What's Holding Back ASEAN on Renewable Energy?

The Diplomat

7 days ago

The region's leaders must demonstrate the political will necessary to align national interests with a collective, climate-resilient future.
'We're baking bread in a dirty oven inside an enclosed room,' reflected Finian Lim, who leads public affairs at Trinasolar Asia Pacific. The main ingredients for solar energy – technology and capital – are already in place, he said. But in the absence of the right policy conditions, we might suffocate before we get to eat.
Lim's metaphor, shared this week during a PRCA Asia Pacific webinar on ASEAN's energy transition, captures the challenge the region now faces.
Southeast Asia stands at an important point in its energy transition. Electricity demand across the ASEAN bloc is projected to grow by 30 percent by 2030, fueled by expanding urban populations, rising incomes, and increased digitalization.
Across ASEAN, governments are already demonstrating that rapid clean energy deployment is possible under promising conditions.
Take Vietnam, which in 2020 became the third-largest solar market in the world, installing more than 17GW of capacity, far surpassing its 2025 targets. The growth was based on government subsidies, supplemented by a coherent feed-in tariff policy, clear timelines, and an open posture toward private capital.
Indonesia and Vietnam have struck multibillion-dollar Just Energy Transition Partnerships (JETPs) with G-7 nations and multilateral lenders. These frameworks aim to accelerate coal phaseout and unlock renewable projects through concessional financing and capacity-building.
Even Singapore, constrained in terms of land and natural resources, has positioned itself as a green finance and technology hub, introducing regional taxonomies – official definitions of what economic activities are 'green' or sustainable – and disclosure frameworks, to attract and direct both Singaporean and foreign funds into regional climate-aligned investments across ASEAN. In 2023, the region attracted just $32 to $40 billion in clean energy investment, far below the funds required (estimated at between $150 to $200 billion annually). Singapore's growing role in catalyzing international investments for ASEAN's energy ecosystem may help narrow this gap.
On the technology front, the tools needed to decarbonize are no longer speculative. Smart microgrids – combining solar generation, battery storage, and digital control systems – are already being deployed in off-grid communities across Indonesia and Malaysia. In parallel, Singapore-founded digital services firm Temus has co-developed an environmental intelligence platform that integrates AI, sensors, and data to enhance visibility into carbon stocks, biodiversity, and land use. These digital platforms are helping to monetize natural capital and support more sustainable investment decisions in resource-rich geographies like Indonesia.
AI-enabled energy management systems (EMS) are also increasingly critical for optimizing grid operations, allowing real-time balancing of supply and demand. Without such dynamic optimization, ASEAN could face systemic disruptions, similar to the brown-outs in Spain during its 2021 solar surge or California's rolling blackouts in 2020, where mismatches between generation and demand overwhelmed grid stability. Thailand's Provincial Electricity Authority, for example, has deployed EMS pilots that reportedly reduced peak loads by as much as 8 percent.
Meanwhile, modular solar and battery energy storage systems are proving their viability in archipelagic states. In the Maldives, an Asian Development Bank-backed project has delivered solar and storage systems across more than 160 islands, slashing diesel dependency and saving millions annually in fuel costs.
On top of being proven and commercially viable, the cost of solar PV and battery storage has dropped by more than 80 percent and 70 percent, respectively, over the past decade. What's now required is the policy infrastructure to scale their deployment across the region.
In 2022, Singapore began importing renewable energy through the Lao PDR-Thailand-Malaysia-Singapore Power Integration Project (LTMS-PIP), marking the first time clean electricity generated in Laos was transmitted across three borders and consumed in Singapore.
Technically, LTMS-PIP worked. But the underlying policy architecture has not kept pace. ASEAN still lacks harmonized rules for renewable energy certificates, emissions factors, and carbon accounting. Without regulatory coherence, electricity may flow, but markets won't move.
For instance, the ASEAN Power Grid was first conceived and formally articulated in 1997 to integrate national grids into a single regional network, enabling large-scale cross-border renewable trade. But progress has been uneven, hindered by slow policy alignment and fragmented bilateral arrangements. At its core, ASEAN's institutional model, which is built on consensus decision-making, makes regulatory convergence a slow and complex process.
To fill the gap, some nations have turned to 'minilateralism': smaller, interest-aligned groupings aimed at specific challenges. LTMS-PIP is a prime example. This was not launched under ASEAN's formal architecture; it was a bilateral deal (Singapore-Malaysia) with Thailand and Laos serving as transit points, which worked because it was pragmatic and narrowly scoped.
That said, even promising approaches like minilateralism have their limits. Geopolitical divisions within the region continue to complicate the broader multilateral cooperation needed to scale and replicate these solutions across ASEAN. Longstanding disputes, from Mekong River water-sharing issues to overlapping claims in the South China Sea , risk eroding trust and slowing cross-border infrastructure alignment.
Domestic obstacles remain just as pressing. Many ASEAN countries still operate with outdated grid infrastructure, ill-equipped to absorb the variability of solar and wind power at scale. More than 3.4 million households across the region remain without access to electricity, and clean cooking solutions elude nearly 167 million people, according to the International Energy Agency.
In addition to requiring technology and financing alone, energy transitions also require broad-based legitimacy. This is where public affairs plays a critical role. As Lim put it during last week's conference, ASEAN's clean energy future will depend on 'connectors, navigators, and advocates.' Solar energy, for example, gains legitimacy not just when it delivers power, but when citizens understand how it lowers long-term energy costs, reduces emissions, and supports local employment.
A successful green transition in ASEAN could add up to $5.3 trillion to the region's collective economy and create up to 66 million new jobs by 2050, according to the World Economic Forum. The tools for this transition exist. But to unlock these gains, ASEAN leaders must demonstrate the political will necessary to align national interests with a collective, climate-resilient future.