Gridlock or growth? The Asean Power Grid faces a critical window of opportunity
A lack of progress on standards and agreements could temper businesses’ optimism
The Asean Power Grid (APG) holds significant potential as a regional growth catalyst, but achieving this vision hinges on the bloc agreeing on standards and frameworks that transform aspirations into tangible action. Conceived in 1997 under the Asean Vision 2020 blueprint, the APG aimed to bolster energy security and economic integration among member states.
However, progress has been slow, and 2026 has emerged as a crucial turning point, with the US-Iran war and Southeast Asia's burgeoning energy demands creating a compelling business case for regional clean energy trade.
According to The Business Times Insights: Powering Asean’s Future 2026, a survey of 514 regional business leaders, over 70 percent of respondents believe that meaningful progress on the APG would boost their willingness to invest and expand within the region. Indonesian businesses displayed the strongest optimism at 84 percent, followed by companies from the Philippines and Malaysia, each at 70 percent.
Nevertheless, the APG still faces regulatory uncertainties that impede project financing. For instance, Singapore's conditional licensing of six projects to import clean power from Indonesia has been delayed due to tight renewal timelines and licensing hurdles. Other critical gaps include the absence of an enforceable electricity-trade agreement among governments and uncertainties surrounding the recognition of renewable energy certificates across borders.
A Wood Mackenzie report predicts that Singapore may fall short of its target to import 6 gigawatts of low-carbon electricity by 2035, despite granting multiple project approvals. Each year of delay beyond 2035 could cost the region US$2.6 billion, according to energy think tank Ember. Nonetheless, governments must balance the need to export clean energy with ensuring reliable and affordable power for their citizens.
Indonesia has expressed caution, awaiting a mutually beneficial APG deal. The Laos-Thailand-Malaysia-Singapore Power Integration Project (LTMS-PIP), which aims to export hydropower from Laos to Singapore, has also faced delays due to disagreements over transmission routes through Thailand and Malaysia. These issues highlight the need for cautious yet proactive steps forward.
Industry players acknowledge the challenge of achieving regionwide consensus and advocate for bilateral agreements as a stepping stone. OCBC group chief sustainability officer Mike Ng believes that smaller, incremental projects will ultimately lead to the organic emergence of the APG. Renews and power research analyst Nevi Cahya Winofa highlights Singapore's power import projects as a key near-term opportunity, emphasizing how successful delivery could build investor confidence and pave the way for further cross-border initiatives.
The APG's potential to support artificial intelligence development through efficient, reliable, and clean energy access is another compelling factor.
With AI demand surging and global energy challenges intensifying, Southeast Asia is in a prime position to capitalize on the APG. However, missing this pivotal window could result in the grid remaining in a state of inertia, thwarting its potential to transform the region's energy landscape.
Written by urgent.news from The Business Times - Companies & Markets's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
