The draft of the Asian Energy Ring (AER), that was fist brought forward by Russia, has been in existence for many years, yet due to various reasons it hasn’t been implemented. However, there’s a chance that the latest developments in the Asian-Pacific region may assist Moscow in bringing its vision to life, since it promises great benefits both to Russia and its partners in the Asia-Pacific region.
The AER project involves the creation of a single electrical network that would transmit electricity across states.
Such a network would effectively distribute electricity surplus, which occurs when production in a certain country exceeds consumption. It is noteworthy that Russia has always had such surpluses in the Amur region, which shares a common border with the north-eastern provinces of China. Those are production heavy regions where massive industry demands an ever increasing amount of electricity with each year.
The presence of an excessive amount of electricity or its shortage does not solely depend on the region where it’s being produced, but on different seasons as well. For example, in Russia less energy is being consumed in the summer than in winter due to its cold climate. At the same time, it’s a well known fact that during the day the levels of consumption are much higher than in the night hours. If AER is to be implemented, Russia could export excess electricity it has to China, and then – to other Asia Pacific countries, where the rapidly growing population is pushing the economy forward, thereby creating a constant increase in energy consumption.
If Russia is linked to Asia-Pacific countries with a single network, this would help all parties involved evenly distribute the load between them and easily share surplus energy. In addition, all these states would be better hedged against disasters that disrupt local energy production.
In the late 1990s, when the AER concept was introduced for the first time, it was planned that together with Russia it will link such countries such as China, Mongolia, North Korea, South Korea and Japan. However, its practical implementation has being consistently delayed.
AER has received increased interest back in 2011, after the Fukushima Daiichi nuclear disaster. Back then, Japan was forced to put on hold the operation of its nuclear plants, thus finding itself in dire need of new sources of energy. It goes without saying that it could hardly find a better partner than Russia, with its vast hydrocarbon resources and geographical proximity. However, a long list of political controversies for many years has been plaguing bilateral relations between Moscow and Tokyo, which hindered their cooperation in this area. Nevertheless, some progress has been made. In March 2016, Beijing signed a memorandum on the joint promotion of interconnected power systems in Northeast Asia. The document was signed by Russia’s largest energy company Rossetti, the State Grid Corporation of China (SGCC), the South Korean company KEPCO and Japan’s Softbank. According to the memorandum, Russia pledged to start supplying electricity to Japan in the near future. In June 2016, Moscow hosted the annual St. Petersburg International Economic Forum (SPIEF), where the AER project was actively discussed.
Back then the Japanese side announced its intention to allocate 10 billion dollars for a submarine electricity cable to be laid across the Japanese Sea. But then Moscow learned that Japan was unable to import its electricity due to a number of domestic laws that had to be changed. It is believed that Tokyo is buying time in hopes of using energy cooperation in its political dialogue with Russia, while discussing such issues as the Kuril Islands. However, it’s most likely that in the near future, Japan will be bound to change the laws that are preventing the AER from being implemented, since the energy security of the state has been worrying Tokyo the most. Therefore, Japan’s accession to the AER is only a matter of time, as long as new countries continue showing interest towards the project.
Back in September 2016, Russia’s President Vladimir Putin put forward a proposal to establish a working group to discuss the AER project at the Eastern Economic Forum (EEF) in Vladivostok. According to the Russian leader, Moscow is capable of exporting electricity to the Asia-Pacific region, while preserving an affordable price level for the region that can be fixed for prolonged periods of time in bilateral deals.
In January 2017, Bangkok hosted a series of forums, all of which were attended by Russian delegations headed by the Deputy Energy Minister Kirill Molodtsov. Among those worth mentioning one can find the first Thai-Russian working group on energy cooperation, as well as the ESCAP meeting (Energy Committee of the UN Economic and Social Commission for Asia and the Pacific), where Molodtsov presented the AER project.
The project attracted a lot of interest from Southeast Asian players, as first shipments of Russia’s electricity could begin as early as 2025 According to experts, by this time the demand for electricity in Southeast Asian countries will be staggering, therefore Russia’s proposal is a timely one.
A particular amount of interest has been shown to the project by Thai authorities. Today Thailand finds itself among the main consumers of electricity in the region, while its own production capacities are unable to fulfill ever growing demand. Therefore, energy is often being imported from the neighboring country of Laos, which has well-developed hydro stations. It should be noted that in recent years, Thailand has considerably strengthened its relations with Russia. Thus, negotiations are underway to establish a free trade area between Thailand and the Eurasian Economic Union (EAEC), in which the leading role is played by the Russian Federation. Therefore, it’s safe to say that Thailand is a really promising partner for Russia. In addition, it is one of the most developed ASEAN countries, which can bring even more regional players into the AER project.
It won’t be an exaggeration to state that the AER has become much closer to actual implementation these days, after years of negotiations. Should it be implemented one day, it will ensure energy security for the whole Asia-Pacific region, and will contribute to its strengthening economic and political ties with Russia. In addition, it would mean that Moscow uses its resources carefully and efficiently, which is also very important.
Dmitry Bokarev, political observer, exclusively for the online magazine “New Eastern Outlook”.