Pumped-storage hydropower in southeast Asia is projected to surge from 2.3 GW today to 18 GW by 2033, according to research by Rystad Energy. This growth represents a nearly eightfold increase in less than a decade and is anticipated to attract an estimated total investment of US$12 billion to US$70 billion.
With 64% of the region’s power generation coming from fossil fuels, reliable and green energy storage solutions are crucial to enhance electricity system flexibility, particularly as more renewable energy sources like solar and wind become integrated. Currently, 2.7 GW of pumped hydro storage is under construction, with the remaining 13.3 GW under development.
While Thailand boasts the most existing capacity, the Philippines will soon surpass it with about 5.7 GW in the pipeline. Other countries investing in pumped hydro include Vietnam and Indonesia, which boast about 4.5 GW and 4.2 GW of pending capacity, respectively. Thailand will also contribute to the region’s growth, with an additional 1.6 GW slated for development.
Pumped hydro is a promising solution to meet growing energy storage demands, but policymakers and developers must implement effective risk management to address the challenges and uncertainties inherent in the operation of pumped hydro, ensuring their seamless integration into the region’s energy landscape, Rystad Energy said. Policymaking has been a pivotal force in the short term, with policies favoring pumped hydro installations driving this momentum forward.
For instance, the Philippines Department of Energy (DOE) is regulating energy storage technologies, including pumped hydro. In the country’s Green Energy Auction Program (GEAP 3), anticipated in the second half of 2024, the DOE plans to offer 3.1 GW of pumped hydro capacity. Similarly, Vietnam’s national Power Development Plan 8 (PDP 8) aims to attain 2.4 GW of pumped hydro by 2030, with projects like Bac Ai and Nihn Son under way. Furthermore, Indonesia, Thailand and other regional nations are progressing with pumped hydro through policy frameworks.
State-owned utility companies dominate pumped hydro projects in most of Indonesia, the Philippines, Vietnam and Thailand. This trend is evident with the top three developers in Southeast Asia, all of which have significant government ownership. Indonesia’s state-owned utility company PLN is the leading developer in the region, with 3.7 GW pumped hydro projects in the pipeline.
The high upfront costs and the long time it takes to see a return on investment make pumped hydro projects less attractive to private companies. Additionally, the licensing process can be unpredictable, dragging out project timelines and adding risk for developers. The Philippines, however, has an unbundled electricity market, meaning there’s competition in power generation and distribution. This competition creates volatile wholesale electricity prices, which can fluctuate more than in regulated markets. This presents an economic incentive for pumped hydro storage in the Philippines.
Rystad Energy is an independent energy research and business intelligence company providing data, tools, analytics and consultancy services to the global energy industry.
