Southeast Asia’s power demand from green industrial parks, data centres, and electric vehicles is expected to increase threefold to more than 100 terawatt-hours over the next three to four years, according to a report published by Bain & Company and Standard Chartered.
The report said the increase in demand from these sectors would require more than $200 billion in investments.
Data centres to account for major investments
According to the report, more than half of the projected investment is expected to flow into data centres.
Nearly all operators surveyed indicated they are willing to pay a premium to avoid delays related to grid connections.
The report highlighted that rising demand for digital infrastructure is becoming one of the biggest drivers of electricity consumption in the region.
Data centre operators are increasingly prioritising reliable and faster access to power infrastructure amid growing demand for cloud computing and digital services.
Green economy projected to expand by 2030
The report estimated that Southeast Asia’s green economy is currently valued at $290 billion.
It is projected to grow to $430 billion by 2030.
Despite the expected growth, the Southeast Asia’s Green Economy report noted that only around 60% of the $540 billion in announced green spending across the region’s power and electric vehicle value chains is currently on a credible path to deployment under existing conditions.
The report pointed to several structural challenges slowing down project execution across Southeast Asia.
Renewable projects face cancellations
According to the findings, around 50% to 60% of renewable energy projects in Vietnam, Thailand, and Indonesia have been cancelled over the past five years.
The cancellations were linked to system constraints, including unclear power purchase agreement structures, permitting issues, and grid connection rules.
The report suggested that regulatory uncertainty and infrastructure bottlenecks continue to create obstacles for renewable energy developers in the region.
Grid upgrades lag behind demand growth
The report also warned that Southeast Asia’s power demand growth is expected to outpace grid upgrades.
It estimated that the region could face an annual grid investment shortfall of $18 billion by 2035.
The lack of sufficient investment in transmission and distribution infrastructure may create additional pressure on electricity systems as demand from green industries continues to rise.
The report further stated that the rules of the green economy have changed due to broader structural shifts globally.
According to the report, energy security and economic growth are increasingly taking priority over sustainability goals.
The shift in priorities is expected to influence investment decisions and policy direction across Southeast Asia’s energy transition efforts in the coming years.
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