On October 21, the International Energy Agency (IEA) established its first overseas office in Singapore. According to the IEA, electricity demand in Southeast Asia is expected to grow at an annual rate of 4%, increasing by more than 60% by 2050. Meanwhile, in order for Southeast Asian countries to meet their climate change targets, investments in clean energy must be increased fivefold to $190 billion annually by 2035. The IEA aims to strengthen collaboration with Southeast Asian nations from its Singapore base, supporting energy security and accelerating the energy transition.

Southeast Asia, experiencing dynamic growth, is expected to account for 25% of global energy demand growth and surpass the energy demand of Europe (EU) by the middle of the century. However, climate change mitigation efforts are still insufficient, and CO2 emissions are projected to increase by 35%. The challenges lie in transitioning to clean energy and building infrastructure for cross-regional integration in transmission and distribution grid.

Given the region’s abundant geothermal resources and its many islands, establishing microgrids powered by geothermal energy is an effective approach. Currently, the United States ranks first in global geothermal energy capacity, followed by Indonesia and the Philippines. Notably, Indonesia has taken steps to promote the utilization of geothermal resources, including the establishment of geothermal laws. Despite these efforts, geothermal energy only accounts for a few percent of total power generation, leaving significant room for development. Fervo Energy, a U.S.-based geothermal startup supported by Bill Gates and Google and utilizing shale drilling technology, is also considering future business expansion into Southeast Asia.

As for Japan, it ranks third in the world in terms of geothermal resources, after the United States and Indonesia. However, its installed capacity ranks only 10th, indicating that the potential of this domestic energy source remains underutilized. Key barriers include lengthy development timelines, high costs, and the fact that 80% of its geothermal resources lie within protected areas as national and quasi-national parks. Nevertheless, investment in geothermal power generation, which has a high supply stability and a lot of room for development of next-generation technologies such as supercritical geothermal power generation and hot dry rock geothermal power generation, should be accelerated. Mitsubishi Heavy Industries, for instance, has invested in Fervo Energy and supplies turbines, highlighting the business opportunities for Japanese companies in this sector. While adhering to principles of environmental conservation and coexistence with local communities, efforts by industry, government, and academia to advance geothermal power development should be accelerated.

This Week’s Focus, October.20 – October.24

Takashi Mizukoshi, the President