How accelerating electrification could strengthen energy security in Southeast Asia

Energy demand is rising rapidly in Southeast Asia, driven by economic growth, industrialisation, urbanisation and rising incomes. Since 2015, energy demand has risen by around 40%, while electricity demand has grown even faster – twice as fast as overall energy use. Although renewables have increased significantly over the past decade, fossil fuels have continued to dominate, meeting over 70% of energy demand growth across this period, with oil accounting for nearly half of total energy consumption.

Rapid energy demand growth and continued dependence on fossil fuels brings greater exposure to energy security risks. The region is increasingly reliant on imported fuels, deepening its exposure to price volatility and supply disruptions. The current energy crisis linked to the Middle East conflict has underscored these vulnerabilities. Ahead of the crisis, around 60% of crude oil imports and a third of natural gas imports in the region came from the Middle East. And based on current policy settings, this dependence is set to increase: by 2035, the region, which today exports small volumes of natural gas, is projected to rely on imports for one-third of its natural gas demand. For oil, imports are projected to account for around 80% of demand by 2035 based on current policy settings.

Electrification can be a critical pillar of strategies to meet the region’s rising energy demand while mitigating these energy security risks. Efficient electric technologies, such as electric motors, heat pumps and electric vehicles, can deliver the same services while consuming less energy than fossil fuel-based alternatives. Shifting final energy consumption towards electricity generated from domestic and low-emissions sources can also reduce dependence on imported fuels, strengthen system resilience and reduce emissions.

Electrification is already shaping energy trends across Southeast Asia, with electricity accounting for 23% of final energy consumption today – higher than the global average. Some countries have even higher shares. For example, around 30% of energy consumed in Brunei Darussalam and Viet Nam is electricity, up from less than 20% in the mid-2000s. Some segments of the economy are also seeing rapid growth in electrification: in 2025, EV sales in the region more than doubled year-over-year and accounted for nearly 20% of all car sales – higher than the sales share in a number of advanced economies.

Even so, there remains significant potential to further expand electrification across Southeast Asia’s industry, transport and buildings sectors – supporting more secure, affordable and sustainable energy systems across the region. Several of the key technologies for doing so are already mature – and stronger policy support could add to the momentum. In general, expanding electricity use is supported by national targets, which emphasise the role of electrification in long-term energy strategies.

While electrification is progressing across Southeast Asia as a whole, the speed varies across sectors and countries. Industry is the region’s largest end-use sector, with accounting for around 45% of final consumption, followed by transport at 30% and buildings at 21%. Today, electricity use is concentrated in industry and buildings, while transport electrification is still at an early stage.

In industry, electrifying low-temperature heat and steam offers one of the most immediate and cost-effective opportunities for Southeast Asia. Around 35% of the region’s industrial energy demand is for low-temperature heat, which could already be electrified using commercially available technologies. Since meeting this demand would require an additional 300 to 400 terawatt-hours (TWh) of electricity, energy efficiency measures should be the first step in reducing heat demand before electrified heating systems are installed. Industrial parks can then help accelerate this transition by integrating renewable electricity, energy infrastructure, storage and waste heat recovery. However, progress on electrifying low-temperature heat across the region so far remains gradual, constrained by high capital costs, grid capacity and reliability issues, and limited access to finance.

In transport, electric mobility has accelerated, alongside the growing use of biofuels in some countries. The share of electric cars in total car sales in Southeast Asia was negligible in 2020, but surged to almost one in five cars in 2025 – substantially higher than the average among emerging and developing economies (excluding China). The sales share was as high as 41% in Viet Nam, 40% in Singapore and 23% in Thailand. This growth has been supported by tax and registration incentives, along with an expansion of domestic manufacturing. Meanwhile, the adoption of electric heavy-duty vehicles, such as buses and trucks, remains more limited – although policy support is increasing, with Singapore and Viet Nam both instituting policy incentives to encourage the uptake of commercial EVs and city-level electric buses. Two- and three-wheelers represent another major opportunity; the region currently has the world’s largest fleet, accounting for nearly one-third of the region’s oil demand for road transport. Electric two- and three-wheelers account for only around 6% of sales in the region today, though again there are signs of progress in countries such as Viet Nam.

