Southeast Asia’s energy transition is gathering momentum, supported by rising investment, evolving policy frameworks, and closer regional integration. Countries are setting ambitious renewable energy targets, electricity demand is growing, and governments are increasingly recognising that power grids, not just generation, are the critical bottleneck to overcome. The region is expected to drive 25 per cent of global energy demand growth by 2035. As one of the fastest-growing electricity markets, it needs to balance industrial growth, rapid electrification and decarbonisation efforts. With nearly 200 GW of renewable energy potential, project development is accelerating to meet demand from transport electrification, data centres and net-zero goals.

Against this backdrop, Global Transmission Report (supported by REGlobal) organised the inaugural TransTech ASEAN 2026, the region’s first exhibition and conference dedicated exclusively to power transmission, on April 21-23, 2026, at the Indonesia Convention Exhibition in BSD City, Jakarta. The event brought together utilities, policymakers, regulators, developers, investors, technology providers and international organisations to address the challenges and opportunities shaping ASEAN’s grid transformation. As highlighted by Dr Konstantin O. Papailiou, President of CIGRE, “the energy transition is not a choice. It is an absolute necessity. And the future has to be, and will be, all electric,” emphasising the urgency driving investments and collaboration across the region.

A stronger, more flexible and interconnected grid—digitised and capable of cross-border electricity trade—is central to integrating variable renewable energy at scale in the region. Reflecting on this, Daniel Tampubolon, Executive Vice-President of New and Renewable Energy, PT Perusahaan Listrik Negara (PLN), noted that “the future of energy in Southeast Asia will not be determined by how much we build, but by how well we connect.” The Association of Southeast Asian Nations (ASEAN) has set a target of 45 per cent renewable energy in total installed capacity by 2030, which will require major investment in transmission infrastructure, new approaches to grid operations, and deeper regional cooperation. Momentum is building through initiatives such as the Laos–Thailand–Malaysia–Singapore Power Integration Project (LTMS-PIP) and bilateral trading arrangements, alongside a growing focus on flexibility tools, market reforms and technologies such as subsea interconnectors and advanced storage.

Key power sector trends in ASEAN

Electricity demand across ASEAN’s 680 million people is projected to be 2.6 times higher by 2050 than today, requiring an estimated USD800 billion in generation and transmission investment by 2045. The 45 per cent renewable energy share in installed capacity targeted for 2030 sits against a current baseline of 33 per cent. In primary energy supply, the gap is even wider: the current 10-15 per cent renewable share must double by 2030, while energy intensity must fall 40 per cent from 2005 levels, demanding accelerated effort across transport, buildings, industry and power simultaneously.

Six forces are reshaping the ASEAN energy landscape: the ASEAN Power Grid (APG) transitioning from vision to action; a rapid renewable scale-up demanding accompanying battery storage and grid investment; mounting pressure to transition away from coal; proliferating data centre demand adding significant new load; oil and gas price volatility, particularly acute given Middle East tensions, reinforcing the urgency of the clean energy shift; and the imperative of a just and inclusive transition that ensures all citizens of the region benefit.

The region is making progress towards its 2030 renewable energy target, but much more remains to be done. By 2050, an additional 1.6 TW of power capacity will be needed to meet demand, which is expected to grow 2.6 times to support 4 per cent annual gross domestic product (GDP) growth. The APG could boost energy security and add up to USD3 trillion to ASEANGDP by 2050. At the same time, resilience is becoming increasingly important, with natural disasters causing USD11 billion in economic losses between 2015 and 2020.

Renewable integration: Internal grid readiness

A key message from the conference was that the main challenge is no longer building renewable energy capacity, but operating power systems with large amounts of variable, inverter-based generation. The focus has shifted from construction to operations, which is now the defining issue for the region.

Three main interlinked barriers to renewable integration were identified: limited grid flexibility, weak forecasting systems and underdeveloped market structures. Poor forecasting leads to inefficient scheduling and higher curtailment. Weak market signals reduce incentives for flexibility investments such as storage or demand response. Inflexible grid operations limit the effectiveness of both improved forecasting and market reforms. Progress in one area depends on progress in all three.

Grid readiness goes beyond the ability to connect renewable energy. It means being able to integrate it reliably and at a reasonable cost. Key indicators include curtailment, congestion, reserve margins and ramping capability. Past system failures in various regions highlight the risks when grid stability does not keep pace with rising renewable penetration. Therefore, grid readiness is a function of the readiness of transmission infrastructure, flexibility, market and digitalisation.

