with a slight growth of 1.4%.
Overall, the region's power demand growth has moderated in Q2.
Although uncertainties lay ahead, the regional power demand growth
will be boosted by a robust economic recovery.
Electricity tariffs will hike this year amid rising fuel
costs
The major power utilities in SEA countries announced electricity
tariff hikes in this quarter after more than two years of price
hike moratoriums to battle against the COVID-19 pandemic.
The unprecedented rise in global energy prices is putting
pressure on governments' budgets for power subsidies. Power
generation becomes more costly as high fuel costs in the midst of a
global energy crunch have been exacerbated by the prolonged
Russia-Ukraine conflict, and countries with limited domestic gas
supply, such as the Philippines and Thailand, had to increase the
use of expensive imported fuels for power generation. These
factors, combined, posed an upward pressure on electricity tariff
adjustments to bolster the state-owned utilities.
Choon Gek Khoo is a research analyst with the Gas,
Power, and Climate Solutions team at S&P Global Commodity
Insights.
Cecillia Zheng is an associate director on the Gas,
Power, and Climate Solutions and leads Southeast Asian power market
research and consulting at S&P Global Commodity
Insights.
Posted on 27 July 2022
This article was published by S&P Global Commodity Insights and not by S&P Global Ratings, which is a separately managed division of S&P Global.
