Southeast Asia is a rapidly developing region, with GDP per capita increasing by more than 30% since 2015. During the last ten years, energy demand has increased by over 35%, with electricity demand rising by more than 60%. Driving this is a 12% increase in electricity access rates, growing consumption in industry, urbanisation and rising incomes creating demand for cooling and other appliances.

Historically, this rising energy demand has been met by fossil fuels, making up 60% of total energy investment in the past decade. Coal was the main beneficiary, growing from 20% to 30% of the region’s energy mix, with USD 110 billion invested since 2015, concentrated in Indonesia and Viet Nam. However, fossil fuel investment decreased from USD 70 billion in 2015 to USD 50 billion in 2025 while clean energy investment reached USD 47 billion, up from 30 billion in 2015. Given the challenges of accessing international capital markets, Southeast Asia’s capital markets have relied on domestic commercial lending. Commercial finance in clean energy sits above 75%, reaching over 85% in clean power, clean fuels and battery storage. Meanwhile, grid storage and transmission and distribution depends heavily on public finance, which contributes around 40% of funding.

Despite wide disparities in economic development, resource endowments and market maturity, energy security is a common priority for the region. Concurrently, coal-fired power has remained a significant component of Southeast Asia’s energy mix. Investment in coal plants has risen steadily throughout the past 20 years, reaching 121 GW of installed capacity in 2025. Assuming 25 years of economic lifetime, the capital yet to be recovered from coal plants in 2025 amounts to more than USD 130 billion, which could expose operators to stranded asset risks as energy transitions accelerate. Achieving orderly and just energy transitions would require a combination of financial approaches to scale up clean energy and reduce reliance on fossil fuels, especially the managed phase-out of coal-fired power plants with transition finance.

Southeast Asia is playing a growing role in clean energy manufacturing supply chains. In 2023 Viet Nam, Thailand and Malaysia were the world’s largest solar PV manufacturers after China. Further, the region holds rich reserves of critical minerals. Indonesia produces more than 60% of the world’s nickel, attracting over USD 50 billion of investment in greenfield mining between 2014 and 2023, over 90% of the global total. Chinese investment is driving Indonesia’s nickel refinery sector, amounting to USD 30 billion in 2024, and Chinese companies account for around 75% of refining capacity in the country.