Southeast Asia Needs More Power, But Its Weak Grid Could Be a Problem
The war in Iran has exposed a critical vulnerability in Southeast Asia’s energy markets. The region is heavily dependent on fossil fuel imports, and demand is continuing its steep growth trajectory even as global crude oil prices remain punishingly high. Though the Strait of Hormuz is finally reopening, restoring flows of crude oil out of the Persian Gulf and toward Asian buyers, global oil…
Southeast Asia faces a growing energy demand as it continues its rapid economic development. However, the region's energy grid infrastructure is insufficient to meet this surge in electricity needs. The International Energy Agency (IEA) warns that inadequate grid capacity and maintenance could hinder the rollout of renewable energy projects in the area.
The situation was exacerbated when the Strait of Hormuz was closed in February due to geopolitical tensions, causing energy price volatility and forcing Southeast Asian nations to implement energy rationing and work-from-home mandates. Despite the challenges, the region is witnessing a renewable revolution, with solar energy gaining traction.
However, grid expansion, energy storage capacities, and transmission infrastructure are lagging, risking a bottleneck in the region's electrification trajectory. Bain & Company and Standard Chartered found that 50 to 60 percent of renewable energy projects in Vietnam, Thailand, and Indonesia were cancelled or stalled due to inadequate infrastructural and policy support between 2021 and 2025.
The IEA suggests that stronger national preparedness and deeper regional cooperation across different sectors and fuels are necessary to withstand supply disruptions and volatile prices. By prioritizing clean energy infrastructure, the Association of Southeast Asian Nations (ASEAN) can build a more resilient energy system capable of meeting its rising electricity demand.
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