INTERNATIONAL RENEWABLE ENERGY AGENCY
Southeast Asia's Economic Resilience Lies in Renewable-Based Electrification and Interconnection

Renewable energy continues to maintain its price advantage over fossil fuels, with more than 90% of the utility-scale renewable capacity added in 2025 cheaper than the lowest-cost new fossil alternative. In Southeast Asia, the existing renewable fleet already saved Indonesia, Thailand, and the Philippines around USD 5.7 billion in coal and gas purchases.

For a region rich in diverse renewable resources yet still reliant on fossil fuel import, the declining costs provide an opportunity to strengthen energy security while driving green industrialisation powered by renewables. Rapid economic growth, industrialisation and urbanisation are poised to drive electricity demand in Southeast Asia.

Although for the moment it represents a relatively small share of total electricity consumption, the fast emergence of data centres supporting artificial intelligence (AI) and digital services is expected to increase electricity demand across different regions, including in the Association of Southeast Asian Nations (ASEAN). And since ASEAN has become one of the emerging hubs for AI-enabled data centres and digital services, it certainly experiences growth in electricity demand.

The International Renewable Energy Agency (IRENA)'s World Energy Transition Outlook 2026: 1.5°C Pathway estimates electricity to account for 53% of ASEAN's final energy consumption by 2050. Among the different end-use sectors, buildings will see the highest electrification rate in the region by 2050, reaching over 80%, while the transport sector will see just above 32% of electrification rate.

For the region's energy transition, the above outlook and expected electricity demand translate to the need for scaled-up renewables, modernised grid infrastructure, more storage, and cross-border connectivity. But expanding renewable power generation technologies and infrastructure requires substantial investments.

With cumulative investment of USD 2.5 trillion between 2026 and 2050, Southeast Asia can reach almost 3 terawatts of installed renewable capacity by 2050, or 90% of renewable energy share in the power sector. The ASEAN region has already installed almost cumulatively 124 gigawatts of renewable power capacity, adding 11 GW in 2025 alone or almost a 10% increase from 2024.

Investments in infrastructure, electrification, grids and wider transition supply chains will also have an impact on jobs. The energy transition drives a structural reallocation of jobs across the whole economy, not only within the energy sector.

Most countries and regions will experience job losses in the fossil fuel sectors, while creating jobs creation in different sectors. Southeast Asia will see more gains in agriculture, likely linked to its biofuel development. Driven largely by solar, the region will account for 5.5% of total global of 84 million renewable energy jobs by 2050.

Building on IRENA's partnership approach which has been tested in other regions, the Accelerated Partnership for Renewable Energy in Southeast Asia (APRESA) provides a stronger operational framework to implement the IRENA-ASEAN Memorandum of Understanding.

Designed to be implemented with full ownership of key national and regional stakeholders, the Partnership seeks to drive national and regional renewables-based energy transitions, strengthen regional interconnectivity in line with the ambition of the ASEAN Power Grid, and promote green industrialisation across the region.

At the Singapore International Energy Week this year, the Singapore-IRENA High-Level Forum emphasises the role of APRESA to advance the critical building blocks needed to translate Southeast Asia's ambition into action.

The four pillars of APRESA are:

1. Strengthening the energy infrastructure
2. Policy, institutional and regulatory frameworks
3. Green industrialisation and local value creation
4. Mobilising private sector investments

Together, ASEAN members need to ensure that policies, investments, and partnerships are aligned with their shared vision of interconnection. Prioritising the four pillars is crucial for the greening of ASEAN's industries that are needed to power tomorrow's economies.