Grid and connectivity

Interconnected ASEAN: An idea whose time has come

Interconnected grids can maximise renewables potential and unlock a new renewable energy market for fossil-dependent countries

To address the twin challenges of rising energy demand and the need for low-carbon electricity access, ASEAN Member States have been planning a unified regional energy integration since 1997. The ASEAN Power Grid (APG) envisions power sector integration through the development of grid infrastructure and a regional power market, comprising multiple cross-border transmission projects categorised into northern, southern, and eastern sub-regions.

Under the ASEAN Interconnection Master Plan Study (AIMS), eighteen transmission interconnection projects are being prioritised, including key cross-border and inter-country interconnections such as Singapore-Riau Islands, Peninsular Malaysia–Sarawak, Kalimantan–Java and Sumatra–Java. The ASEAN Power Grid, including all the transmission interconnection projects, is expected to be fully established by 2045, underscoring the urgency of addressing key challenges related to regional grid planning. ASEAN is projected to have an interconnection capacity of 17,550 MW by 2040, based on the ASEAN Interconnection Masterplan (AIMS) III and will contribute to 2,824 km development of electricity grids in the ASEAN region.

Despite years of discussion, regional grid interconnection in Southeast Asia has yet to take off. But that may be about to change. A convergence of forces—rising renewable energy deployment, growing electricity demand, more affordable transmission technologies, and a rare window for political cooperation—is creating the conditions for breakthrough progress. Solar and wind are scaling rapidly across the world, creating opportunities for surplus generation that could be shared across borders. At the same time, rising electricity needs in the region make it clear that smarter, integrated systems are essential to ensure reliable, low-cost power.

Enablers are lining up. High-voltage transmission technologies and infrastructure financing have become more accessible, lowering the barriers to long-distance power exchange. The Lao PDR–Thailand–Malaysia–Singapore Power Integration Project (LTMS-PIP) shows that cross-border trade is technically and commercially feasible.  

The upcoming Brunei Darussalam-Indonesia-Malaysia-Philippines Power Integration Project (BIMP PIP), replicating the success of LTMS-PIP, is expected to produce a feasibility study by 2025. Other interconnection projects are proposed to be a priority, including the connection between Peninsular Malaysia – Sumatra – Singapore, Sarawak – Brunei, and the lines connecting Lao PDR, Viet Nam, Cambodia and Myanmar. While these developments are promising, efforts need to be accelerated to maximise the full benefits. 

Amid global geopolitical uncertainty, enhanced regional cooperation can offer a hedge against supply shocks and price volatility. The ASEAN Energy Ministers have issued a joint declaration to achieve a sustainable energy supply through interconnectivity. Building on this, stronger governance should be established to pursue unified electricity connectivity and a region-wide coordinated electricity market. 

For the ASEAN Power Grid plan to become a reality, it must be aligned with a corresponding financing framework to facilitate its implementation. This includes harmonising technical standards of the electricity system, completing the AIMS Phase 3 Studies—such as minimum requirements for multilateral power trading, integrated resource and resilience planning (IRRP), grid codes, technical standards harmonisation, wheeling charge methodologies, third-party access and effective transaction settlement mechanisms—while ensuring regulatory compliance and grid stability. The market forces and policy momentum are aligned to facilitate the shift from bilateral power trade to building a cohesive, renewables-driven regional power market.

Several ASEAN countries and provinces have plans for more solar and wind projects, reflecting growing momentum toward renewable energy development. Based on the Global Energy Monitor’s list of ongoing solar and wind projects, Sumatra and the Riau Islands have a planned installation of 14 GW of solar power in the pipeline by 2035 but have no planned wind projects. Lao PDR is constructing 4.8 GW of solar and 4.9 GW of wind capacity by 2035, respectively. Cambodia is developing a 2.9 GW of solar and 0.2 GW of wind by 2035. Brunei is currently building 0.03 GW of solar capacity, while 0.1 GW of solar capacity is under construction in Sarawak and is expected to be operational by 2030.

By enabling power exchange between countries, ASEAN grid interconnection could be the potential driver to unlock the additional 24 gigawatts of solar and 5.6 gigawatts of wind capacity in resource-rich ASEAN countries. For example, clean power generated along the BIMP (Brunei Darussalam-Indonesia-Malaysia (Sabah & Sarawak) -Philippines) grid connection could supply electricity to Indonesia’s Kalimantan, considering the plan to build the new Nusantara Capital City.  Similarly, clean power generated in Cambodia and Sumatra could be delivered to Singapore.  More interconnection would also be helpful in spreading peak load distribution and minimising outages, compensating low production of renewables in one region by a power supply from another.

Achieving the increase in solar and wind use across ASEAN will require a combination of greater investment, stronger off-taker commitments, and supportive measures such as land allocation, flexible local content requirements, and an improved ease of doing business. While the challenges are significant, modern, flexible and interconnected grids present an opportunity: resource-rich countries can help strengthen energy security across the region by supplying clean energy to countries with limited solar and wind potential.

In countries where interconnection projects are prioritised, for example Indonesia-Sumatra, Malaysia-Sarawak, Cambodia, Lao PDR and Brunei plan to construct 27 GW capacity of solar and wind by 2035. For instance, as a coal-producing region with relatively low electricity demand, Sumatra currently lacks sufficient incentives to develop solar energy. However, interconnection could change that by enabling electricity exports to the Singapore market. Similarly, improved interconnection among hydro-rich areas such as Cambodia, Sarawak, and Lao PDR could help incentivise solar and wind development. On top of these planned installations, there is scope to boost further growth given the economic potential for solar and wind in some of these geographies.

ASEAN’s power demand is projected to reach 1,626 terawatt-hours by 2030. According to the updated power development plan, solar and wind capacity are expected to reach around 101 GW, with estimated generation approximately 11%, or 177 terawatt-hours, of that demand.

A 30 GW of solar and wind that can be unlocked has the potential to generate 109 terawatt-hours of electricity, opening opportunities for countries to exceed their national targets.

There are bottlenecks to creating the market for cross-border power trade in ASEAN, in the form of economics and institutional obstacles, creating a fundamental barrier to market integration and cross-border power trade. These include financial and institutional constraints in the post-pandemic recovery period. Questions also arise in the market model that could be adopted; supply chain stability in the midst of the US tariff and reliability and resilience risks tied to a model of an unified power market. 

This trajectory could be part of a wider goal in driving the economic growth of the countries. Countries such as Lao PDR and Viet Nam are already venturing their electricity sales to a new market, Singapore, through the cross-border power exchange and interconnection across Lao PDR, Thailand, Malaysia and Singapore. This will be further amplified by the development of offshore wind farms in Viet Nam, as well as solar and battery projects in Indonesia, with more power to export. 

Cross-border electricity trade also allows countries to benefit from additional financing by establishing a regional Renewable Energy Certificate (REC) trading framework. Beyond electricity trading, environmental attributes such as RECs can incentivise utilities and/or power plant owners to invest in renewables by earning extra revenue from the sale of REC to companies committed to using renewables in their operations.

The closer integration of mainland and archipelagic ASEAN will open new transit routes. This could potentially incentivise fossil-reliance countries like Brunei to champion the energy transition, via the BIMP (Borneo-Indonesia-Malaysia-Philippines) Power Grid Interconnection Project (PIP).

Ember’s calculation, using metrics for 30 GW of new solar and wind projects, shows that around 182,000 jobs could be created from 30 GW installations. There is potential for ASEAN to expand the local employment impacts by creating a local supply chain for solar and wind, so the jobs include manufacturing roles, installation, maintenance, and support services.