Iran war drives South-East Asia towards renewables but investment falls short

The Iran conflict is driving South-East Asia toward solar and wind power, but current investment levels fall short of the needed resources, according to a new report. South-East Asia's utility-scale storage capacity of roughly 7GW by 2030 makes up less than a third of the 23 to 26GW requirement, according to energy think tank Ember.

Analyst Alnie Demoral noted that the financing gap has shifted from raising capital to creating bankable assets. The Strait of Hormuz, disrupted by the conflict, previously carried nearly a fifth of global LNG, with Asian spot prices rising 45% from a year earlier. The Philippines, facing a national energy emergency, saw gas-fired power capacity decline from 19.7GW to 13.8GW.

In Vietnam, Vingroup is replacing a planned 4.8GW LNG plant with renewable energy sources. While large solar projects can attract commercial financing, battery storage, small renewables, and transmission lines remain less appealing to investors. Investment in the region must reach $281 billion annually by 2035 to meet its energy transition goals, but current investment levels are insufficient.

Electricity demand in the region is expected to grow by 5.4% annually through 2030, with coal demand set to rise as expensive gas drives utilities to burn more coal. Ember's findings highlight the challenge of cutting exposure to imported fuel after the Iran war.