Asia faces higher energy costs from LNG disruption, IEEFA says

Bangladesh alone spent $880m on emergency cargoes after supply disruptions.

Asia’s exposure to liquefied natural gas (LNG) supply disruptions is raising energy costs as seen in Bangladesh, which spent about $880m on emergency cargoes after deliveries were disrupted during the Middle East conflict.

The Institute for Energy Economics and Financial Analysis (IEEFA) said in a report published on 9 July that Bangladesh was forced to purchase 11 emergency spot cargoes at prices almost three times typical levels after the conflict affected deliveries.

The experience contrasts with Pakistan, which imported more than 50 gigawatts (GW) of solar panels over the past five years and reduced its exposure to high LNG prices in global spot markets.

Pakistan avoided about $6.3b in fossil fuel import expenditure in 2026 compared with 2022, IEEFA said.

“The contrasting experiences of Pakistan and Bangladesh are likely to serve as prominent policy references throughout Asia,” the agency said.

Falling renewable technology costs are strengthening the economic case for reducing reliance on imported fossil fuels.

Solar photovoltaic module capital costs have declined 65% over six years, whilst battery storage and wind turbine capital costs fell 44% and 42%, respectively, according to figures cited by IEEFA.

Solar paired with battery storage can now match or undercut gas-fired electricity costs in nearly every Asian power market, the report said.

Renewable equipment supply could also keep costs under pressure. China accounts for more than 80% of global solar manufacturing capacity across polysilicon, wafers, cells, and modules.

“Currently, manufacturing capacity remains more than double global demand across each stage of the solar supply chain,” IEEFA said.

Wind manufacturing faces similar conditions. Global nacelle manufacturing capacity is projected at 325GW in 2026, more than twice estimated demand, whilst China accounts for 75% of global wind turbine manufacturing capacity.

Battery manufacturing also has excess capacity. IEEFA cited McKinsey’s estimate of about 900 gigawatt-hours of excess battery manufacturing capacity in 2025, contributing to battery prices of $108 per kilowatt-hour.

IEEFA said the combination of lower renewable technology costs, excess manufacturing capacity, and energy security concerns is bringing affordability, security, and climate sustainability closer together in Asia.

Trade barriers in Western markets could also redirect low-cost Chinese solar and wind equipment towards Asia and other developing economies, the report said, potentially giving countries more options to reduce their dependence on imported fossil fuels.