One new element that would need to be introduced in the secondary model is a regional market operator. The market operator would collect information on excess supply and demand, match potential trades, and provide relevant information to the AMS. It could also, potentially, aid in wheeling charge calculations. As some of these functions are similar to the recommendation for a regional co-ordinator role in the harmonised bilateral model, one option would be for the recommended regional co-ordinator institution to take on the market operator responsibilities as well.

Because trading in a secondary model is potentially more complicated than under a harmonised bilateral model, it would also be necessary to introduce an organisation that can function as a central clearing party (CCP). The CCP would simply collect and distribute money associated with any cleared trades. The proposed market operator could take on the CCP function as well, or that could be established in a separate institution.

Primary trading model

Establishing a secondary trading model would fully meet ASEAN’s goal of enabling multilateral power trading among the AMS. It is, however, worth considering a more ambitious, futureoriented option that would bring more benefits to participating countries – albeit with more work required of them.

Under a primary trading model, regional multilateral trading would become the primary mode of trade. All generation in the participating countries would clear in the regional market. This allows for full reserve and capacity sharing, and enables increased optimisation of generation resources across the integrated markets.

Doing so, however, requires that domestic markets be fully restructured. Moreover, under the primary model, there are no national or local markets, but instead only a regional market among the participating countries. Harmonised bilateral trading is still possible under this model, but for the countries involved it would be a replacement for a secondary model.

Functionally, this model is not dramatically different from the secondary model. The role of the regional institutions remains essentially the same, though their overall responsibilities would increase significantly. It would be possible, though, for the same market operator in the secondary model to organise the primary market as well.

In all likelihood, many or perhaps even most of the AMS will choose not to implement a primary model, at least in the near term. This is therefore included as a more future-oriented option, one that could be implemented after the secondary model is established. It is important to note, however, that secondary and primary models are compatible with each other, in the sense that trading is possible between them. In addition, it is still possible for the AMS to utilise the harmonised bilateral trading model.

Conclusion

ASEAN has made significant progress on the development of the APG. Most of this progress, however, has been limited to the bilateral development of transmission infrastructure and trade. Though the ASEAN region is in many respects unique, lessons from international experiences show that it is possible to develop multilateral trading while respecting the local context. Moreover, pilot projects such as the LTMS–PIP demonstrate that it is very possible to establish multilateral trading within ASEAN.

14

Development of multilateral trading in ASEAN can and should be done in a stepwise and voluntary fashion. It is therefore possible, as demonstrated in Figure 4, that different AMS will choose to participate in different trading models. The proposed trading models allow for that kind of flexibility. Harmonised bilateral trading can benefit all AMS, so long as they are interconnected, by providing a framework and institutional structure to make it more efficient. It may be that a subset of AMS choose to limit themselves to bilateral trading only, while others choose to participate in a secondary model. It may also be that some AMS choose to create a primary trading model among themselves.

Regardless of the path each AMS chooses to take, there are clear benefits to be gained by ASEAN as a whole in moving forward with the establishment of multilateral power trade.

Figure 4. A possible future for power trade in ASEAN

Source: IEA 2019. All rights reserved.

15