ASEAN’s clean energy bottleneck has shifted from raising capital to creating bankable projects

However, the picture changes for smaller projects. Development and transaction costs , including permitting, grid connection, legal work and due diligence, barely fall with project size, so each installation repeats them. Every additional megawatt of capacity raises equity returns by around 0.5 percentage points. By comparison, cutting the interest rate from 9% to 5% lifts returns by only 4.4 percentage points. Cheaper finance alone cannot fix the disadvantage of being smaller in scale.

This matters because the region’s plans depend on small projects. Indonesia’s strategy envisages around 100 GW of solar, with roughly 80 GW deployed as distributed systems across more than 80,000 villages. A remote community project cannot simply be made larger to improve its economics; its size is set by local demand. The report suggests aggregating small projects into financeable portfolios and for policy that targets transaction costs directly.

ASEAN needs 23–26 GW of energy storage by 2030 under regional transition scenarios, yet only around 7 GW of projects have been publicly announced. Ember’s assessment of five markets finds the Philippines and Singapore furthest ahead, Viet Nam and Indonesia in transition and Malaysia at an early stage, with a 51-point spread driven by market rules, not by any inability to build batteries. No country in the region has a dedicated capacity market, and batteries in most markets cannot stack revenues from energy, ancillary services, capacity and congestion management.

Transmission faces a similar problem. Using the planned 128 km, 230 megawatt (MW) Sarawak–West Kalimantan connector as an illustration, the report estimates an equity return of 7.2–8.8%, well short of the 12% benchmark. Grids create value by integrating renewables, easing congestion and strengthening energy security, but that value goes to generators, consumers and the wider system rather than to the asset itself. Cost-recovery tariffs leave little room to capture it.

“As the transition moves beyond utility-scale renewables, investment will increasingly depend on reducing transaction costs, monetising flexibility and enabling infrastructure to earn returns that reflect its value to the power system,” said Dr Alnie Demoral, Energy Analyst at Ember.

The report recommends reforms to how single-buyer utilities procure power, harmonised technical standards through the ASEAN Consultative Committee for Standards and Quality, financing structures built for large numbers of small projects, and revenue stacking for storage and grids backed by financial guarantees and more flexible tariffs. As the ASEAN Power Grid advances, it argues, the region should pool investment behind specific asset classes: transmission, solar-plus-storage and wind-plus-storage.

“While access to finance for utility-scale renewable ventures has been resolved to some extent, this has also widened the gap in energy access between on-grid and off-grid markets,” said Erel B. Narida, President of the Renewable Energy Association of the Philippines. “Aggregation of distributed energy projects with financial and policy support will open a lot of potential for our SME members and create bankable assets.”