Although electrification in buildings is already widespread, there are still opportunities to expand its use in cooking – particularly in lower-income households – and in space and water heating. On cooking, targeted programmes such as Indonesia’s LPG-to-electric stove conversion efforts can help accelerate this transition, while higher efficiency standards and improved implementation of them can help maximise the benefits of electrification. At the regional level, the ASEAN Plan of Action for Energy Cooperation (APAEC) 2026-2030 is helping to promote collaboration to harmonise and strengthen minimum energy performance standards (MEPS) for electric appliances, particularly for cooling, which can also support uptake by making it easier to find the most effective best-cost options.

The availability and falling cost of many technologies, including solar PV, batteries, electric cars, heat pumps and electric boilers, has supported their wider adoption, along with higher shares of variable renewables in power systems. At this juncture, the main challenge is therefore less about technological readiness and more about the extent and focus of policy support.

Under current policy settings, electricity’s share of final consumption in the region is set to rise only gradually, increasing from 23% today to 27% by 2035 and 33% by 2050. Under more ambitious policy pathways, electrification moves much faster across all sectors, with electricity’s share of consumption reaching 30% in 2035 and nearly 50% in 2050. In this pathway, fuel imports are around one-third lower in 2035 than in a pathway based on current policy settings – and by 2050, oil demand displaced by EVs and biofuels would be equivalent to Southeast Asia’s total oil imports today.

Yet accelerating electrification would also increase pressure on the region’s power systems, requiring swift action. In the pathway that sees faster electrification, annual power demand nearly triples by 2050 compared with today, and peak demand also rises significantly. This brings two challenges.

Firstly, for electrification to deliver the full benefits for energy security and sustainability, low-emissions and domestic sources of electricity generation would also need to grow strongly. From 2015 to 2025, the emissions intensity of electricity production in the region increased, in stark contrast with the decline seen globally. This highlights the critical importance of combining electrification with strategies to transition the electricity mix to low-emissions sources such as renewables and nuclear.

Secondly, meeting this level of electricity demand growth securely requires expanded grid infrastructure, deploying dispatchable capacity, and enhancing power system flexibility, including via storage and demand response. Strong efficiency standards for equipment such as air conditioning units can also help to counteract the upward push of electrification on peak demand.

Moreover, accelerating electrification in Southeast Asia requires clearer regulatory frameworks, stronger policy implementation and better alignment across sectors. Integrated planning frameworks also play a key role in coordinating the development of generation, transmission and distribution networks, demand-side flexibility and the electrification of end-use sectors, helping align rising electricity demand with clean power supply and grid investment.

Mobilising investments in end-use technologies is also important, which requires attracting sector-specific investment and improving access to finance. In buildings and transport, electrification depends on affordability and consumer confidence, supported by stronger building codes and targeted incentives for electric mobility. In industry, corporate balance sheets, competitive pressures and payback expectations shape investment decisions. Lower technology costs, reliable power supply, and policy incentives, such as subsidy reforms, can drive deployment across electrification technologies. Additionally, new financing models can help businesses manage the upfront costs of electrification; leasing allows firms to use electric equipment without buying it outright, while green loans and lending through local financial institutions can make it easier for small and medium-sized enterprises to access affordable financing.

Given uneven progress on electrification across countries in Southeast Asia, regional coordination remains important. Initiatives among the Association of Southeast Asian Nations (ASEAN) – including the ASEAN Community Vision 2045 and the ASEAN Plan of Action for Energy Cooperation (APAEC) 2026‑2030, and particularly the ASEAN Power Grid, Energy Efficiency & Conservation and Renewable Energy programmes – provide platforms for coordination that support knowledge sharing and innovation, which can help accelerate electrification. With more coordinated action across policy, investment and infrastructure, Southeast Asia would be well positioned to accelerate electrification to improve its energy security and support sustainable growth.