The IEA’s Regional Cooperation Centre is working to strengthen Southeast Asia’s energy future – EQ
In Short : The IEA has launched its first Regional Cooperation Centre in Singapore to boost Southeast Asia’s energy transition. The centre will support clean energy adoption, cross-border power trade, and regional initiatives like the ASEAN Power Grid. With energy demand set to rise 60% by 2050, the centre aims to promote renewables, improve efficiency, and strengthen regional energy cooperation.
In Detail : The IEA’s new Regional Cooperation Centre based in Singapore marks a pivotal step in bringing the International Energy Agency closer to its partners in Southeast Asia and beyond. As the IEA’s first office outside of its headquarters in Paris, the Centre will help deepen longstanding relationships and support the region in achieving a secure, affordable and sustainable energy future.
Southeast Asia’s role in the global energy landscape
Southeast Asia is a key driver of global energy trends. This dynamic region is a global manufacturing and industrial hub set to see rapid population growth, rising standards of living and strong economic expansion in the coming decades. As a result, the region’s need for energy services is going to increase rapidly in the coming decades, as highlighted in the IEA’s latest Southeast Asia Energy Outlook.
How this rising demand is met will have major implications for the region and for global trends. The region’s energy mix is heavily dependent on fossil fuels and many countries are becoming more reliant on imported oil and gas, increasing their exposure to high import bills and energy security concerns. In a scenario based on today’s policy settings, Southeast Asia’s annual oil and gas import bill rises to USD 250 billion by mid-century.
Southeast Asia is one of only two regions in the world where emissions are rising in line with GDP (the other is the Middle East). Fossil fuels – led by coal – have met nearly 80% of Southeast Asia’s growing energy demand since 2010. Coal-fired generation meets around half of the region’s electricity and accounts for 80% of power sector emissions.
Countries in the region are working hard to diversify their energy mixes. Eight out of the 10 member states in the Association of Southeast Asian Nations (ASEAN) have set mid-century net zero emissions goals, and there is growing momentum to boost the shares of cleaner domestic sources of energy, particularly solar PV and wind. These efforts are supported by a strong political will to boost the region’s strategic energy independence and unlock the opportunities clean energies represent in terms of economic growth and job creation.
Reflecting the region’s importance to the IEA, the Regional Cooperation Centre serves as a new hub for the IEA’s activities and engagement in the region, providing policy guidance, technical assistance, training and capacity building across many areas – including clean energy technologies, technology innovation and supply chains, cross-border power trade, and access to finance for energy investment. The Centre is also working to deepen engagements with government, industry, research institutions, the financial sector and other key stakeholders in the region to define areas of support, collaboration and cooperation.
Regional energy transitions require scaling up renewables and expanding cross-border power trade
Electricity demand growth in Southeast Asia in 2024 was over 70% higher than the global average, and it is expected to continue to outpace global demand growth in the coming years due to economic growth, a rising population, urbanisation and increased electrification. This trend risks raising the region’s emissions profile and impacting overall energy security.
One solution countries are pursuing is accelerating the deployment of renewables. By 2035, renewables are expected to supply over a third of the region’s electricity, led by solar PV and wind. To manage this transition effectively, countries will need to enhance the resilience and flexibility of both national and regional power systems. Efforts to expand cross-border power trade would also support the uptake and integration of renewables.
The region has diverse energy resources, including widespread solar potential, particularly in countries with a pronounced dry season; abundant hydropower resources in Indonesia, Lao PDR and Viet Nam; geothermal in Indonesia and the Philippines; and wind resources across several countries. Given this diverse potential, regional power trade, robust grid interconnection, and greater flexibility options are vital to ensuring the region’s energy future is affordable, secure and sustainable.
Recognising this, the Centre aims to support the region’s power sector transition, offering targeted bilateral and regional support to ensure that governments and policy makers are equipped to embrace the opportunities of renewables integration, power system modernisation and cross-border power trade. The Centre will work to catalyse progress in collaboration with ASEAN member states and important regional institutions such as the ASEAN Centre for Energy (ACE).
Energy technology development and innovation will be key to future-proofing energy systems
Southeast Asia’s energy future will include technologies not yet adopted at scale in the region. These include battery storage; hydrogen and ammonia; carbon capture, utilisation and storage (CCUS); sustainable fuels; and nuclear power. Technology development, supportive business models, strong supply chains and policy innovation are required to capture the full potential of these technologies – and public-private partnerships, new financing mechanisms and market reforms will be critical to integrating them broadly.
Southeast Asia also has the resources and capabilities to become a global leader in clean energy manufacturing. Indonesia and the Philippines together account for about 65% of global production of nickel, a key input for battery and electric vehicle manufacturing. Meanwhile, Malaysia, Thailand and Viet Nam are emerging as solar PV manufacturing hubs, and Singapore, the world’s largest bunkering port, can play a pivotal role in clean energy supply chains. Countries across the region, recognising the economic opportunities at hand, are actively seeking to build domestic manufacturing capabilities and attract inward investment.
To support this transition, the Centre is working closely with policy makers, industry and investors to identify the role of innovative technologies in supporting the region’s energy ambitions and to determine how they can collectively create enabling environments, develop business models for scale and capture supply chain opportunities.
Achieving the region’s energy ambitions requires scaling up finance and investment
To support the development of these sectors, financing and development in Southeast Asia need to accelerate. Meeting announced climate targets requires clean energy investment in the region to increase sixfold to USD 190 billion per year by 2035.
Most of this investment will need to come from commercial sources of finance. However, barriers remain. The IEA’s Cost of Capital Observatory shows that the cost of capital for solar PV and storage projects in Indonesia and Viet Nam is at least twice as high as in advanced economies. Scaling up private finance will mean tackling the risks that push up the cost of capital, as well as a much larger flow of clean energy projects that match investors’ risk and return expectations.
Public investments will continue to be important in the region – not least because of the importance of state-owned enterprises in many parts of Southeast Asia – including in strategic areas such as electricity grids. Development finance institutions (DFIs), export credit agencies, philanthropies and other holders of concessional financing also have a key role to play in mobilising private sector investment, creating markets for emerging technologies, and scaling commercial technologies across the region.
To support the region in this area, the Centre will expand the IEA’s Cost of Capital Observatory to include more Southeast Asian countries and capture additional clean energy technologies. The Centre will also conduct in-depth analysis on how to best ramp up energy sector investment, including for grids and interconnections, and facilitate engagements with the financial sector.
Partnerships and capacity building can help countries in the region achieve their energy goals
Through the Centre, the IEA will also continue to expand capacity building with partners in Southeast Asia, which has long been a pillar of the Agency’s work with the region. Bilateral support for governments and regional initiatives, including Energy Efficiency Policy Training Weeks, annual training for ASEAN power regulators with the Energy Market Authority of Singapore, and energy statistics trainings, have helped strengthen government capabilities to plan and implement their strategies on energy security and transitions. Going forward, the Centre will support these existing programmes and use them as a model for further capacity building efforts in the region.
International collaboration and partnerships can help countries in Southeast Asia effectively navigate the complex energy challenges ahead while maximising the related economic and social opportunities. By leveraging the IEA’s modelling and analysis capabilities, convening power, and international experience – and by working with governments, ASEAN, ACE, the private sector and other key groups, such as Asia Zero Emissions Community bodies – the Centre will continue to support Southeast Asia’s energy sector at this critical moment.
