Southeast Asia is becoming an increasingly important part of the global energy system. The region accounts for 9% of the world’s population and 4% of its GDP. Energy use has risen sharply since 2015, supported by industrialisation, urbanisation, rising incomes and expanding mobility needs. This growth has helped underpin economic development and wider access to modern energy, but it has also increased exposure to global fuel markets and added to emissions.

The current Middle East crisis has tested Southeast Asia’s energy security and affordability, exposing the limits of short-term responses. The region was heavily exposed to Middle Eastern supply, both through direct crude oil and gas imports and through refined product trade. Governments have responded with measures to curb demand, reduce taxes, stabilise prices and protect vulnerable households and sectors. These interventions can soften the immediate social and economic impact of higher fuel prices, but they also create fiscal risks. Fossil fuel subsidies in the region were around USD 40 billion prior to the crisis and are set to rise sharply in 2026, underlining the continuing political pull of emergency support when international prices increase.

Fossil fuels continue to dominate the region’s energy mix, with coal playing the largest role in recent growth. Total energy demand is around 40% higher than in 2015, and fossil fuels have supplied most of the increase. Coal has expanded particularly rapidly, with demand rising by 8% per year, increasing its share in the energy mix from 20% in 2015 to 30% today. Renewables followed as the second-fastest, growing at 7% per year, with solar PV and wind expanding particularly rapidly at around 35% per year, albeit from a low base. Modern bioenergy, hydropower and geothermal remain dominant, accounting for over 95% of total renewable energy supply in 2024. Oil demand has continued to rise on average by 1.5% per year since 2015 to 5 mb/d today, while natural gas remains an important fuel for power generation and industry. At the same time, declining regional oil output and tightening gas balances are increasing the region’s reliance on imports, heightening vulnerability to international price shocks and supply disruptions.

Industry, transport and buildings shape the region’s energy demand profile. Industry is the largest end-use sector, accounting for around 45% of total final consumption today, and has been the main source of demand growth since 2015, driven by manufacturing, non-energy-intensive industries and rapid expansion in metals production, including nickel-related activity in Indonesia. Transport remains the main driver of oil demand, with road freight, rising car ownership and the region’s large two- and three-wheeler fleet sustaining fuel consumption. In buildings, progress on electricity access and clean cooking has reduced reliance on traditional biomass, while rising ownership of appliances and air conditioners has made electricity the leading source of growth.

Electricity is moving to the centre of Southeast Asia’s energy system. Electricity demand has grown much faster than overall energy demand since 2015, 6% and 4% respectively, and now accounts for more than 20% of total final consumption. Buildings and industry are the main drivers, while transport electrification is still at an early stage but gaining momentum in markets such as Singapore and Viet Nam. Electricity generation has increased by around 60% since 2015, with coal meeting most of the growth, lifting share of regional generation from 37% to 47%. Natural gas remains important for flexibility and system balancing, while oil-fired generation has continued to decline.

Renewables are expanding, but their role differs widely across countries and technologies. Modern bioenergy, hydropower and geothermal still account for most renewable energy supply, while solar PV and wind have grown rapidly from a low base. Hydropower already supplies a significant share of electricity generation in several countries, reaching as high as 75% in Lao PDR, where it underpins an export-oriented power sector. Solar and wind have gained ground, particularly in Viet Nam, and deployment is broadening across the region. Even so, their combined share of regional electricity generation remains modest, pointing to the importance of grids, storage, permitting and power market reforms if the region is to integrate larger volumes of variable renewables.

Energy investment is rising quickly, but it remains below the scale implied by the region’s energy needs. Since the 2024 Outlook, annual energy investment has risen by 30% to over USD 100 billion in 2025. This is one of the fastest growth rates globally, supported by higher spending on renewables, grids, storage, efficiency and electrification. However, Southeast Asia still accounts for only around 3% of global energy investment, well below its shares of global energy demand at 5% and population at 9%. Fossil fuels account for just over half of total energy investment, with natural gas representing a quarter of it, while grid investment has not kept pace with generation needs despite growing recognition of its importance.

Policy momentum is strengthening, but implementation gaps remain large. Eight out of the eleven ASEAN countries have announced net zero emissions targets and as of April 2026, six countries had submitted new Nationally Determined Contributions. These pledges imply faster emissions mitigation than previous commitments, but they remain misaligned with long-term net zero goals. Countries are increasingly focusing on diversification, electrification, renewable auctions, carbon pricing, biofuel mandates and electric vehicle incentives.