05/10/2023

A Mahardika perspective on how cross-border power trade is moving from regional ambition toward investable infrastructure

A regional system is beginning to take shape

For decades, electricity planning in Southeast Asia was overwhelmingly national. Each country developed its own generation capacity, secured its own fuel supplies and planned around domestic demand.

That model is becoming harder to sustain. Regional electricity demand is expected to rise substantially, while the best renewable resources are not always located near the largest centres of consumption. Lao PDR has substantial hydropower potential. Indonesia and the Philippines have extensive solar resources, while Vietnam has strong offshore wind potential. Singapore and other landconstrained centres, by contrast, have growing demand but limited space for utility-scale renewable projects.

Cross-border interconnection allows these differences to become complementary. Resource-rich countries can export electricity, while land-constrained markets gain access to a broader and potentially cleaner supply base.

From concept to operating market

The ASEAN Power Grid is no longer only a policy aspiration. The Lao PDR-Thailand-Malaysia- Singapore Power Integration Project initially enabled Singapore to import up to 100 MW of renewable hydropower from Lao PDR through Thailand and Malaysia. Subsequent arrangements have sought to expand the trade toward 200 MW and make flows more flexible, but this should not be read as proof that a continuous 200 MW four-country market is already operating.

That experience matters because regional power trade requires far more than a transmission line. It depends on contracts covering purchase volumes, transmission access, wheeling charges, pricing, settlement, system operation and the allocation of risk across several jurisdictions. The complexity of those arrangements explains why the regional grid is likely to advance corridor by corridor rather than through one continent-wide market appearing at once.

Capital and policy are beginning to align

The ASEAN Power Grid Financing Facility is intended to help convert regional ambition into a bankable pipeline. Led by ASEAN and the ASEAN Centre for Energy and coordinated by the World Bank and Asian Development Bank, the initiative supports technical preparation and aims to mobilise public and private finance for cross-border projects.

The World Bank estimates that realising the broader ASEAN Power Grid vision could require about USD 800 billion in generation and transmission investment through 2045. That figure covers the wider system needed to support regional power trade; it should not be presented as the cost of interconnectors alone.

Malaysia made regional grid integration a priority during its 2025 ASEAN Chairmanship. Singapore has also issued conditional approvals and licences for prospective low-carbon electricity imports from Indonesia, Vietnam and Cambodia. These steps signal a stronger project pipeline, but a conditional approval or licence is not the same as a final investment decision, construction milestone or operating import.

Transmission remains the critical constraint

Southeast Asia does not lack renewable resource potential. Transmission is central to moving electricity from where it can be generated efficiently to where it is required, but it is not the region's only constraint.

Transmission development has not kept pace with the renewable pipeline. Regulatory frameworks differ between countries, and state-owned utilities generally retain central roles in generation, transmission and system planning. Those differences make open access, wheeling charges and bankable long-term contracts difficult to standardise.

Financing, offtake, permitting, technical standards, political coordination and cross-border pricing are equally important. Developers that can combine technical delivery with regulatory coordination and commercially workable risk allocation will be addressing one of the region's most consequential infrastructure gaps. Multilateral institutions are actively seeking well-structured projects, and governments are showing greater willingness to coordinate than during earlier stages of the ASEAN Power Grid.

An interconnected energy future

A fully integrated regional grid will not emerge through a single agreement or megaproject. It will be built corridor by corridor, using practical transactions that prove the commercial and operational model.

As those connections multiply, Southeast Asia's energy future will be shaped less by isolated national systems and more by the region's ability to share resources, balance supply and demand, and invest across borders.

Mahardika Energy Partners supports developers, investors and institutions evaluating cross-border power opportunities, project structures and market-entry pathways across Southeast Asia. For further information or to discuss a specific opportunity, contact Mahardika Energy Partners.

Sources and regulatory references

• Energy Market Authority of Singapore, LTMS-PIP and conditional approvals for low-carbon electricity imports.
• World Bank and Asian Development Bank, ASEAN Power Grid Financing Facility initiative.
• ASEAN Centre for Energy, The 7th ASEAN Energy Outlook and ASEAN Power Grid infrastructure roadmap.