Delays in the development of the Asean Power Grid (APG) could result in billions of dollars in economic losses for the region and alter energy transition pathways, according to a report by think-tank Ember.
Members of the Association of Southeast Asian Nations (Asean) have announced their target to establish the Asean power grid by 2045. Under an assumed completion date of 2035, each year that the project is delayed beyond this will add $2.6bn in economic losses, according to the report released today by Ember. A five-year delay for the APG would cost the region almost $14bn, as well as 55bn m³ of additional gas, and over 71mn t of CO2 emissions.
Ember uses 2035 as the baseline year, based on Singapore's plan to import 6GW of power via interconnections by then, as well as regional ambitions such as a 2,000MW Malaysia-Singapore interconnection targeted to begin operating in 2030.
Asean's power demand is set to continue rising because of industrial growth, data centres, electrification, and cooling demand. Electricity demand in southeast Asia is set to almost double to 2,000 TWh/yr in 2050 from 1,300 TWh/yr today, according to energy watchdog the International Energy Agency (IEA). Coal and gas generated over 73pc of the region's electricity demand in 2025, compared with 5pc from solar and wind, according to Ember.
Asean's vulnerability because of its reliance on fossil fuel imports has become apparent especially because of the US-Iran war. Southeast Asia gets about a third of its oil and refined products from the Middle East, and the conflict has raised regional gas prices by as much as 60pc compared with pre-war levels, the report said.
Some countries offer subsidies to help absorb some of these price shocks, but "for economies that depend on affordable power to support industry and attract investment, this exposure is a major risk to economic competitiveness," the report said.
The region's energy import bill is projected to reach a record $160bn this year, and is set to increase further in the decades ahead, potentially rising to $400bn, or 5pc of its economy, by 2050 based on current policy settings, according to the IEA.
A five-year delay in the establishment of the APG would also mean 7.2GW of solar power would not be developed in Asean in 2035. Singapore would have to install an additional 300MW of gas-fired capacity to meet demand in 2035 locking in fossil fuel infrastructure with economic lifetimes that can span 25 years, as well as take-or-pay contracts, and this could extend fuel imports.
Countries with abundant renewables such as Indonesia, Laos, Cambodia and Myanmar could collectively lose $1.1bn in revenue for each year the APG is delayed because they would be unable to monetise renewable resources through power exports, according to the report.
Recommendations
The APG would link national power systems to enable the sharing of reserve capacity to offset local shortages, and enhance system security, reliability and market efficiency, including through reducing the need for conventional plants or battery storage, the report said. It would also enable renewable energy to be developed where resources are most cost-effective.
For the APG to materialise, political discourse needs to shift away from just discussions to commitment that extends beyond electoral cycles, and this has to be supported by working-level co-ordination, the report said. The Lao PDR–Thailand–Malaysia–Singapore Power Integration Project (LTMS-PIP) demonstrates that such co-operation is possible.
Secondly, cross-border projects need to be made bankable through harmonised and transparent tariff frameworks and regionally co-ordinated wheeling charges. Cost sharing should also be done fairly, whereby costs are allocated according to each party's perceived benefits. Regional financing mechanisms such as the Asean Power Grid Financing Initiative are also important in mobilising capital.
Lastly, while bilateral projects are more pragmatic in the near term because they require less harmonisation of regulatory frameworks and implementation timelines, their governance and institutional frameworks from the outset should be built with a view to expand easily into multilateral power trade, Ember said.
