Energy efficiency and demand-side management

Energy efficiency is a core energy security resource for a rapidly growing region. Under current policies, energy demand in ASEAN member states is expected to grow by around 2.6% per year to 2035, while electricity demand rises even faster. Recent fuel-market disruption has underlined the region’s exposure to imported fossil fuels, higher prices and supply-chain shocks. Efficiency reduces these risks by moderating demand, lowering import requirements, easing pressure on grids and infrastructure, and reducing consumer costs. Past efficiency gains already mean fuel imports to ASEAN member states are around 10% lower than they otherwise would have been.

Progress must accelerate significantly to meet regional ambition. Energy intensity in ASEAN member states has improved by less than 0.5% per year so far this decade, which is below the global average. The ASEAN Plan of Action for Energy Cooperation 2026-2030 targets a 40% reduction in energy intensity based on total primary energy supply by 2030, compared with 2005, necessitating improvement of more than 4% annually during the remainder of the decade. Faster progress towards this target could be achieved with stronger regional co-operation, expanded energy efficiency policies across sectors, enhanced implementation, and wider adoption of electrification and demand-side flexibility.

Efficiency also strengthens crisis response and affordability. During the 2026 energy crisis, ASEAN member states used conservation campaigns, teleworking, public transport promotion, restrictions on official travel, cooling-temperature adjustments and structural measures such as accelerated electrification to reduce energy demand. Price support protected consumers but broad subsidies can weaken incentives to save energy, increase fiscal costs and reduce the life-cycle advantage of efficient technologies. The benefits of emergency measures can be greater if they are targeted and accompanied by enduring energy efficiency measures.

Buildings are a priority as cooling and digital loads expand. Buildings account for about one-fifth of regional final energy demand, and rising incomes, urbanisation and data-centre investment are increasing electricity use. Most ASEAN member states have building energy codes, but coverage, stringency, enforcement and certification vary. Moderating the growth of this demand depends on stronger standards, including expanding building energy codes to progressively cover more building types. Building retrofits can be supported through incentives, audits, energy service companies and performance disclosure, while data centre efficiency can be supported through stringent facility and IT equipment standards. Smart, grid-interactive buildings can also help manage peak loads and integrate variable renewables.

Stronger appliance standards can moderate rapidly rising cooling demand. Air-conditioner ownership has increased from around 18% of households in 2019 to almost 30% today and the installed stock could triple by 2035. Without additional action, cooling demand may rise sixfold by 2050. ASEAN aims to harmonise room air-conditioner minimum energy performance standards at a cooling seasonal performance factor of 6.09 Wh/Wh by 2030, but most national requirements remain in the 3‑4 Wh/Wh range. Accelerating progress will require stronger national standards together with harmonised testing, product registration, enforcement and labelling across air conditioners, refrigerators, lighting, fans, rice cookers and other equipment.

Transport efficiency and electrification can reduce oil demand in the sector that consumes around 60% of the region’s oil products. Transport represents about 30% of final energy consumption and is dominated by road vehicles. To address this exposure, ASEAN member states can deploy stronger fuel-economy standards and labelling schemes for light- and heavy-duty vehicles, limit inefficient used-vehicle imports, improve public transport and freight efficiency, and strengthen incentives while reforming broad fossil-fuel subsidies. Electric two- and three-wheelers offer substantial potential as they are highly amendable to electrification and the most prevalent mode of transport in many member states. Measures to support interoperable charging infrastructure could further accelerate progress.

Expanding policy coverage and strengthening compliance are key opportunities to improve industrial efficiency. Industry accounts for about 35% of final energy consumption and is a major user of coal, gas and electricity. Several member states require large energy consumers to conduct energy audits, implement energy management systems and employ qualified energy professionals, but coverage and enforcement differ, while public information on compliance is limited. Support for energy management training and certification initiatives can strengthen these requirements. Increasing the stringency of minimum energy performance requirements for industrial motors presents an important opportunity: only three countries currently have such requirements in place, and most of these are below international best practice. Fiscal and non-fiscal incentives, such as awards, can help accelerate implementation.

The combination of energy efficiency, electrification and demand-side flexibility can deliver extensive and responsive energy security outcomes in ASEAN member states. Demand-side flexibility, including through smart, grid-interactive buildings, can facilitate the integration of variable renewable energy and improve grid reliability by flattening demand curves, while also reducing reliance on fossil fuels during peak demand hours. IEA analysis shows that demand flexibility in Thailand could reduce peak demand by up to 13%, free up transmission capacity on network corridors and lower power system operating costs by 9-11% by 2030. Singapore, Thailand and Viet Nam have introduced demand-response programmes or pilots, but deployment across the region remains uneven.

Digital infrastructure, tariffs and interoperability are essential enablers. Smart meter deployment is critical to underpin demand-side flexibility initiatives. Roll-outs are advancing in several markets. Time-varying electricity tariffs are available to varying degrees in seven member states. Smart capability and interoperability requirements for devices, along with frameworks enabling aggregators, can unlock demand-side flexibility from residential and commercial energy users.