Discussion Papers

A Review on Institutional Framework, Principles, and Key Elements for Integrated Electricity Market: Implications for ASEAN

By Tsani Fauziah Rakhmah and Yanfei Li

ERIA Discussion Paper 2016-26

Posted: October 2016

ASEAN member countries are becoming large energy consumers and growing participants in the global energy market. Cross-border electricity trade becomes increasingly important particularly in the context of fast-rising energy demand and growing urban population. This paper attempts to set out the common principles, methodologies, institutions, and structure for designing an integrated cross-border electricity market and delivering practical policy implications for ASEAN. To allow cross-border electricity trade, the region will need a target model, common vision, and principles that govern electricity market and grid operation. In the country level, energy prices administratively determined by the government should be shifted to market-oriented pricing mechanism. Integrated electricity market has an enormous potential that can be realised at reasonable costs. When individual countries pursue regional cooperation mechanism to secure their energy supply, investment comes and contributes to optimisation of available energy resources throughout the region.


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