Reliable grids are key to sustaining ASEAN’s economic growth

ASEAN has been one of the world’s fastest-growing regions, with countries such as Vietnam and the Philippines leading in GDP growth. Even amid global uncertainty, the region has shown resilience, supported by digitalisation, industrial expansion, and rising consumption.

To sustain this momentum, ASEAN economies are accelerating clean energy transitions. Some countries are pursuing firm net-zero goals, others sector-specific or renewable targets, but all share the same challenge of building power systems capable of supporting rapid demand growth and integrating large shares of variable renewable energy.

A recent Ember report identified six broad pillars for efficiently managing variable renewables. One key pillar is upgrading existing grid infrastructure with digital tools and smart technologies, which is the central focus of this report. Strengthening grid reliability will be essential to translating the region’s ambitions into reality.

ASEAN’s renewable energy boom makes it imperative that its power grids evolve into future-ready, next-generation, flexible systems. Stronger domestic grids are needed to integrate solar and wind, while regional interconnections can provide additional flexibility by sharing resources across borders. Together, these two strategies of reinforcing national systems and advancing cross-border integration are central to ASEAN’s long-term energy vision.

The ASEAN Power Grid (APG) embodies this ambition. It aims to create a more interconnected electricity market that enhances energy security, supports renewables, and improves resilience against disruptions. Progress has been steady: as of 2023, six ASEAN countries are linked by 13 cross-border interconnections stretching 3,631 km. But regional power trade remains limited, with the Lao PDR–Thailand–Malaysia–Singapore (LTMS) project still the only operational multilateral arrangement.

At a national level, transmission remains a key challenge. Many of the most resource-rich solar and wind sites are located far from major demand centres, and limited transmission capacity can lead to congestion and curtailment. Expanding the grid, particularly through high-voltage corridors, has not always kept pace with renewable growth, in part due to permitting, financing, and procurement processes. At the same time, ageing infrastructure and limited rural coverage continue to affect overall reliability.

Grid reliability is the ability of the power system to deliver a stable and continuous supply of electricity, often measured by the frequency, duration, and scale of outages. While other indicators exist, common metrics include:

• System Average Interruption Duration Index (SAIDI): average outage duration per customer.
• System Average Interruption Frequency Index (SAIFI): how often outages occur.
• Energy Not Served (ENS): the total volume of electricity lost during outages.

Across ASEAN, reliability indicators show notable progress. Between 2015 and 2020, average outage duration (SAIDI) declined by nearly 60% — from 13 hours to just over 5 hours, while outage frequency (SAIFI) was cut in half. These improvements reflect the continued investment and commitment of ASEAN countries in strengthening grid infrastructure and operations.

Despite progress, reliability performance varies across ASEAN. Singapore, Brunei, Malaysia, and Thailand keep outages below one hour per customer annually, while the Philippines, Indonesia, and Vietnam have cut interruptions to just a few hours. Cambodia, Lao PDR, and Myanmar still face longer outages, reflecting ongoing grid development.

SAIDI and ENS data highlight these differences. Myanmar and Cambodia record higher outage durations, while Indonesia, Vietnam, and the Philippines show shorter outages but higher ENS, with the Philippines alone reporting over 41,000 MWh in 2020. Even countries with relatively low SAIDI, like Malaysia and Thailand,  incur ENS in the thousands, showing how both outage frequency and scale of impact matter. Both Singapore and Brunei record the lowest interruption and frequency of outages. 

These patterns underscore that reliability is a multi-dimensional challenge, tied to physical geography, spatial arrangement of energy source, infrastructure and consumption patterns. Priorities differ as some countries must reduce outage duration and frequency, while others must limit the impact of large disruptions. As ASEAN transitions to a low-carbon grid, solutions will need to be tailored to each country’s unique needs.

ASEAN’s grids are becoming more reliable, but the surge of solar and wind is creating new challenges. Variable generation requires systems that can respond instantly to fluctuations, something many ASEAN grids are not yet equipped to do. Without real-time visibility, storage, and demand-side flexibility, even small shifts in output can trigger curtailment, costly fossil backup, or outages.

The scale of the coming transition is striking. By 2050, ASEAN’s solar capacity is projected to jump more than twelvefold, from 27.7 GW in 2023 to 334.8 GW. 