Country-level readiness assessment

Countries in the ASEAN region are at different stages of readiness. According to an analysis by the Masyarakat Ketenagalistrikan Indonesia (MKI) or Indonesian Electricity Society, Singapore, Vietnam and the Philippines are relatively advanced, with functioning markets and stronger systems. Thailand, Malaysia and Indonesia are in the middle with expanding renewables but still building flexibility and forecasting capabilities. Cambodia, Laos and Myanmar face more basic challenges, including limited infrastructure and weaker market frameworks. As per MKI analysis, ASEAN can meet a 25 per cent renewable energy target with minimal grid system changes, but higher penetrations require targeted flexibility investments.

This diversity indicates that the region needs differentiated strategies rather than a one-size-fits-all approach. More advanced systems must focus on managing high shares of renewables in real time, while others must first strengthen infrastructure and system reliability.

Addressing operational challenges in renewable-rich systems

As renewable penetration rises, system complexity is increasingly driven by operations rather than capacity expansion. Experience from power systems with high renewable penetration highlights five interlinked challenges that shape daily system operations: forecast uncertainty, congestion and weak transmission corridors, limited flexibility in conventional plants, growing stability and voltage management requirements, and gaps in data quality and coordination. These issues do not occur in isolation—poor data weakens forecasts, which in turn increases late-stage adjustments, exacerbates congestion, and heightens curtailment and reserve stress. Crucially, renewable integration is now fundamentally an operational challenge, requiring real-time balancing, rapid response to maintain system security, and coordinated market and dispatch decision-making.

Addressing these challenges requires a shift in how grids are planned, operated and valued—anchored in four core priorities.

  • First, market design must make flexibility visible and valuable. As renewable shares increase, traditional energy-only market structures become insufficient. Modern systems need layered market mechanisms –day-ahead, intraday and balancing markets – that explicitly value flexibility. This creates incentives for storage, demand response and fast-ramping resources needed to manage variability.
  • Second, grid expansion remains important, but operational control is increasingly critical. This includes tools such as grid control devices, voltage support technologies, dynamic line ratings (DLRs) and stronger plant-level capabilities such as responsiveness to dispatch signals and fault ride-through performance. These measures reduce curtailment and improve congestion management.
  • Third, digitalisation strengthens operations by improving visibility and decision-making. High-quality, real-time data strengthens every stage of system operation, from forecasting to dispatch and post-event analysis. Advanced forecasting tools, automation of routine decisions and integrated control room systems enable faster and more reliable responses to changing system conditions. At the same time, cybersecurity and system recovery capabilities are essential as dependence on digital systems grows.
  • Fourth, regional interconnection can add flexibility. Cross-border transmission enables systems to share reserves, smooth variability across larger geographic areas and reduce the need for domestic overcapacity. Diversity in demand patterns and renewable generation profiles across countries can lower overall system costs while improving reliability. As interconnection expands, it also supports market integration, allowing flexibility to be traded more efficiently and transparently across borders.

Together, these priorities reflect a broader shift in the energy transition: building renewable capacity is no longer enough. Power systems must be designed and operated to handle variability dynamically, with stronger grids, more flexible resources, and market frameworks that align economic signals with physical system needs.

Regional integration and cross-border trade

Regional integration is emerging as a central pillar of Southeast Asia’s energy transition, with the APG providing the foundation for a more interconnected and resilient regional electricity system. Most ASEAN countries are already linked through cross-border interconnections, though power trade remains largely bilateral, typically structured through power purchase agreements (PPAs) and interconnection arrangements. Under the APG framework, 18 priority interconnection projects have been identified under the ASEAN Interconnection Masterplan Study (AIMS) III to strengthen regional connectivity. As of 2025, nine of these have been completed, delivering around 10.2 GW of transmission capacity, with additional projects under development expected to contribute a further 5.5 GW in the near term and up to 9 GW in future expansions. While physical connectivity is advancing steadily, the transition toward a fully integrated, multilateral power market remains an ongoing process.

A key milestone in this transition is the LTMS-PIP, which represents the region’s first multilateral electricity trading initiative. Phase I involved 100 MW of power trade over two years from 2022 to 2024, with Singapore as the buyer and Lao PDR as the seller under an Energy Wheeling Agreement (EWA). By enabling cross-border power flows across four countries using existing interconnections, the project demonstrates the technical and commercial feasibility of regional trade. It has provided valuable operational experience in scheduling, settlement and regulatory coordination, offering a practical foundation for scaling up multilateral electricity exchanges in the region.

