AI, energy security needs are driving surge in South-east Asia’s energy infrastructure deals
The deal value in the region is up 2.5 times year on year to US$9.2 billion in Q1, based on CGSI data
A surge in energy infrastructure deals across Southeast Asia is being driven by concerns over AI and energy security, according to industry watchers and investment bankers. In the first quarter of 2026, deal value soared 2.5 times year on year to US$9.2 billion, with Singapore leading at US$7 billion in 2025 and Malaysia showing the strongest year-on-year increase at US$5.3 billion.
This surge is largely due to the importance of energy security, as Southeast Asia relies on the Middle East for about 60% of its imported crude oil and a third of its gas. With Iran's war disrupting supply, governments are eager to approve and finance projects faster, even with higher financing costs. The core drivers of these deals, however, remain the artificial intelligence boom and the surge in data centre investments.
James Ong, group head of asset management at CGSI, explained that AI's energy needs are structural, meaning the story will continue in 2026. In Southeast Asia, Indonesian companies are particularly active in acquiring resources or energy-related facilities in Australia and Singapore, often through joint ventures due to the sensitive nature of the industry.
Meanwhile, China and Asean are also conducting cross-border deals, with Chinese foreign direct investment climbing in Vietnam, Indonesia, and Thailand. Renewables-focused deals are also gaining traction, as renewable energy becomes more affordable and easier to build compared to coal or gas plants. However, investors are primarily backing renewable deals that can reliably supply power, such as solar paired with battery storage and geothermal infrastructure.
Grid infrastructure remains a significant need and challenge in Southeast Asia, due to its high capital requirements and transmission output. The Asean Power Grid (APG) initiative aims to boost energy security and multi-lateral power trade, with about 7.7 GW of cross-border interconnection projects completed and a target of 17.6 GW by 2040.
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