Gas Shortages and High Prices Derail Southeast Asia’s Power Buildout

Southeast Asia is facing challenges in meeting its ambitious plans for gas-fired power generation due to supply chain bottlenecks, volatile LNG prices, and financing constraints, according to a new report by energy consultancy Wood Mackenzie. The six largest economies in the region – Indonesia, Malaysia, Vietnam, Singapore, Thailand, and the Philippines – aim to install 53 gigawatts (GW) of new gas-fired power by 2030, but are expected to only achieve one-third of this goal, or 14.9 GW, by the end of the decade.

This shortfall is primarily attributed to supply chain issues, volatile LNG prices, and a global shortage of gas turbines, which has led to delivery lead times of at least five years for some projects. Singapore is the only market on track to meet its targets, with all major projects expected before 2030 secured for turbine supply.

Other markets, such as Vietnam and Indonesia, are lagging significantly behind, with only a fraction of their planned gas capacity expected to start operating by 2030. The Middle East crisis has heightened concerns over gas supplies, prompting some governments to increase their reliance on coal for power generation, at least temporarily.

While coal cannot fully replace lost gas supply, it can provide a buffer amid the ongoing energy market disruption. Despite this, the IEA anticipates that coal and gas-fired power plants will continue to play a role in Southeast Asia's energy mix through 2050, albeit with a growing emphasis on flexible operation and clean energy as policy priorities.