Southeast Asia must invest heavily in upgrading and modernising its transmission networks if countries across the region are to deploy substantially larger volumes of renewable energy over the next decade. As spending on green energy climbs, grid systems in countries such as Indonesia, India and Vietnam are failing to keep pace with capacity growth, creating a bottleneck in power distribution. Expanding and strengthening transmission networks would answer rising regional power demand while reducing dependence on fossil fuels.

According to the International Energy Agency (IEA), Southeast Asia accounts for 9 per cent of the world's population and 4 per cent of its GDP, yet under current policy settings it is set to represent almost 20 per cent of global energy demand growth to 2035. Eight countries in the region have introduced economy-wide net zero targets in a bid to meet this demand while reducing reliance on fossil fuels.

A decade of heavy investment in renewable energy and electrification has already curbed fossil fuel import requirements, saving the region roughly $30 billion in import costs in 2025. Southeast Asia's renewable energy capacity stood at 120 GW in 2024 and is expected to almost triple by 2035 under current policy settings, or to grow fivefold if announced targets are achieved.

Realising that growth, however, will require governments across the region to invest heavily in their transmission and distribution networks, which the IEA says must more than double in length by 2050 to keep pace with rising demand and cope with the growing variability of supply and demand. Investment in grids and storage needs to rise from $13 billion today to $50 billion in 2050 to meet announced pledges, including an estimated $27 billion in cross-border interconnections under the ASEAN Power Grid, the region's long-running initiative to link national electricity systems and trade power across borders. Its first multilateral arrangement, the Laos-Thailand-Malaysia-Singapore power integration project, has delivered up to 100 MW of Lao hydropower to Singapore via Thailand and Malaysia since 2022.

Across Asia more broadly, energy consumption climbed by around 50 per cent over the past decade while investment in energy infrastructure remained broadly stagnant. Both electricity demand and generation investment have advanced faster than the infrastructure supporting them. The imbalance extends beyond Asia: in its 2023 global assessment of electricity grids, the IEA concluded that annual grid investment worldwide must double to more than $600 billion by 2030, and identified around 3,000 GW of renewable projects waiting in grid connection queues. The Asian Development Bank has identified the shortfall in transmission investment as a major barrier to Asia's energy transition, calling for resilient, digitalised and flexible electricity networks.

A recent assessment found that Southeast Asia's overloaded transmission lines, undersized transformers, ageing equipment, weak maintenance and inadequate network planning can increase technical losses, constrain power flows and delay the connection of new renewable projects. Supply constraints compound the problem, as the IEA has reported that lead times for key grid hardware such as transformers and high-voltage cables have lengthened markedly since 2019 amid rising global demand for grid equipment. Electricity access across Asia rose from around 70 per cent in 2000 to more than 97 per cent in 2021, yet grid losses still stood at around 12 per cent in 2022 — only marginally below the 14 per cent recorded in 2000.

At the same time, the region's diversifying energy mix is adding operational complexity, as higher shares of solar, wind and distributed generation increase the need to manage supply fluctuations. These constraints indicate that transforming the region's transmission networks will require more than simple expansion, pointing instead to coordinated investment across physical networks, storage, flexibility, digital system management and regional interconnection.

Country-level pressures illustrate the scale of the challenge. In Indonesia, the government invested over $3 billion in 2022 in the expansion and renovation of its transmission and distribution systems — about one-quarter less than the average amount spent during the 2017-2021 period. Indonesia must significantly increase investment in its power infrastructure to meet its target of extending transmission and distribution lines by more than 47,000 km between 2021 and 2030, in support of its goal of achieving carbon neutrality by 2060.

In India, accelerated renewable energy development is beginning to outpace the country's transmission and distribution infrastructure. In the first quarter of 2026, transmission constraints contributed almost two-thirds of all renewable energy curtailment, totalling 300 GWh, according to Ember Energy data. Between 2022 and 2026, India delivered only about 80 per cent of its annual transmission targets. Underinvestment in the country's transmission infrastructure now threatens the achievement of India's 2030 target of 500 GW of non-fossil electricity.

In Vietnam, installed power capacity has reached nearly 90 GW, with renewable energy contributing around 27 per cent. Because grid infrastructure has not expanded at the same pace, some provinces have been forced to cut solar and wind power generation due to insufficient network distribution capacity. Vietnam's Ministry of Industry and Trade is working to improve the legal framework for energy development, including proposed amendments to the Law on Electricity and related regulations, in an effort to attract investment in the country's transmission network and strengthen investor confidence in the market.

Many countries in Southeast Asia are accelerating the deployment of renewable energy in line with aims to achieve a green transition in the coming decades. Yet regional investment in transmission infrastructure is not keeping pace with the development of green energy capacity, producing a major bottleneck for power distribution and deterring investment in the renewables sector by undermining investor confidence.

By Felicity Bradstock for Oilprice.com

Source: OilPrice.com