Grid bottlenecks threaten Southeast Asia's energy transition, report says

Transmission storage and cross border links must keep pace with rising electricity demand.

Investment in power generation across Southeast Asia is accelerating, but transmission, storage, and cross-border connectivity are emerging as the region's next energy challenge, according to a TBH report.

The report, which examined the energy transition across Malaysia, Thailand, Indonesia, Vietnam, the Philippines, and Singapore, argued that generation, transmission, storage, and cross-border connectivity must be planned together amidst demand for industrial growth, urbanisation, and data centres expansion.

"Southeast Asia's energy transition is entering a new phase," said Ali Nami, Director and Energy Lead at TBH. "Many countries are making significant investments in generation capacity, but the focus is increasingly shifting towards transmission, storage, and connectivity."

The report said transmission upgrades, grid modernisation, and energy storage are becoming increasingly important as more solar and wind capacity comes online.

It identified storage as a key component in supporting renewable energy, managing peak demand, improving reliability, and maintaining grid stability.

TBH also highlighted growing momentum behind regional energy integration through the ASEAN Power Grid and the ASEAN Plan of Action for Energy Cooperation 2026–2030.

It said greater cross-border connectivity could strengthen energy security, improve network resilience, and support more efficient power distribution across countries with different renewable resources, electricity demand, and generation capacity.

"Singapore and Malaysia are identified as likely early movers in regional interconnection, given their infrastructure networks, institutional capability, and existing roles in regional energy and digital markets," the report said.

It also said Indonesia's scale and proximity to Singapore increase its strategic importance in discussions on cross-border power flows.

Across individual markets, the report said Malaysia's growing data centre industry is increasing pressure on grid reliability and long-term planning.

Vietnam's industrial expansion is straining transmission networks, whilst Indonesia requires significant investment in generation, transmission, and storage across its island network.

The Philippines is focusing on grid resilience and network modernisation, with offshore wind emerging as a long-term opportunity. Thailand continues to expand solar and other renewable energy whilst balancing affordability and energy security.

"Electricity demand is increasing rapidly across the region, driven by industrial growth and the expansion of digital infrastructure," said Michael Tan, Country Manager for Malaysia at TBH.

Tan added that meeting that demand will require careful planning, coordinated investment, and a long-term approach to future needs.