*4.2. Hydrogen, an Enabler to Scale up Variable Renewable Energy*

In ASEAN, power generation is dominated by coal, gas, and hydropower. Intermittent renewables from solar and wind energy contributed a negligible amount (14.47 TWh) or about 1.4% in 2017. However, the most optimistic prediction is that ASEAN will increase the share of wind and solar energy in the power generation mix to about 12.3% by 2050 (calculated from Figure 1). The inclusion of the share of hydro (17.6%) and geothermal (2.2%) energy in the power generation mix contributed to the overall renewable share of 21.2% in 2017. However, future abundant resources are wind and solar energy, the current share of which is negligible. Grid operators had many misperceptions of VRE such as wind and solar energy, although its production cost has drastically dropped in recent years; solar photovoltaic farms' levelized cost of electricity (LCOE) dropped from US\$0.378/kWh in 2010 to US\$0.043/kWh in 2020 in some places [12]. Similarly, all LCOE cost trends for wind energy and concentrated solar power dropped drastically in 2010–2020 and will continue to drop in 2021 (Figure 3), but their share in the power generation mix remains small. Misperceptions stemmed from the concern that VRE production is variable and intermittent, and that its higher share in the grid will add costs as it will require backup capacity from conventional gas power plants [12].

**Figure 3.** Falling Costs of Renewables in terms of Levelized Cost of Electricity (LCOE). CSP = concentrated solar power, kWh = kilowatt-hour, LCOE = levelized cost of electricity, PV = photovoltaic. Source: IRENA [13].

Technically, VRE power production output varies within a few seconds depending on wind or sunshine. However, the risk of variable energy output can be minimized if the power system is largely integrated within the country and within the region. The aggregation of output from solar and wind energy from different locations has a smoothing effect on net variability [12]. However, the ASEAN power grid is progressing slowly, and the integrated ASEAN power market might be far off because of several reasons, such as regulatory and technical harmonization issues within ASEAN power grids and utilities.

Scalable electricity production from wind and solar energy faces tremendous challenges from the current practice of system integration in ASEAN. Investors in solar or wind farms will confront high risks from electricity curtailment if surplus electricity is not used. Many countries have advanced research and technologies for battery storage (lithium-ion batteries) for surplus electricity produced from wind and solar energy, but advanced battery storage remains costly. Produced from electrolysis using surplus electricity, hydrogen has many advantages as it can be stored as liquid gas, which is suitable for numerous uses and easy to transport. Many ASEAN countries could produce wind, solar, hydropower, or geothermal electricity. Their resources, however, are far from demand centers and developing the resources would require large investments in undersea transmission cables. A solution would be to turn renewables into easily shipped hydrogen.

Hydrogen is a potential game changer for decarbonizing emissions, especially in sectors where they are hard to abate, such as cement and steel. Scalable resources from wind and solar energy and other renewables can be fully developed by widely adopting the hydrogen solution. The more electricity produced from wind and solar energy, the higher the penetration by renewables of the grid; at the same time, surplus electricity during low demand hours can be used to produce hydrogen. The more power generated from wind and solar energy and other renewables, the greater the possibility to increase the efficiency of electrolysis to produce hydrogen. On-site hydrogen production from wind and solar farms will solve the issue of curtailed wind and solar electricity. To increase the efficiency of electrolysis and allow further penetration by renewables of grids, a hybrid energy system including hydropower, geothermal, or nuclear plants, for example, would be the perfect energy choice. Since hydrogen is a

clean energy carrier and can be stored and transported for use in, amongst others, hydrogen vehicles, synthetic fuels, upgrading of oil and/or biomass, ammonia and/or fertilizer production, metal refining, heating, and other end uses, hydrogen development is an ideal pathway to a sustainable clean energy system and enables scalable VRE such as solar and wind energy.
