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SINGAPORE: Southeast Asia is facing mounting pressure to turn a long-discussed regional power grid into reality, energy experts say, as rising electricity demand and geopolitical tensions intensify the need for deeper energy cooperation.
Speaking to CNA on the sidelines of Ecosperity Week 2026 in Singapore on Wednesday (May 20), regional energy leaders said the Association of Southeast Asian Nations (ASEAN) Power Grid is increasingly being viewed as an economic and energy security necessity.
While acknowledging stronger political backing for the project in recent years, they warned that Southeast Asia still faces major hurdles including regulatory fragmentation, financing gaps and weak grid connectivity.
URGENCY AROUND ENERGY SECURITY
Scott Morris, vice-president for East and Southeast Asia and the Pacific at the Asian Development Bank (ADB), said rising geopolitical tensions have made regional energy cooperation more pressing.
Ongoing tensions in the Middle East have renewed concerns over disruptions to global fuel supply routes such as the Strait of Hormuz, through which a substantial share of the world’s oil and liquefied natural gas shipments pass.
The situation is “bringing to the political forefront the concept of energy security and resilience, and that squarely is what (the ASEAN Power Grid) is ultimately about,” Morris said.
He said the initiative now has a stronger opportunity to move forward because governments increasingly recognise that “their long-term energy security is a matter of mutual dependence within the region”.
Political commitment is key to driving action on the technical, regulatory and legal barriers that need to be resolved across these countries, he added.
Support for the ASEAN Power Grid has strengthened in recent years, with ASEAN leaders at the 47th ASEAN Summit in Kuala Lumpur last October reaffirming their commitment to accelerating regional power integration.
THE REAL BOTTLENECK
Experts say Southeast Asia’s energy transition will depend not only on deploying more renewable energy, but also on building the transmission networks and cross-border interconnectors needed to move electricity across the region.
Tan Sue-Ern, head of the International Energy Agency’s (IEA) Regional Cooperation Centre, said Southeast Asia has enormous untapped renewable energy potential – but much of it is located far from major demand centres.
“Interlocking and interconnecting the power systems so that you can bring low-cost supply together with the demand centers is critical,” she said.
The IEA estimates Southeast Asia has around 20 terawatts of untapped solar and wind potential – equivalent to roughly 55 times the region’s current total power capacity.
But Tan said grids are increasingly becoming the global bottleneck for energy transition efforts.
Cross-border electricity trade in Southeast Asia is complicated by differences in technical standards, regulations and market structures across national power systems, experts note.
According to an IEA report released in March, only around US$2 billion has been invested in ASEAN cross-border interconnections over the past five decades.
The agency estimates Southeast Asia will need about US$27 billion by 2040 to build the links needed to connect electricity grids across the region.
INVESTORS WANT CERTAINTY
While many governments across the region have announced net-zero targets and expanded renewable energy ambitions, experts say private investors remain cautious because regulatory frameworks are still fragmented and inconsistent.
In its report, the IEA warned that financing models and commercial arrangements for cross-border interconnectors have been slow to evolve, with most projects still relying on state-owned enterprises and bespoke bilateral agreements.
ADB’s Morris said investors and governments alike will need greater certainty over how regional electricity markets and cross-border power trade would operate.
“There is a lot of what we would call upstream work around the regulatory environment,” he said.
This would require countries to look beyond their domestic electricity systems and develop more aligned regulatory and legal frameworks, he added.
Institutions such as the ADB also play a role in helping projects become more attractive to investors through concessional financing and technical support during the early stages of project preparation, Morris said.
IEA’s Tan said investor confidence would depend not only on political commitments, but also on market mechanisms such as renewable energy auctions and power purchase agreements.
She cited Singapore’s target to import 6 gigawatts of low-carbon electricity by 2035 as an example of how governments could create stronger demand signals for investors.
But experts acknowledge that regional power trade remains politically sensitive because governments still view energy security as closely tied to national interests.
“It is a matter of convincing them that their national interests are actually a regional interest, that they are one and the same,” Morris said.
