This article was first published in The Business Times on May 21, 2026. It was co-authored with Ambiyah Abdullah, Senior Economist and Ignatius Primadi Limin, Senior Research Analyst from the ASEAN Centre for Energy.

While constraints remain, a faster pace of implementation is increasingly feasible

The current geopolitical turbulence has sharpened the importance of the ASEAN Power Grid (APG) as a strategic tool for managing energy risks in ASEAN.

The ASEAN Plan of Action for Energy Cooperation (APAEC) 2026-2030 does not treat the APG merely as a physical infrastructure agenda, but instead reinforces its role as a strategic regional platform – one that can harness the region’s diverse energy resources for shared economic benefit.

Accelerating the APG would offer ASEAN policymakers access to a collective buffer that allows for the sharing of risks against external energy disruptions similar to the ongoing global oil supply shock, reducing the need for economies to navigate global volatility on their own.

Indeed, recent spikes in oil prices and higher fossil fuel electricity costs underscore the urgency for expanding renewables and strengthening grid connectivity.

Boosting resilience and accelerating the energy transition

At its core, the APG connects economies through a network of cross-border transmission lines that enable power to flow across borders. This strengthens energy security and resilience by making better use of the region’s unevenly distributed resources.

Hydropower in Lao PDR and Malaysia, solar across the equatorial belt, geothermal in Indonesia, and wind in Vietnam can complement one another when systems are interconnected.

This has important implications for ASEAN’s energy transition. A more integrated grid allows countries to scale up renewable energy with greater confidence – knowing that excess supply can be exported and shortfalls can be met through imports.

Over time, this supports fuel diversification and reduces reliance on imported hydrocarbons such as coal, oil and liquefied natural gas.

At the same time, greater integration will require complementary investments in energy storage and grid flexibility solutions to manage the intermittency of renewable sources.

The APG also supports broader structural shifts in energy use. A more robust and integrated grid with abundant capacity can facilitate the electrification of transport systems, including electric vehicles and mass transit, helping reduce oil dependence over time.

Overcoming constraints

Progress toward these goals is already underway. The APG is advancing from bilateral arrangements to multilateral power trade.

A key example is the Lao PDR-Thailand-Malaysia-Singapore Power Integration Project launched in June 2022. This initiative is set to double traded electricity from 100 megawatts (MW) to 200 MW in its second phase.

Beyond the increase in volume, it demonstrates ASEAN’s ability to coordinate regulations, scheduling and commercial arrangements across borders – an essential foundation for wider multilateral trade.

Institutional support has also strengthened.

In 2025, ASEAN member states signed an enhanced APG memorandum of understanding, building on the original 2007 agreement. The updated framework calls for accelerated grid expansion over the next 15 years, and sets a clearer path toward full regional interconnection by 2045.

The bloc is also addressing one of the most complex constraints: subsea interconnections.

The endorsement of the terms of reference for the ASEAN Subsea Power Cable Development Framework provides greater clarity on legal, regulatory and technical requirements, while establishing common principles for commercial and financial arrangements.

With six subsea power cable projects already in advanced stages of negotiation and planning, this framework could significantly accelerate regional connectivity, particularly for island and archipelagic systems.

Financing, long seen as a key bottleneck, is also gaining traction.

In 2025, ASEAN, together with multilateral development partners, launched the ASEAN Power Grid Financing (APGF) initiative to mobilize finance and technical support for project development and implementation. This marks an important shift from aspiration to execution.

More work ahead

Yet, the scale of investment required remains substantial. The ASEAN Interconnection Masterplan Study III estimates financing required to meet the region’s renewable energy targets will be around US$764 billion.

Progress has been constrained less by a lack of strategic intent, and more by challenges in developing bankable projects and coordinating implementation across jurisdictions. The APGF aims to address these gaps by supporting project pipelines, feasibility studies and financing mobilization.

Despite the growing momentum, key bottlenecks remain. Cross-border electricity trade remains uneven and fragmented across the region. Differences in regulatory frameworks, technical standards and market structures continue to slow implementation.

Harmonization efforts are therefore critical.

The APAEC 2026-2030 places strong emphasis on strengthening institutional frameworks, enhancing regulatory capacity, and aligning technical requirements to support multilateral power trade.

In parallel, ASEAN’s road map for multilateral power trade provides operationalization priorities under the enhanced APG framework.

Taken together, these developments suggest that a faster pace of implementation is increasingly feasible. Stronger political backing, clearer institutional frameworks, and more structured financing mechanisms are beginning to address longstanding constraints.

The APG is ultimately more than an infrastructure project. It is a cornerstone of ASEAN’s long-term energy resilience.

By advancing regional interconnection and operationalizing multilateral power trade, ASEAN can build a more resilient, sustainable and integrated energy network – one that allows member states to better navigate global energy volatility while unlocking the full value of the region’s diverse renewable resources.