In Short : ASEAN is driving global and regional collaboration to advance the ASEAN Power Grid vision, aimed at boosting cross-border electricity trade and renewable energy integration. The initiative seeks to enhance energy security, attract investments, and promote technology exchange. By building an interconnected grid, ASEAN plans to support sustainable growth and accelerate the region’s clean energy transition.
In Detail : The ASEAN Power Grid opens the door to secure, sustainable and cost-competitive energy for the region
Southeast Asia is one of the world’s fastest-growing regions for electricity demand, second only to India. This economic dynamism is driven by economic development, population growth, urbanisation and increased electrification.
If countries across the region deliver fully on their long-term national energy goals, electricity could account for up to 45% of Southeast Asia’s total final energy consumption by mid-century, exceeding the global average, as highlighted in the IEA’s Southeast Asia Energy Outlook 2024. At the same time, the region’s power supply is changing. According to the ASEAN Energy Outlook 8, the full achievement of national targets would take renewables’ share of the region’s electricity mix from below 30% in recent years to above 70% by 2050. Managing this transformation while maintaining electricity security and affordability is at the forefront of policymaking priorities for countries across the region.
The ASEAN Power Grid (APG), a regional initiative launched in 1999, aims to interconnect national power systems to meet Southeast Asia’s fast-growing electricity demand, strengthen energy security, and support the region’s energy transition.
By expanding cross-border interconnection, the APG enables countries to share diverse resources, maintain reliable supply and integrate variable renewables more effectively than isolated systems. These capabilities enhance energy security by reducing dependency on imported fuels, and lowering countries’ exposure to global fuel price volatility and supply disruptions. The APG also brings wider socioeconomic benefits: creating jobs through infrastructure development, improving public health via better air quality, and supporting industrial growth with reliable, affordable electricity.
The APG is making incremental progress, with over 38 000 GWh of cross-border power exchanged between 2016 and 2022 and projects like the Lao PDR–Thailand–Malaysia–Singapore Power Integration Project proving the feasibility of multilateral trade. New efforts, including the Brunei–Indonesia–Malaysia–Philippines initiative and bilateral deals such as renewable electricity imports between Malaysia and Singapore, highlight growing momentum but also expose coordination challenges rooted in regulatory and institutional differences, limited resources, and sovereignty concerns.
Strengthening collaboration between ACE and IEA to advance the ASEAN Power Grid
The APG stands at a pivotal juncture. The finalisation of the 2026-2030 ASEAN Plan of Action for Energy Cooperation and renewal of the APG Enhanced Memorandum of Understanding mark a crucial opportunity to transform long-standing commitments into meaningful regional energy integration.
Realising this opportunity requires strategic co-ordination. Strengthened collaboration between the ASEAN Centre of Energy (ACE) and the International Energy Agency (IEA), working closely with other key institutions, offers the powerful platform needed to align national and regional priorities and accelerate APG implementation.
Momentum is building, supported by efforts from regional and international organisations. While ASEC provides coordination across sectors, ensuring policy coherence and alignment with broader regional priorities, ACE is a designated centre for APAEC implementation. It not only serves as a secretariat but also provides technical and policy recommendations, supporting ASEAN Member States to operationalise regional initiatives such as the APG. International organisations, development partners, and multilateral banks also provide resources, expertise, and financing, making strategic coordination among these actors essential to advance the APG.
The IEA has collaborated closely with ACE and ASEAN stakeholders over the past several years on multilateral power trade and regional integration. Together, they can effectively coordinate with other partners while ensuring initiatives remain aligned with ASEAN priorities. The IEA’s new Regional Cooperation Centre in Singapore further strengthens this collaboration by providing a dedicated platform for engagement on regional grid integration. The continued and strengthened collaboration between ACE and the IEA, working in close collaboration with other key institutions, can offer a powerful platform to align national and regional priorities, streamline cooperation with shared visions to accelerate APG implementation.
Political, regulatory and governance considerations shape APG progress
While there are technical issues in interconnecting power systems, the biggest challenges for the success of the APG are political, regulatory and institutional. Sustained political commitment underpinned by effective coordination mechanisms will ultimately determine whether the APG fulfils its potential. Clear and consistent policy signals backed by long-term commitments are needed to attract private sector investment and accelerate implementation of cross-border infrastructure. Moving forward requires sustained dialogue and coordinated implementation with clear priorities and timelines.
Institutional arrangements for the APG remain somewhat fragmented. The APG involves multiple actors and layers of governance yet lacks streamlined co-ordination mechanisms. Enhanced coordination among ministries, utilities, regulators and regional bodies is essential to support the implementation of the APG.
The absence of a unified regulatory body and limited co-ordination among APG-related bodies, including the Heads of ASEAN Power Utilities Authorities, the ASEAN Power Grid Consultative Committee and the ASEAN Energy Regulatory Network, exacerbates implementation challenges. Although existing regional bodies provide platforms for dialogue and collaboration, efforts are constrained by limited resources and no mandate for implementation.
Experiences from other regions show that these challenges can be overcome. Continental Europe, the Central America Electrical Interconnection System and the Southern African Power Pool demonstrate that effective institutional arrangements and sustained political co-ordination can support cross-border power trade.
Given the current institutional landscape in ASEAN, establishing a dedicated institutional mechanism such as an APG Secretariat could ensure continuity, strengthen inter-agency co-ordination and preserve institutional memory.
Building mutual trust and demonstrating the value of cooperation is critical. Regional integration requires transparency, sustained political engagement and confidence-building efforts. Innovative measures such as the development of a regional framework for renewable energy certificates trading, are fostering new forms of co-operation, while regional initiatives like the ASEAN Interconnector Masterplan Study III Phase 3 and the APG Stakeholders Coordination Meeting are positive steps for trust-building, fostering the dialogue and coordination for AGP implementation.
Building on this collaborative momentum, sustained political leadership and coordinated efforts from ASEAN governments and strategic partner can advance the APG’s potential as a cornerstone of Southeast Asia’s energy transition and connectivity agenda.
Securing innovative financing can unlock investment in cross-border interconnectors
Advancing the APG will require significant capital investment, robust financial frameworks and resilient supply chains with cross-border interconnectors being a priority. The electricity market structure in most ASEAN countries is vertically integrated or under the single-buyer model, in which state-owned electric utilities own and operate the grid.
Many electric utilities in ASEAN face financial constraints that limit their capacity to invest in domestic grid infrastructure, let alone capital intensive, cross-border interconnectors. Moreover, restrictive national laws and regulations tend to create difficulties in achieving regulatory approval for utilities to invest in cross-border interconnections.
With grid infrastructure considered a natural monopoly, financing for cross-border assets is a challenge. Private sector involvement is underdeveloped due to uncertainties in ownership structure, financial models and remuneration schemes, which contribute further to the capital cost issues in the region. The IEA’s Cost of Capital Observatory highlights that financing costs for clean energy infrastructure in ASEAN remain significantly higher than in advanced economies, making APG-related investments even more challenging.
There is a need for innovative investment models and financing mechanisms such as blended finance and public-private partnerships to reduce risk and unlock investment. Formation of a regional transmission investment facility could be explored by ASEAN countries, as seen and adopted by other markets, such as the Connecting Europe Facility for Energy. The recently launched APG Financial Initiative marks an important step toward addressing financing barriers to realise the APG by 2045.
