Southeast Asia needs at least US$200b in energy sector investment by 2030

Of this, over three-quarters should be earmarked for clean energy.

Southeast Asia will need at least US$200b worth of investment in the energy sector by 2030 to speed up their clean energy transition, the International Energy Agency (IEA) reported.

In line with this, the IEA noted that more than three-quarters of the total amount should be earmarked for clean energy. 

“However, investment momentum for renewables has been inconsistent, with insufficient policy signals to support the development of robust project pipelines,” IEA said.  

“With only three years left to reach regional interim renewables targets, which envision renewables to account for 35% of power capacity by 2025, accelerating investments in renewable power and enabling infrastructure, such as electricity networks and battery storage, is critical.”

Read more: Global renewable investment reaches record-high $500b in 2022

The IEA added that emerging and developing economies (EMDE) will need to turn to private capital to finance renewable energy and deviate from public finance which these economies have been reliant on, traditionally. At present, public financing accounts for nearly 60% of clean energy investments. 

Private capital will need to account for 60% of investments, which is still lower than the level seen across advanced economies at almost 90%. 

“This is partly due to the elevated role of EMDE state-owned utilities as investors in electricity grids,” the IEA noted. 

“To facilitate this shift, regulatory and financing frameworks must improve to reduce the costs, risks, and barriers around developing clean energy projects in EMDEs and the ASEAN region, in particular.”

In its March 2023 report, ASEAN Renewables: Opportunities and Challenges, the IEA and Imperial College London reported that the annual average energy investments in the region stood at US$70b between 2016 and 2020. Of this, clean energy only accounted for below US$30b annually. 

More particularly, the average annual capital expenditures of US$10b went to solar PV and wind energy over the past five years. This is also amongst the lowest globally.

“Additionally, almost half of private capital for power in Southeast Asia was invested in fossil fuel generation,” the report read. 

“Overall, investments in clean energy follow a worrying trend: for every dollar invested in renewable power capacity in Southeast Asia, another dollar was invested in unabated fossil fuels.”