ASEAN Power Grid: Overcoming Fragmentation for Regional Energy Unity

The ASEAN power grid initiative has emerged as a critical linchpin in Southeast Asia's transition to a sustainable energy future, with regional leaders and multilateral institutions converging on a vision to harness the region's vast renewable potential. The International Energy Agency (IEA) underscores the urgency, noting that energy demand in Southeast Asia grew at twice the global average in 2024 and is projected to double by 2050. This surge is driven by economies shifting toward energy-intensive industries, such as data centers, while grappling with the dual challenge of rising fossil fuel dependency and climate risks.

The proposed ASEAN Power Grid (APG) aims to address these issues by integrating disparate national grids into a cohesive network capable of transmitting renewable energy across borders. The IEA estimates that the region's untapped renewable potential-20 terawatts of solar, onshore, and offshore wind could meet future demand if harnessed effectively. However, technical and political barriers have historically hindered progress. Differing grid voltages, regulatory frameworks, and national priorities for domestic energy policies have fragmented efforts. Now, escalating climate risks and the need for energy security are shifting priorities toward cross-border collaboration.

A landmark step came with a new financing initiative announced by the Asian Development Bank (ADB), the World Bank, and ASEAN, which commits up to $12.5 billion in initial funding and aims to mobilize over $750 billion for grid development. This includes $10 billion from the ADB and $2.5 billion from the World Bank over the next decade, alongside technical assistance and risk mitigation tools to attract private investment. The initiative aligns with an upcoming enhanced memorandum of understanding among ASEAN nations to finalize the APG's blueprint, a vision first proposed in the 1990s.

The economic and environmental case for the APG is compelling. A connected grid could reduce reliance on volatile fossil fuel imports, stabilize energy prices, and lower emissions. For instance, Vietnam's offshore wind projects could supply power to energy-starved neighbors like Singapore and Malaysia via undersea cables, while Singapore's lack of natural resources positions it as a hub for cross-border clean energy trade. Thailand and Indonesia are also poised to benefit as major importers. The IEA estimates that doubling interconnections could increase ASEAN's connected renewable capacity from 7.2 gigawatts in 2022 to 33.5 gigawatts by 2037.

The global battery energy storage systems market is projected to reach $99.67 billion by 2033, driven by a 28.8% annual growth rate, with lithium-ion batteries dominating due to their scalability and efficiency. Flywheel batteries, which offer high-power, rapid-response storage, are expected to grow at the fastest rate (30.7% CAGR), addressing the intermittency challenges of renewables. Asia-Pacific leads in adoption, accounting for 44.8% of the market in 2024, a trend mirrored in the APG's focus on integrating storage solutions to balance variable renewable supply.

Supporting this transition is a robust infrastructure plan that includes energy storage and smart grid technologies. These innovations are essential to stabilize the grid and ensure reliable energy delivery across the region, even with the variable nature of renewable sources like wind and solar.

The APG also aligns with broader decarbonization trends, including green hydrogen production. The Asia-Pacific green hydrogen market, valued at $6.21 billion in 2025, is forecast to surge to $199.91 billion by 2035 as countries like China, Japan, and South Korea scale electrolyzer manufacturing and export infrastructure. While not directly tied to the APG, hydrogen could complement the grid by storing excess renewable energy for long-term use.

Critics argue that the APG's $750 billion price tag is daunting, but proponents highlight its long-term benefits: enhanced energy security, reduced emissions, and economic resilience. For Southeast Asia's 780 million people, a modernized grid could underpin sustainable industrialization, improve climate-resilient food security, and position the region as a global clean energy leader. As ADB President Masaru Hayami noted, "The APG is not just an infrastructure project-it's a catalyst for regional integration and climate action."