Building on this progress, future initiatives such as the Brunei–Indonesia–Malaysia–Philippines Power Integration Project (BIMP-PIP) aim to expand regional connectivity further, particularly across more complex geographies involving island systems and subsea interconnections. Also in the pipeline is the Vietnam–Malaysia–Singapore (VMS) corridor, which would connect approximately 2 GW of Vietnamese wind energy to Malaysia and Singapore, though it is not yet listed among the 18 AIMS III priority projects. These initiatives are expected to play a critical role in unlocking new renewable energy resources, improving system flexibility and strengthening resilience across ASEAN’s diverse power systems.

The expansion of cross-border trade will depend on strengthening institutional and regulatory frameworks and gradually shifting from bilateral arrangements toward a more integrated multilateral model. Following the signing of the enhanced APG MoU and endorsement of the terms of reference (ToR) for the ASEAN Submarine Power Cable Development Framework by ASEAN countries in October 2025, the region has moved into an operationalisation phase led by the ASEAN Power Grid Coordination Committee (APGCC). Implementation is being advanced through dedicated task forces that divide responsibilities across key domains. Malaysia is leading legal and regulatory development, Singapore is guiding policy frameworks and Thailand is coordinating technical aspects. In parallel, work on subsea interconnections follows a structured allocation of roles, with Malaysia acting as technical coordinator, Singapore overseeing legal and regulatory issues, the Philippines leading governance and Brunei focusing on financing.

The investment scale required is formidable. The Peninsula Malaysia–Sarawak interconnection alone is estimated at USD10 billion—and that is a single link. The Asian Development Bank (ADB) and World Bank advisors have consistently recommended viewing the APG as a regional project rather than a collection of individual interconnections, but translating that principle into coordinated financing and regulatory structures across sovereign states is slow work.

Financing grid projects and unlocking capital

Given the substantial scale of investment, the APG Financing Initiative (APGF) was established in 2025 in collaboration with the ADB and the World Bank, to serve as a new regional financing mechanism for all multilateral development banks (MDBs), public and private investors to unlock capital, de-risk investments and enhance the financial viability of the APG. This recognises that capital is not the primary constraint. The constraint is investable opportunities, structures that offer clear risk allocation, revenue certainty and regulatory clarity.

The investment landscape

The International Energy Agency (IEA) projects USD27 billion in APG-specific investment over the next 15 years, while the ASEAN Centre for Energy (ACE) puts the figure at USD15-30 billion over the next 10 years. Both represent more than ten times the total APG investment of the past 50 years. Compared to the IEA’s estimate of USD330 billion in overall grid investment, the APG share is relatively modest, indicating that the required financing is achievable if prioritised. Under the APGF, ADB will provide up to USD10 billion over 10 years, supported by USD6 million in technical assistance from development partners. The World Bank is contributing USD2.5 billion through the Accelerating Sustainable Energy Transition Programme and has offered a USD12.7 million grant to ACE for project preparation.

Three structural shifts will shape the investment landscape over the next 15 years. First, the mix is moving from generation-to-grid to grid-to-grid projects. Historically, 85 per cent of APG investment has been generation-to-grid, attracting commercial financing, but 60 per cent of future investment will be in grid-to-grid projects that typically rely on sovereign or concessional financing. Second, almost all current APG projects are land-based, but 75 per cent of planned projects through 2040 will involve subsea connections, a technology area where the region has limited experience. Third, investment is shifting geographically from the Mekong sub-region, which accounts for 90 per cent of current APG investment, toward the Malaysia–Singapore–Indonesia corridor, expected to represent 75 per cent of new investment through 2040.

The bankability challenge

Several projects in the APG pipeline are not yet financeable because the underlying demand or supply conditions do not yet exist. The North Kalimantan–Sabah connection depends on excess hydropower capacity in Indonesia, which is still under construction, and the Sumatra–Batam connection depends on demand from special economic zones that are not yet operational. These dependencies create real risks of stranded assets or delays. Subsea projects add further complications: route surveys must be paid for before commercial viability is confirmed, and cable manufacturing slots must be reserved and deposited years before financing is in place. ADB is developing mechanisms to address these early-stage barriers, including a USD25 million grant project preparation trust fund established with bilateral partners, including Australia and the UK.

Unlocking private capital

Private capital is available – development finance institutions (DFIs), commercial banks, pension funds and asset managers all expressed appetite for the asset class. The barriers are structural: regulatory frameworks that limit private ownership of transmission assets, the absence of competitive procurement processes such as public-private partnerships (PPPs) and the difficulty of allocating risk across multiple sovereign regimes in cross-border projects. For example, the ADB-supported Monsoon project, which is a private sector-led wind energy development linking Laos and Vietnam and valued at approximately USD690 million, illustrates how de-risking works. Once key upstream risks were identified and addressed, six commercial lenders participated in the financing alongside the development bank.

