Electricity Demand in Asia and the Effects on Energy Supply and the Investment Environment

December 1995 Electricity demand in seven Asian economies is expected to increase sharply in the coming years. To meet this demand, these countries must develop stronger domestic bond and stock markets to meet capital requirements for projected power development projects and pollution control. Demand for energy (including electricity) has been increasing more rapidly in developing Asian economies than anywhere else in the world and is expected to continue growing. To meet rising demand, these countries must address such issues as how to meet the resulting enormous capital requirements and how to prevent environmental deterioration. To calculate what those capital requirements may be, and to estimate potential environmental damage, Ishiguro and Akiyama built econometric energy demand models for seven economies: China, Indonesia, Malaysia, the Philippines, Republic of Korea, Taiwan (China), and Thailand. They estimate that electricity demand will increase an average 8.1 percent a year between 1993 and 2010 (the same rate as in 1980-92) -- increasing 4.9-fold for the period. Growth rates for power demand are expend to decline in Indonesia, Korea, and Taiwan (China), but increase in Malaysia and the Philippines. China's growth rate is expected to remain about 7.6 percent a year. Demand growth is expected to shift from the industrial sector to the residential and commercial sector, whose share in electricity demand is expected to increase from 24 percent (1990) to 44 percent (2010). Total electricity generated is expect to increase 3.8-fold, from 1.26 trillion kwh in 1993 to 4.8 trillion kwh in 2010, with coal accounting for 68 percent of the increase, oil 4 percent, natural gas 7 percent, nuclear power 8 percent, and hydro 12 percent. Investment costs range from an estimated US$579 billion to US$772 billion (1992 dollars) for 1994 - 2005 and an estimated US$428 bill...