ASEAN power grid expansion to require over $300 billion in investment: IEA report
Tuesday, March 10 2026 - 05:02 PM WIB
By Romel S. Gurky
Southeast Asia will need more than US$300 billion in investment to expand and modernize electricity grids by 2040 as the region’s power demand and renewable energy deployment accelerate, according to a new report by the International Energy Agency.
The report, titled Financing the ASEAN Power Grid, said electricity consumption across the Association of Southeast Asian Nations has increased ninefold since 1990 and is projected to grow by 3 to 4 percent annually through 2040, considerably faster than the global average.
To meet rising demand, ASEAN countries are expected to more than double their total power generation capacity by 2040, with renewable energy accounting for about 75 percent of new capacity additions under current policy settings.
The expansion will require major investment in electricity networks across the region, including cross border interconnectors under the ASEAN Power Grid initiative.
According to the report, around $27 billion will be required specifically for cross border interconnector projects by 2040, with annual spending needing to exceed $1 billion before 2030 and average more than $2 billion per year thereafter.
Read also: IEA sees global electricity demand rising more than 3.5% annually through 2030
Regional electricity trade remains limited despite the first interconnection between Laos and Thailand being built in the 1970s, with only about $2 billion invested in cross border power links over the past five decades.
The report said the development of the ASEAN Power Grid could help improve energy security, lower electricity costs and support the integration of variable renewable energy by allowing countries to export surplus power and import electricity during shortages.
Momentum for regional electricity trade has increased in recent years, including through the Lao PDR–Thailand–Malaysia–Singapore Power Integration Project, which has demonstrated the feasibility of multilateral electricity trading in Southeast Asia.
However, the report noted that mobilizing investment at the required scale will depend on new financing models, stronger regulatory coordination and standardized commercial arrangements for cross border electricity trade.
It added that multilateral development banks and development finance institutions will likely play a key role in mobilizing capital, providing credit enhancements and supporting the development of bankable interconnector projects across the region.
Editing by Alexander Ginting