Inside SoftBank CEO’s vision for an Asia Super Grid

By Medha Basu

Interview with Director of the Renewables Energy Institute, founded by Masayoshi Son.

In the wake of Japan’s Fukushima nuclear disaster in 2011, one of the country’s richest people - Masayoshi Son - mooted an idea to build an “Asia Super Grid” to improve access to renewable energy on the continent.

The CEO of SoftBank set up the Renewables Energy Institute (REI) to promote this vision and rally support from governments. Stakeholders did not take the idea seriously at first. According to Son, "many people laughed and told me it was a crazy idea.”

It has since picked up speed and interest from neighbouring governments, including China, which itself has a vision to build a globally connected grid for renewables. REI’s Director, Mika Ohbayashi, says: “We see the Asian Super Grid is one of the key areas that we have to develop to establish the renewable-based society in Asia.”

The vision

Son’s Asia Super Grid vision is to build power grid infrastructure spanning Northeast Asia to improve access to renewables. This would allow countries to trade in electricity, expanding the use of renewables, lowering electricity prices and improving access across the region. “We think that it's a key to expand the potential of renewable energy in Asia,” says Ohbayashi.

In 2016, Japan’s SoftBank signed MoUs with three large power companies from neighbouring states: State Grid China Corporation (SGCC), Korea Electric Power Corporation (KEPCO), and Russia’s national transmission system operator Rosetti. The four have agreed to study the feasibility of connecting the existing power infrastructure between their countries, including installing undersea cables, says Ohbayashi.

Official figures on the costs of this project have not been released by the Institute, but a feasibility study submitted to the Korean parliament estimated the costs to be around 7.2-8.6 trillion won (US$5.9-US$7 billion). Each of the countries would provide funding, with SoftBank contributing from Japan, she says.

Broadly, there are two key forces pushing these countries to develop renewables, Ohbayashi adds. One is that the global cost of renewables technology is declining. “Renewables have now become the cheapest electricity source in almost all countries”. However, Korea and Japan are still exceptions, and the super grid could drive down prices.

The other is international pressure from climate change. Large corporates, including tech companies, have pledged to use 100% renewable energy. They are now putting pressure on their suppliers to shift to renewables too, she adds. Some of these suppliers are Japanese, and they are “a little bit scared that maybe they will be kicked out from the supply chain or not to be chosen as a business partner”.

Progress so far

Of the four countries that have signed on to the project, China and Korea’s partnership is the most advanced. “They have already agreed to proceed with a concrete idea to construct transmission system and undersea cables between them,” Ohbayashi explains. Both SGCC and KEPCO own and supply the majority of their countries’ electricity and are funded by the government.

But warming of relations on the Korean peninsular has also driven progress, Ohbayashi believes. South Korea’s power connection to China would have to run through North Korea, providing an opportunity to improve supply in the north. “Since last year the Korean peninsula political situation has totally changed, so they are talking about doing economic cooperation together, including North Korea.”

In the future, the four countries could also be connected to neighbouring Mongolia. The country plans to build 8,000 MW of wind power to export. SoftBank has secured land in the Gobi Desert to develop solar and wind power. “When we build up energy sources we’ll first consider exports. It will be aimed at the Asian super grid,” Tleikhan Almalik, chairman of Mongolia’s Energy Regulatory Commission, told Reuters.

Ohbayashi believes that the “biggest barrier” to the Asia Super Grid vision is the Japanese government. “They didn't show any interest in that, or they tried to avoid to discuss about this idea,” she says. They have not yet entered talks on the project, but Ohbayashi is hopeful that this will change as two of the country’s largest utilities have shown interest in the Super Grid project.

SoftBank CEO Son’s vision for a cross-border power grid is not the first to come around, and there are other similar projects to learn from. For instance, Europe already has a well-established grid connecting most of the continent and is looking at a future project to link with countries in North African and Central Asia.

Son’s project will need to tackle massive political hurdles and regulatory changes to see the light of day. Its impact would be enormous across the region.