Southeast Asia’s energy transition stands at an inflection point. As the region’s energy demand accelerates— spurred by both rapid economic growth and a growing population — the stakes are higher than ever. The ASEAN Centre for Energy (ACE) estimates that Southeast Asia’s energy demand will more than double from 2022 levels by 2050. By that year, the International Energy Agency predicts that the region’s energy demand will surpass the European Union’s.

This growth presents an enormous challenge: How can we ensure energy security, meet climate ambitions, and address the needs of a growing population at the same time? Yet there is a silver lining: Southeast Asia has the potential to lead the way in the global energy transition.

ACE estimates suggest that renewable energy could meet more than two-thirds of the region’s energy needs by 2050. However, unlocking this potential is far from straightforward. Large upfront capital investments, profitability concerns, and a lack of adequate grid infrastructure all stand in the way.

The solution? A more connected Southeast Asia.

Regional interconnectivity is key to unlocking Southeast Asia’s decarbonized future. The ASEAN Power Grid (APG) vision aims to connect power grids, creating a borderless network throughout Southeast Asia that links regions rich in renewable energy to demand centers. A connected system would lay the foundation for a robust and integrated regional energy market.

It would allow countries to diversify their energy sources and strengthen resilience by drawing upon mutual support from neighboring nations.

Through the APG, countries could establish long-term power purchase agreements for renewable energy projects that improve project bankability and attract high-quality investments.

For example, The Business Times in Singapore reported that planned electricity export projects from Indonesia to Singapore could bring as much as $20 billion in investments to Indonesia.

The APG would also increase access to electricity in exporting countries as domestic grid infrastructure is strengthened to support cross-border trade. Domestic manufacturing and related economic activities would likely see an uptick as developers source parts and services locally.

Southeast Asia is already taking strides toward realising the APG vision. Pathfinding projects, such as the Lao PDR-Thailand-Malaysia- Singapore Power Integration Project, have proven the feasibility of multilateral cross-border power trade among multiple Southeast Asian countries. Its success has paved the way for further initiatives such as the Brunei-Indonesia- Malaysia-Philippines Power Integration Project.

These efforts are laying the groundwork for an interconnected regional grid. But significant investment and infrastructure development are still needed.

Singapore is supporting projects from Australia, Cambodia, Indonesia, and Vietnam to provide a total of 7.35 gigawatts of low-carbon electricity imports to Singapore. Doing so has allowed us to kick-start discussions within the region on how we can collaborate to realise the APG vision.

Collaboration beyond the Association of Southeast Asian Nations (ASEAN) is essential. No one country can realise the APG alone. ASEAN has collaborated with dialogue partners such as Australia, Japan, and the United States on renewable energy technologies and regional power integration. These partnerships not only bring financial support, but also a wealth of expertise to accelerate the sustainable energy transition.

An example of such collaboration is the joint feasibility study between Singapore and the United States on regional energy connectivity.

The first phase demonstrated the technical feasibility and socioeconomic benefits of regional connectivity, while the second phase will focus on studying the necessary legal and financial frameworks to support it.

Southeast Asia’s renewable energy resources make the region an ideal testing ground for emerging low-carbon technologies. Hydrogen, geothermal energy, and carbon capture and storage (CCS) hold immense potential. Singapore, in collaboration with ExxonMobil and Shell through the S Hub consortium, is studying cross-border CCS projects to enhance the region’s climate resilience.

The inaugural Singapore-US Forum, co-hosted with the US Department of Commerce at the 2024 Singapore International Energy Week (SIEW), brought together government and industry leaders to discuss strategies to accelerate the development of hydrogen in Asia. These partnerships are critical for driving innovation and ensuring that Southeast Asia remains at the forefront of the global energy transition.

Similarly, organisations like the Atlantic Council play a key role in driving the region’s decarbonisation by facilitating important discussions that shape energy transition narratives. As our strategic insights partner for SIEW, the Atlantic Council’s advocacy efforts on energy security have helped to build mindshare among participants on the benefits of regional interconnectivity, renewables, and low-carbon energy technologies.

The energy transition in Southeast Asia has global implications. A stable, prosperous, and decarbonised Southeast Asia will not only benefit the region but also strengthen global supply chains, promote economic growth, and contribute to climate stability. Through our continued partnerships with the United States and other global partners, we will build a connected and sustainable world for all.