My Say: The case for an Asean power pact

To achieve global climate goals and ensure a sustainable future, nations must collaborate on energy transition, which is unfolding at a speed and scale unprecedented in history. This is not merely a technological shift but an economic and social transformation that will define our region’s trajectory.

For Asean, this transition is both an immense opportunity and a formidable challenge. Managed collectively, it could anchor our competitiveness in a low-carbon global economy. Pursued in isolation, it risks leaving us with splintered systems, monumental costs and asymmetrical access.

Recent developments across Southeast Asia highlight both the promise and the complexity of the region’s energy transition. Across Asean, governments are beginning to integrate national targets with new market mechanisms and investment plans that signal a growing momentum for renewables. According to Khazanah, Malaysia and Vietnam have introduced corporate power purchase agreement schemes that expand business access to renewable energy, while Thailand is preparing to launch a similar initiative later this year.

Khazanah also projects that in 2025 alone, nearly 20gw of clean power capacity will be auctioned, including the first battery storage tenders in Malaysia and the Philippines, alongside an inaugural offshore wind auction in the latter. Vietnam has set an ambitious goal of adding 24gw of solar and more than 20gw of wind capacity by 2030. Indonesia is gunning for 7.6gw of solar and 2.8gw of wind over the same period.

These developments point to a welcome acceleration. Yet, the region still confronts deep structural fissures. Asean’s energy systems remain largely fragmented, shaped by divergent national policies, regulatory frameworks and technical standards.

Grid codes, tariff regimes and approval processes diverge across borders, piling on stumbling blocks against large-scale renewable energy projects that require seamless cross-border flows of electricity. The Laos-Thailand-Malaysia-Singapore Power Integration Project has proven that multi-country trade in electricity is technically feasible, but the traded volumes remain modest because of contractual limits, inconsistent market rules and poor policy harmonisation.

The consequences of such fragmentation are far-reaching. It keeps energy costs needlessly higher, depriving our industries of the competitive edge that affordable power could bring. Without integrated backup systems, supply can be easily disrupted, quickly leading to shortages. More crucially, it could weaken our ability to attract investment, as international investors prefer clear rules and stable frameworks over complex and untested arrangements.

As the current Asean chair, Malaysia has a rare opportunity to move beyond rhetoric and pilot projects. The Asean Power Grid, Asean Interconnection Masterplan Study and Asean Plan of Action for Energy Cooperation already provide a foundation but progress has been slow and uneven, with too many initiatives confined to studies rather than translated into commercially viable projects. What is now required is collective will to transform ambition into action.

Malaysia’s chairmanship should, therefore, focus on three critical priorities. First, setting a clear roadmap for cross-border renewable energy trade, with measurable targets, agreed timelines and transparent monitoring mechanisms. Such clarity will give investors the confidence to commit the scale of capital needed for interconnections and renewable deployment.

Second, harmonising technical standards and regulatory frameworks. Without alignment on grid codes, tariff structures and market rules, integration remains elusive. This is not a call for uniformity but for compatibility, so that surplus renewable power generated in one country can be delivered seamlessly to another.

The third is financing. Public budgets alone cannot cover the colossal costs of grid modernisation, storage systems and renewable deployment. A blended finance platform that brings together public funds, development banks and private capital, underpinned by risk-sharing mechanisms, is indispensable. Malaysia’s pioneering role in developing green sukuk demonstrates how Islamic finance can be mobilised for climate objectives.

A regional financing mechanism that combines conventional and shariah-compliant instruments could unlock new pools of capital while broadening investor participation. This idea was reinforced at the inaugural Asean-GCC-China Summit in Kuala Lumpur earlier this year, which highlighted the appetite for deeper collaboration on energy affordability, resilience and interconnectivity. Such a platform could funnel Gulf financing, Chinese technology and Asean policy leadership into joint projects that are both commercially viable and socially inclusive.

The Gulf states, with their deep capital reserves and expertise in utility-scale renewables, are natural partners in this endeavour. China’s experience is equally instructive. In 2024 alone, it added 278GW of solar and almost 80GW of wind capacity, reaching its 2030 target six years ahead of schedule.

This remarkable feat was secured on the back of large-scale investment in transmission infrastructure, which enabled the grid to accommodate the variability of renewable generation while maintaining reliability of supply. The numbers are staggering: China invested nearly US$290 billion in domestic renewable energy and US$87 billion in grid upgrades in 2024, a scale of commitment that dwarfs Asean’s collective financing requirements for decades to come.

China has now moved to the next stage of transition, focusing on industrial decarbonisation in sectors, such as steel, cement and hydrogen. This experience can be a catalyst for Asean as we consider how to decarbonise our own industrial base.

Knowledge transfer, technology collaboration, and investment partnerships with China and other willing partners must form part of Asean’s strategy. Yet Asean must also safeguard its autonomy, ensuring that such partnerships reinforce rather than weaken regional integration.

Beyond technology and finance, Asean’s energy transition must also be socially inclusive. A regional vision that prioritises only industrial hubs risks leaving rural communities and vulnerable populations behind. Decentralised solutions, such as solar microgrids, can provide affordable access in remote areas.

Policies must shield households from sudden energy price shocks and create opportunities for new jobs through green skills training and vocational programmes. This is also clearly aligned with Malaysia’s Madani framework, which places inclusivity and social justice alongside economic growth.

Domestically, Malaysia is already advancing its energy transformation through the 13th Malaysia Plan, which aims to make the country a high-income, low-carbon nation by 2030. The plan emphasises expanding renewable capacity, modernising transmission and distribution and embedding energy efficiency across all sectors. If aligned with an Asean-wide framework, every ringgit invested in Malaysia’s energy system will not only advance national objectives but also strengthen regional resilience.

Equally paramount is governance. The creation of an Asean Green Energy Council could provide a platform for governments, industry, financiers, think-tanks and civil society to synchronise infrastructure development, align policies and monitor progress. Without such an institutional mechanism, the risks of duplication, delay and mistrust will loom large.

The coming decade is decisive. If Asean continues with piecemeal steps and fragmented policies, chances are we will be saddled with an energy system that is outdated, costly and inequitable. But if we act boldly and take that leap forward, we can build an integrated, competitive and inclusive regional energy framework towards a brighter, sustainable future that secures our place in the global low-carbon economy.

To turn our ideals into reality, now is the time to strike while the iron is hot. Malaysia is committed, through both our domestic reforms and our leadership as Asean chair, to advancing this vision. Either Asean emerges as a leader in sustainable, secure and affordable energy or we remain trapped in antiquated systems that hold back our collective potential. The choice before us is stark. The future of our competitiveness, our environment and our people depends on our decision today.

This article first appeared in Forum, The Edge Malaysia Weekly on September 8, 2025 – September 14, 2025