Southeast Asia emerges as key clean energy investment hub, report finds

Hydropower is a key clean energy source attracting foreign investment in ASEAN. (Photo: iStock)

Southeast Asian countries are increasingly seen as promising markets for clean energy, attracting substantial public investments from China, Japan, South Korea, and Australia.

According to a new report released on May 20 by international research organization Zero Carbon Analytics, the number of cross-border renewable energy projects in five ASEAN nations is growing at a rate of 15% annually. However, the report notes that investments in solar power and grid infrastructure remain relatively limited.

Indonesia received the most cross-border investment

The report analyzes clean energy collaborations from 2013 to 2023 between foreign investors and five major ASEAN countries: Indonesia, the Philippines, Thailand, Malaysia, and Vietnam. Among them, Indonesia received the highest investment, totaling USD 3.536 billion, followed by Thailand with USD 1.3 billion and Vietnam with USD 694 million.

In terms of investor countries, China tops the list with over USD 2.7 billion invested, followed by Japan with USD 2.44 billion, South Korea with USD 583 million, and Australia with a relatively small USD 51 million. (See Figure 1)

Figure 1. Funding for clean energy cooperation projects between five major ASEAN countries and their respective partner countries, 2013–2023. (Source: Zero Carbon Analytics)

When categorized by energy type, hydropower attracted the most funding at USD 2.26 billion, followed by geothermal at USD 1.58 billion, and wind at USD 1.43 billion. Solar investment lagged significantly at only USD 264 million.

The report points out that Southeast Asia’s solar potential remains largely untapped, despite falling technology costs. In some countries, solar power is now cheaper than biomass. Amy Kong, Oil and Gas Researcher at Zero Carbon Analytics, noted during the report’s launch webinar that emerging technologies like floating photovoltaics offer strong growth potential in the region.

Hydropower dominates while solar falls behind

A breakdown of investment flows by both country and energy type reveals that China has concentrated primarily on hydropower and wind, while Japan has focused on hydropower and geothermal. South Korea has also prioritized hydropower. Despite its global dominance in solar, China’s solar investments in ASEAN are smaller than Japan’s, as shown in Figure 2.

Figure 2. Investing countries and energy types. (Source: Zero Carbon Analytics)

The report projects that ASEAN’s electricity demand will grow 41% by 2030, while renewable energy capacity is expected to increase by 300% to 500% by 2035. The ASEAN Power Grid (APG) is expected to play a crucial role in supporting this growth. Sharon Seah, coordinator for climate change at Singapore’s Iseas-Yusof Ishak Institute, expressed optimism about Malaysia's ASEAN chairmanship this year, suggesting it could accelerate progress on regional grid integration.

With the ASEAN Summit set for May 26, Malaysian Prime Minister Anwar Ibrahim has emphasized the importance of regional cooperation on grid connectivity, clean energy, and carbon markets. As the U.S., under former President Trump, has withdrawn from several international climate initiatives and threatened steep tariffs on Southeast Asian solar exports, the outcome of this year’s summit is being closely watched for signs of climate and energy cooperation.

Source: Zero Carbon Analytics, The Straits Times, China Daily