Energy Market Integration in East Asia: Energy Trade, Cross Border Electricity, and Price Mechanism

Date:

30 September 2014

Category:

ASEAN, Malaysia, Myanmar, Philippines, Thailand, Energy, Finance and Macroeconomy, Investment, Trade

Type:

Research Project Reports

Authors:

Han Phoumin, Fukunari Kimura, Youngho Chang, Sangeeta Sharma, Anindya Bhattacharya, Tania Bhattacharya, Tri Widodo, Rafiazka Millanida Hilman, Yu Sheng, Yanrui Wu, Xunpeng Shi, Dandan Zhang, Yanfei Li, Chea Piseth, Chea Sophearin, Romeo Pacudan, Dayong Zhang, David C. Broadstock

Tags:

Energy, Macroeconomy, Trade

Print Article:

Research on Energy Market Integration (EMI) has been the focus of many scholars, researchers, and leaders in the energy field as evidences, particularly in Europe and America, tend to show the benefits from such market integration. The Association of Southeast Asian Nations (ASEAN) community, aiming to achieve the ASEAN Economic Community, will need to address the issue on EMI in a more explicit way as it has been a driving force for economic growth in the region so far. It must be noted that for EMI and energy trade to occur, the basic prerequisite is to have sufficient available connecting infrastructure between markets and the supporting regulatory and political conditions. A well-coordinated and effective resource allocation could happen only if markets are contestable and fully competitive, and countries may give up their policy on sovereignty from "own-regulation" to "deregulation" in order to join the regional market integration.

The Economic Research Institute for ASEAN and East Asia (ERIA) has conducted the EMI studies for several years, and the studies have been promoted by East Asia governments to deepen understanding on matters impacting on energy trade liberalisation and investment, energy infrastructure, pricing reform, and deregulation of domestic energy markets. Previous EMI studies focused on the review of the regional commitment of East Asian Summit (EAS) countries, the benefits from EMI, the electricity market, theories, subsidies, and renewable energy (RE). In the EMI 2013-2014, the theme was chosen to provide more focus on the energy trade in the ASEAN and East Asian countries, though other energy-related issues are also covered in this study.

This EMI study provides analytical perspectives on constraints and barriers, and the measures that countries could take to address issues--from institutional, financial, and human resources--to realise the potential benefits from energy trade-related matters, power connectivity, and other EMI-involved mechanisms.