Market trends & mechanisms

Differing routes to unlocking clean energy investments

ASEAN’s clean energy ambitions depend on how effectively its largest emerging economies can draw private investment into renewable projects. Viet Nam, the Philippines, and Indonesia are each charting their own path to opening their power market, ranging from full liberalisation to gradual change. Yet all three face the same challenge: mobilising clean energy investment while safeguarding energy security and keeping power affordable.

Viet Nam, the Philippines and Indonesia differ in geography and market design. These shape their renewable resources and the scale of market access.

New-changing mechanisms are driving energy transitions in each of the three countries. Viet Nam is introducing regulatory reforms to operationalise a wholesale electricity market, aiming for the gradual liberalisation of the sector. The Philippines, by contrast, is fine-tuning its liberalised market to attract more private investment and improve operational efficiency. Meanwhile, Indonesia is prioritising national energy self-sufficiency, aligning industrial expansion with domestic resource utilisation.

Viet Nam is steadily opening its power market to private and foreign investment. Although the power market still operates in a single-buyer system, the sector has been unbundled of power market operations, and segmentation of generation, transmission and distribution to attract new players. Private and foreign investors now own more than half of the country’s installed capacity, showing a gradual shift toward a more open and diversified market. The privatisation of transmission and distribution through Public Private Partnership (PPP) allows more investments for grid upgrades, while the government maintains control over operation.

The country is also liberalising its retail electricity market to attract more investment and ensure a stable power supply through a three-step process. After launching its wholesale electricity market in 2019. The next step focuses on enhancing competitiveness by expanding participation and removing barriers for the private sector’s participation in electricity retail.

A key reform under this effort is the DPPA, or corporate renewables through Decree No. 57/2025/ND-CP, which enables corporate-driven renewable energy adoption. The DPPA incentivises corporate purchases of renewable energy and allows them to claim ‘environmental attributes,’ enabling them to quantify their renewable energy use.

The DPPA aims to strengthen market confidence by ensuring guaranteed offtakers for renewable energy projects and addresses the issue of recent curtailments, where solar generation was being limited due to grid restrictions. 

The state utility, Viet Nam Electricity (EVN), continues to manage the electricity market through fixed-price contracts, providing a hedge against global market volatility. To introduce more flexibility, two DPPA models are now available: DPPA Model 1 through a private grid and DPPA Model 2 using the national grid. Under either model, renewable developers can invest in wind or solar projects, generate electricity, sell it to the grid, and wheel the electricity over the grid. This enables consumers to purchase clean electricity directly from producers while using the national or private grid as the delivery channel.

According to Ember, the country’s share of renewable energy could at least double if manufacturers in the processing sector purchased electricity through the DPPA scheme. This could potentially raise clean energy consumption from 19% to 42%, based on the latest non fossil energy share and the electricity consumption from the state electricity company of processing companies.

The Philippines’ electricity liberation started more than two decades ago with the Electric Power Industry Reform Act (EPIRA) of 2001, which aims to make electricity more affordable through competition and private sector participation. 

EPIRA paved the way for the  Wholesale Electricity Spot Market (WESM) and Retail Competition and Open Access (RCOA)  framework, allowing users to select their suppliers, and drive efficiency through competition among generations.

Yet despite these reforms, the Philippines’ electricity tariff is one of the highest in Southeast Asia, due to structural and institutional barriers. In response, recent policy shifts have focused on scaling renewable investment and improving market efficiency. 

Since the launch of GEOP in 2021, corporate demand for clean energy in the country has doubled. Under the program, consumers can directly source electricity from renewable energy suppliers, signalling a strong market appetite for clean power. However, supply has struggled to keep pace, revealing a bottleneck in renewable generation capacity.

To close this gap, the government is using the Green Energy Auction (GEA) as a complementary mechanism to expand supply and meet rising demand from GEOP participants. Competitive auctions can accelerate the development of new renewable projects providing clear price signals and transparent procurement, which in turn enhances investor confidence and bankability.

Recent auction rounds have increasingly focused on energy storage integration to enhance reliability. GEA-3, held in early 2025, prioritised pumped hydro, while GEA-4 introduced the country’s first Integrated Renewable Energy and Energy Storage System (IRESS) auction – pairing solar with batteries for 1.1 GW of capacity. By June 2025, GEA-5 marked another milestone, targeting 3.3 GW of offshore wind for 2028–2030.

These innovations are already materialising on the ground. A 197 MWp solar PV plant coupled with a 320 MWh battery energy storage system (BESS) now delivers power beyond typical solar generation hours (6 a.m. to 5 p.m.), effectively allowing solar to serve as a baseload source.

Financing remains a hurdle: only one-third of the renewable energy investment under the national plan can be financed by domestic banks. To attract capital, the Philippines has lifted foreign ownership restrictions by allowing 100% foreign ownership of public services. 

Since the market opened to full foreign ownership in 2022, 20 GW of projects have already been awarded to overseas developers. This has helped spur almost a twofold increase in clean energy investment in 2023 compared to the previous year’s level. This led the country to be ranked 2nd among 110 emerging markets for green energy investments by Climatescope.

Indonesia is riding a wave of economic momentum, attracting investment from mineral downstreaming to infrastructure. The country’s president has also announced to transition entirely to homegrown 100% renewable energy in the next ten years, increasing national energy security and anchoring industrial growth in domestic resource potential. However, any policy announcement around this target is yet to materialise.

A major policy shift arrived in 2025 with Ministry of Energy and Mineral Resources (MEMR) No. 5/2025, which introduces risk sharing for currency exchange volatility for energy companies engaging in PPAs. The regulation introduces a new risk-sharing formula for exchange rate volatility: PLN agrees to bear the risk if the exchange rate between the rupiah and foreign currencies fluctuates, while the independent power producer (IPP) takes on convertibility risk. 

The regulation also expands project ownership options. It allows the use of Build-Own-Operate (BOO) mechanism, an alternative to the previous regulation that strictly uses Build-Own-Operate-Transfer (BOOT) mechanism. More importantly, the regulation reduces financial risks due to grid constraints with provision of a payment over Deemed Dispatch, based on the amount of curtailed energy under PLN grid maintenance or emergency events.

Indonesia is also aligning PPA reform with its carbon-market ambitions. MEMR 5/25 recognises the rights on environmental attributes or carbon economic value of power plants using renewables, including carbon credits, renewable energy certificates, green labels or other tradable rights. The carbon market is also being regulated under the newly published Presidential Regulation No. 110/2025, which includes provisions on carbon trading, carbon tax, offset, Measurement, Reporting and Verification (MRV), certification, payments and valuations. This regulation further incentivises renewables developers. 

Electricity demand is expected to grow rapidly, led by the digital economy. Indonesia is forecasted to add 1.5–2 GW of data centre capacity by 2027, which equals to 5% of the current 40 GW peak demand. Yet physical constraints limit the speed at which new generations can be built. With limited inter-island grid connectivity, limited storage system, significant wind potential concentrated in Sulawesi, limited land availability in Java, and geothermal, hydro and gas projects all have long development timelines. 

Against these constraints, solar emerges as Indonesia’s most viable near-term option. Its modular nature, technological maturity, wide availability, shorter implementation timelines, and declining costs, combined with its sustainability advantages, make it the most practical pathway for near-term renewable energy expansion. Substantial new solar generation capacities, or 350 GW by 2040, are needed to cover these consumption requirements, as well as increasing electricity demand from the population and industrial growth. 

However, policy alone is not enough. Project-level economics ultimately determines how these policies translate into real deployment. Understanding how pricing and development costs affect returns is key to assessing the maturity of these evolving markets.