Diving Deep: Southeast Asia's Rocky Road to Renewable Energy Transition

The Association of Southeast Asian Nations (ASEAN) - including Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam - ranks as the world's fourth-largest energy consumer, with demand rising 3 percent each year.

Every ASEAN member has set 2030 Nationally Determined Contribution (NDC) goals. Priorities include renewables, cross-border transmission, and low-carbon innovations like carbon capture and storage (CCS) and hydrogen.

Still, despite net-zero pledges, the region depends heavily on fossil fuels, especially coal. One study shows conventional fossils powering over 73 percent of ASEAN's electricity, with emissions climbing. Meeting national goals fully would lift renewables' share from under 30 percent recently to over 70 percent by 2050.  This is owing to multiple factors, from abundance oif coal in the largest country Indonesia, to the risk of storms that have prevented more extensive deployment of wind and solar so far among the island countries like Singapore, Malaysia, Philippines .  

ASEAN's ongoing socio-economic context complicates the vital energy shift. As mostly developing economies with youthful populations, countries pursue growth and better living standards. Yet economic progress must separate from emissions, amid a massive decarbonization scale.

Key strategies encompass renewables, cross-border transmission, and emerging low-carbon technologies such as CCS and hydrogen.

Investment Gap Remains

The energy investment gap is the most critical factor that needs attention for the region to make its net-zero ambitions achievable. 

IEA World Energy Investment 2025

The gap remains high, with ASEAN requiring at least USD 200 billion in annual energy investments by 2030, with three-quarters of that earmarked for clean energy, according to the World Economic Forum (WEF). 

IEA World Energy Investment 2025

Yet ASEAN nations drew just USD 50 billion in 2025, revealing a wide investment shortfall. Facing barriers to global capital markets, Southeast Asia's funding leans on local commercial loans. Clean energy commercial finance exceeds 75 percent, climbing above 85 percent for clean power, fuels, and battery storage. Grid storage, transmission, and distribution, however, rely substantially on public funds, which cover about 40 percent of needs.

Regional Cooperation is the Key

The non-profit stresses that regional collaboration is essential for standardizing regulations, linking infrastructure, and fostering cross-border energy trade, with a focus on the ASEAN Power Grid (APG).

The APG faces a defining moment. Completing the 2026-2030 ASEAN Plan of Action for Energy Cooperation and renewing the APG Enhanced Memorandum of Understanding offer a key chance to turn enduring pledges into substantive regional energy connectivity.

Emerging initiatives, like the Brunei-Indonesia-Malaysia-Philippines effort and bilateral arrangements such as Malaysia-Singapore renewable imports, signal a rising drive, yet reveal hurdles from regulatory and institutional variances, scarce resources, and sovereignty issues.

Ray of Hope from Energy Leaders for Transition

Although clean energy expansion has been slow to date, Southeast Asia is gaining prominence in global manufacturing supply chains for renewables. In 2023, Vietnam, Thailand, and Malaysia ranked as the top solar PV producers worldwide after China.

The region also boasts substantial critical mineral reserves, aiding the worldwide green shift. Indonesia supplies over 60 percent of global nickel, with Chinese investments reaching USD 30 billion in its nickel refining sector in 2024; Chinese firms control about 75 percent of the nation's refining capacity.

Vietnam, the Philippines, and Indonesia - key Asian nations aiming to expand renewables and cut dependence on coal, oil, and gas - together represent nearly 60 percent of ASEAN's power demand and emissions, per a recent Ember report. Robust policies, market changes, and incentives underpin this momentum.

These countries drew USD 4.6 billion in clean energy funding in 2024. In November, Canada's Brookfield Asset Management revealed plans to invest in renewables across all three. Brookfield lately bought Alba Renewables, a clean energy firm with a 1.8 GW portfolio of wind, solar, and battery storage—mostly in the Philippines and Thailand.

The Philippines 

In the Philippines, low-carbon sources generated 21 percent of electricity in 2024. Geothermal dominates clean power at 8.3 percent, followed by hydropower at 8 percent, with solar and wind at just 3.8 percent - highlighting the urgency for stronger action. Power sector emissions have tripled in the last two decades from heavier coal dependence. The nation targets 35 percent renewable electricity by 2030.

The Philippines is advancing plans for 15 GW of clean energy capacity by 2030, primarily geothermal and hydropower, with a goal of 50 percent renewables by 2040. Officials aim to boost geothermal capacity by 75 percent and hydropower by 160 percent by 2040, alongside growth in wind and biomass.

Recently, it inked a USD 15 billion deal with UAE's Masdar for solar, wind, and battery storage projects, targeting 1 GW of clean energy by 2030.

Indonesia

In Indonesia, renewables account for about 20 percent of electricity production. Hydropower leads as the primary renewable, supplying roughly 8 percent of generation, while wind and solar make up only 0.2 percent. Electricity demand has tripled over the past 20 years, prompting reliance on coal and gas to satisfy it.

In 2023, Indonesia secured USD 20 billion in funding via the Just Energy Transition Partnership (JETP) from international lenders to boost renewable rollout.

The shift to renewables faces hurdles from a state-controlled power market, disjointed governance, and inadequate grid infrastructure. Perusahaan Listrik Negara (PLN), the national utility, has ensured widespread access and reliability, but low investment and regulatory ambiguity could hinder decarbonization, as noted by the East Asia Forum. Indonesia's 2025-34 Electricity Supply Business Plan calls for 69.5 GW of new capacity, with 61 percent from renewables. PLN and private investors need about USD 180 billion for infrastructure over this period.

Vietnam

Vietnam is building a robust renewable energy sector, generating 44 percent of its electricity from low-carbon sources in 2024 - surpassing the global average of 41 percent. Hydropower made up 31 percent of production, with solar and wind contributing 13 percent. The nation targets 47 percent renewable electricity in its energy mix by 2030.

Currently, Vietnam is managing its energy shift alongside growth goals. The Prime Minister has endorsed an updated list of critical national energy programs and projects, targeting at least 60.3 GW of new capacity from 2025-35, where about a third will come from fossil fuel plants.

On renewables, progress continues: from 2018 to 2024, solar and wind capacity grew from nearly zero to about 25 GW, according to Enerdata, fueled by government feed-in tariffs that drew billions in private funds. By 2023, domestic sources supplied 58 percent of financing, with 27 percent from domestic-foreign partnerships.

Under the revised Power Development Plan 8 (PDP8), Vietnam plans for 73 GW of solar and 38 GW of onshore wind capacity by 2030, contingent on sustained investor trust.

Even with multi-billion-dollar energy transition agreements signed in 2022 with affluent countries and development banks, coal consumption in Indonesia and Vietnam is set to expand through at least 2030, according to the International Energy Agency (IEA). It projects a 4.5 percent annual rise in Southeast Asia from 2025 to 2030, driven mainly by Indonesia, Vietnam, and the Philippines.

Road Ahead

ASEAN states must prioritise unlocking investments and mobilising funds to de-risk unappealing areas like early coal plant retirements and grid infrastructure. Emerging tools like the Just Energy Transition Partnership (JETP) and Energy Transition Mechanism (ETM) require closer collaboration with countries and agencies to attract more regional funding.

WEF emphasises multi-level collaboration - national, regional, and global - in policy and technology. ASEAN should align policies such as sustainable activity taxonomies and carbon taxes to signal commitment and draw investors. Technologically, prioritise knowledge transfer for carbon capture, utilisation, and storage (CCUS), smart grids, and green hydrogen, while accelerating the ASEAN Power Grid (APG) for cross-border renewable trade.