Electricity and renewables security review

Electricity security is becoming increasingly important as power systems expand in ASEAN member states. Electricity already accounts for 23% of final consumption, and demand has grown by around 6% per year since 2015. It is projected to rise by a further 5.4% annually during 2026-2030, driven by industry, cooling, data centres and broader electrification. Indonesia is expected to account for about 40% of additional demand, followed by Viet Nam with 26%. Meeting this growth reliably and affordably will require generation, grids and flexibility resources to develop in step.

The generation mix is diversifying, but fossil fuels remain central. Coal currently provides nearly half of electricity supply in ASEAN member states, with particularly high shares in Indonesia, the Philippines and Viet Nam, while gas dominates in Brunei Darussalam, Singapore and Thailand. However, variable renewables are growing rapidly and reshaping the generation mix. Solar capacity reached nearly 38 GW in 2025 - more than fifteen times its level a decade earlier - and the region has very large technical potential for variable renewables. By 2030, wind and solar generation are projected to grow by around 26% and 23% per year respectively, raising their combined share from about 5% to 11%. Coal- and gas-fired generation will also increase, although coal’s share declines slightly.

Different power-market structures have varying implications for operational efficiency, investment and affordability. ASEAN member state electricity market structures range from vertically integrated utilities and single-buyer models in most countries to competitive wholesale markets in the Philippines and Singapore. Centralised arrangements can support co-ordinated investment but may weaken competitive incentives, while market-based systems can improve dispatch and price signals but require effective mechanisms to acquire energy, adequacy and ancillary services. Long-term power purchase agreements and fuel contracts can support investment yet constrain operations due to minimum take or pay requirements, contributing to inefficient dispatch which leads to oversupply and renewable curtailment. Improving market and regulatory frameworks across the region should therefore balance long-term investment certainty with greater and more transparent competition according to system needs.

Resource adequacy assessments should evolve with the changing system. Several member states still rely largely on deterministic reserve margins, sometimes set well above international standards, which can lead to overinvestment, while not necessarily enhancing system reliability, as network failures can still cause frequent or prolonged outages. Malaysia, Singapore, Thailand and Viet Nam are adopting or moving towards probabilistic criteria that better account for uncertainty in supply, demand and extreme events. Adequacy planning should continue to evolve in that direction, considering generation and network adequacy together, alongside fuel security, flexibility, affordability and actual service-quality indicators.

Grid development and climate resilience are urgent priorities. Transmission and distribution grid development has not kept pace with demand and renewable deployment in several countries, contributing to rising congestion and curtailment. Ageing and radial networks also increase exposure to local failures. In addition, extreme weather events can raise peak demand, reduce thermal and hydropower output and damage infrastructure; around one-fifth of Southeast Asia’s grids face tropical-cyclone risk. As disruptions become more frequent and severe, electricity systems will need to be more resilient and able to absorb and recover from both short-term shocks and long-term changes. In parallel, regional annual investment in grids and storage will need to rise substantially, from around USD 13 billion today to USD 30 billion by 2035.

Reliance on imported fuels in generation mixes affects the affordability of electricity security. Systems dependent on imported LNG or coal are exposed to international supply disruption and price volatility. The 2026 energy crisis illustrates how higher fuel costs can rapidly affect wholesale electricity prices, regulated tariffs, utility finances and public budgets. Consumer subsidies and lifeline tariffs can protect vulnerable households but may weaken cost recovery and investment incentives if poorly targeted. In addition, expanding domestic renewables can reduce fuel-price exposure, but savings must be balanced against potentially increasing network and system integration costs.

System flexibility must keep pace with rising shares of solar and wind. Flexibility comes from dispatchable power plants, stronger domestic grids and interconnections, storage and demand response, supported by accurate forecasting, shorter dispatch intervals and effective ancillary-service arrangements. Most ASEAN systems are expected to remain at early phases of variable renewable integration through 2030, where flexibility requirements can largely be met through improved operational practices and more efficient use of existing system assets. Viet Nam is already encountering higher-phase integration challenges, including larger swings in the supply-demand balance and renewable curtailment. As shares rise, investments in batteries, demand-side flexibility, and the monitoring and control of distributed resources are gradually expanding the range of flexibility available to system operators.

Clean-energy supply chains offer both strengths and vulnerabilities. ASEAN member states host a significant share of global solar PV manufacturing, with capacity across modules, cells, wafers and polysilicon that is more than sufficient for projected regional deployment in most segments. However, production is export-oriented and ownership is concentrated among Chinese companies, creating vulnerabilities through dependence on foreign investment decisions, technology transfer and corporate supply chain strategies. Wind supply chains, however, are less developed: the region manufactures substantial tower capacity but remains dependent on imported nacelles and blades. As wind deployment accelerates towards 2030, diversified procurement, local capability development and supply-chain monitoring will become more important.

Regional interconnection can improve security and reduce system costs. The ASEAN Power Grid (APG) can enable countries to share renewable resources, reserves and flexibility across a wide area. Momentum is building with the Enhanced APG Memorandum of Understanding in 2025, and expansion of the Lao People’s Democratic Republic-Thailand-Malaysia-Singapore Power Import Project. Delivering the proposed interconnection will require around USD 27 billion of investment between 2025 and 2040. Moving the APG towards implementation will require both domestic conditions and effective co-operation arrangements covering governance set-ups, co-ordinated planning, interoperable grid codes, transparent transmission and wheeling charges, cross-border cost-benefit analysis and cost allocation, commercial frameworks and data sharing.

To ensure electricity supply, the priority is to reflect the changing risk profile of power systems into electricity security frameworks. Planning should consider resource adequacy, flexibility, grid development, climate resilience, fuel security and affordability together. Expanding and modernising grids, diversifying electricity supply through renewables and, in some countries, nuclear power, and deploying storage and other flexibility resources can strengthen security as demand and renewable generation grow. Demand-side flexibility should also become a standard part of electricity security strategies, supported by better visibility of distributed resources, suitable tariffs and incentives, and effective aggregation.