Wind will expand from 7.4 GW to 228.4 GW, while batteries are set to rise from just 4.2 GW today to nearly 94 GW. 

Vietnam and the Philippines are expected to lead deployment, followed by Indonesia, Thailand, and Malaysia. This growth signals a strong commitment to clean energy but also unprecedented operational complexity.

International experience highlights what’s at stake. In India, sharp solar dips in 2023 strained the grid, highlighting the risks associated with weak flexibility and limited forecasting. Many ASEAN power systems share similar characteristics of rigid demand patterns and modest uptake of demand-side tools such as time-of-use tariffs, industrial demand response, and smart devices, which can create similar operational challenges.

At this stage, it is important to distinguish among grid improvements. A reliable grid ensures a consistent supply with minimal outages. A modernised grid strengthens the hardware by upgrading ageing infrastructure, expanding transmission, and adding capacity to meet rising demand. A smart grid goes further by embedding digital intelligence: sensors, automation, forecasting, and demand-side participation that enable real-time balancing of renewables and demand.

Smart grids refer to the digitalisation of electricity networks, enabling two-way communication between suppliers and users. Rather than a single technology, the term describes an interconnected system linking generation, transmission, distribution, consumption, and information platforms through sensors and digital tools.

While modernisation and smart grids often overlap, only a smart grid delivers the flexibility needed for high-renewables futures. 

Without stronger demand-side measures and continued investment in forecasting, storage, and digital controls, ASEAN risks curtailment, costly fossil backup, and reliability gaps. These pressures are already visible in renewable-rich regions where limited transmission capacity has caused supply bottlenecks, leaving clean power unused, reducing developer revenues, and increasing fossil reliance.

By investing in transmission, smart grid technologies, and demand-side measures, ASEAN can cut inefficiencies, boost investor confidence, and unlock the full potential of solar and wind for its clean energy transition.

ASEAN’s rapid growth is increasingly powered by digital industries, advanced manufacturing, and data-driven services, which all depend on clean, reliable electricity. In this context, even short outages can translate into major economic losses and weakened competitiveness.

The Value of Lost Load (VOLL) is a planning metric that estimates the economic cost of electricity outages. It is not an electricity price or tariff, but a tool for cost–benefit analysis in reliability, transmission, storage, and adequacy planning. VOLL highlights that outages are not just technical inconveniences but direct economic burdens, due to lost industrial output, spoiled goods, and disrupted services. 

A high VOLL indicates that even short outages impose significant costs, strengthening the case for investing in reliability, redundancy, and smarter grid operations, while a low VOLL suggests outages are less disruptive to the economy and that further investments may yield limited returns.

Across ASEAN, the average VOLL is estimated at $2.4/kilowatt-hour (kWh). Some countries are exposed to higher risks:  Myanmar, the Philippines, and Indonesia, exceeding $3/kWh. In Singapore, where power interruptions are rare, VOLL surpasses $6/kWh, reflecting how even short outages can disrupt high-value sectors such as finance, ICT, and advanced manufacturing.

These variations illustrate how the economic consequences of outages differ by context. In emerging economies, interruptions compound the challenges of rapid demand growth and infrastructure gaps, while in advanced markets, they jeopardise high-productivity industries and investor confidence. 

For instance, the Panay Island power interruption in January 2024 was reported to cause daily losses of around 400–500 million PHP ($7–9 million USD). While such a scale of blackout is uncommon for the island, it illustrates how grid disruptions can have material impacts on local economies and livelihoods.

Looking ahead, reliability gaps could cost ASEAN nearly $2.3 billion in annual outage-related losses by 2040, through foregone investment, missed industrial output, and diminished competitiveness. This estimate is derived by translating current system interruptions (SAIDI) into energy not served (ENS) and then valuing this lost electricity against the projected domestic gross value added. 

Put simply, it reflects the scale of economic activity that could be disrupted if the electricity supply were unavailable for the equivalent number of outage hours. These estimates are indicative benchmarks, not precise forecasts, since impacts vary by sector, timing and duration. High-value services like finance often face far greater losses than averages suggest.

Nonetheless, the message is clear: modernising grids is essential to secure growth, unlock renewable potential, and safeguard its place in the global economy. Delay, by contrast, risks billions in annual losses and erodes the resilience the region has worked hard to build.