The path forward involves an evolution from concessional to blended to fully commercial financing structures as regulatory frameworks mature and project risk becomes better understood.

Technology focus

The technology sessions at TransTech ASEAN 2026 covered both the established tools for long-distance power transmission and the emerging technologies being deployed to manage increasingly complex, renewable-dominated grids. High-voltage direct current (HVDC) and flexible alternating current transmission systems (FACTS) technologies were the central focus, illustrated through operational case studies from the Philippines, planning case studies from Indonesia, and a global technology perspective.

HVDC

HVDC technology is becoming increasingly important in Southeast Asia as power systems expand across long distances and integrate higher shares of renewable energy. Compared to conventional high voltage alternating current (HVAC) systems, HVDC offers several technical advantages: precise bidirectional power flow control, the ability to interconnect systems operating at different frequencies, elimination of voltage drop constraints over long distances and improved system stability through advanced power electronics. The voltage source converter (VSC) variant is particularly well suited to the ASEAN context, as it can independently control active and reactive power, making it effective for weak grids, island systems and renewable-dominant operating conditions.

The economic case for HVDC in the ASEAN context is equally compelling, particularly given the region’s archipelagic geography. Break-even analysis shows that for overhead lines (OHL), HVDC becomes more cost-effective than HVAC beyond approximately 600 km, a threshold exceeded by both the Java–Kalimantan and Sumatra–Java corridors being planned by Indonesia. For submarine cables, the break-even distance is even shorter: approximately 70 km, meaning almost any subsea interconnection of meaningful scale will be HVDC by default.

The Philippines’ PHP51 billion, ±350 kV Mindanao–Visayas Interconnection Project (MVIP), which is a 450 MW bipolar system comprising 184 circuit (ckt) km of subsea cable and 422 km of overhead DC line and reached full bipolar operation in early 2024, had a dramatic impact on electricity prices. The effective rate paid by consumers dropped from around PHP9 per kWh before commissioning to a low of PHP2.81 per kWh in February 2024—a reduction driven by the ability to dispatch lower-cost Mindanao generation to serve Visayas load. Over a five-year retrospective, the full set of major transmission investments, including the MVIP, reduced power rates by 26 per cent.

Indonesia’s HVDC planning is at an earlier but rapidly advancing stage. PLN Puslitbang’s research programme has produced case studies on a Sumatra–Batam–Bintan interconnection, which identified a need for approximately 2,300 MVAr of reactive compensation and harmonic filters to prevent voltage collapse, as well as a multi-terminal HVDC approach to alleviate congestion in the already heavily loaded Java–Bali and Sumatra–Java system. An MoU for the Indonesia–Singapore Green Power Corridor—envisaging 3.4 GW of clean energy exports by 2035—has been signed, though it is not yet included in Indonesia’s Rencana Usaha Penyediaan Tenaga Listrik (RUPTL).

FACTS Technologies

As inverter-based generation displaces synchronous machines, the grid’s fundamental stability characteristics change. Inertia falls, short circuit ratios decline, fault current levels drop and frequency stiffness weakens—the grid becomes structurally less stable at precisely the moment it needs to handle greater variability.

FACTS technologies, including static synchronous compensators (STATCOMs), enhanced STATCOMs, synchronous condensers and fixed series compensation, address these deteriorating parameters in AC systems where full HVDC conversion is not warranted. Enhanced STATCOMs can provide dynamic active power support through integrated supercapacitors. Grid-forming battery systems can supply synthetic inertia and fault current contribution, though the limited overload capability of power electronics requires careful oversizing and adaptive protection algorithm design.

Looking ahead

TransTech ASEAN 2026 highlighted that while technology, capital and policy frameworks are advancing, the region is well-positioned to translate this momentum into tangible progress. The priority now is execution – strengthening project preparation, deepening regulatory alignment, enhancing institutional cooperation and sustaining political commitment to turn the APG into a truly integrated system beyond bilateral connections.

For more effective renewable integration, improving forecasting systems and strengthening market access frameworks are essential. Without these, investments in grid flexibility will not deliver full value. At the same time, coordination across policy, legal and technical workstreams must lead to clear outcomes, particularly on subsea cable regulations and multilateral electricity trading. Financing also needs to scale up quickly, with greater use of concessional funding, blended finance and emerging green grid frameworks to support increased investment in transmission infrastructure.