ASEAN’s Renewable Energy Push Faces Barriers But Shows Clear Path To A Cleaner Power Future – IEA Report

The Association of Southeast Asian Nations (ASEAN) is at an important stage in its energy transition. The region has a very large potential for clean energy, especially solar and wind. Studies show that ASEAN has nearly 20 terawatts of solar and wind potential, which is enough to meet the region’s electricity needs many times over. However, despite this huge resource base, renewable energy made up only about 25% of the total electricity supply in 2024. At the same time, the region is showing stronger climate ambition, with eight out of eleven ASEAN member states now committed to achieving net-zero emissions. This marks a clear shift away from the long-standing dependence on coal and toward cleaner sources of power.

Even with this ambition, the growth of renewable energy in ASEAN faces several challenges. One major issue is cost. Solar and wind power generation in many ASEAN countries is still more expensive than the global average. This is mainly because energy markets in the region are fragmented and financing costs remain high. Investors often hesitate to commit money as national energy plans do not always provide clear details on how targets will be achieved or when key actions will take place. Without clear timelines and implementation plans, it becomes difficult for developers to move forward with confidence.

Another major barrier is the lack of flexibility in existing power systems. Many countries in the region are tied into long-term contracts with coal and gas power plants. These contracts often require payments even when the electricity is not needed. As a result, there is limited space on the grid for new renewable energy projects. In addition, administrative challenges slow down progress. Complex permitting processes and restrictions on foreign ownership in certain markets make project development time-consuming and uncertain.

To address these issues, the International Energy Agency has outlined several practical solutions. One key recommendation is improving policy clarity. Governments are encouraged to regularly update their energy plans and embed them into law so they remain stable even when political leadership changes. Clear roadmaps covering the next five to ten years can help developers align their investments with national goals.

Another important step is modernizing procurement systems. Competitive auctions have proven worldwide to be an effective way to reduce renewable energy prices. ASEAN countries such as Malaysia, the Philippines, and Thailand have already shown that well-designed auctions can lower costs while giving developers long-term revenue certainty.

Improving system flexibility is also critical. The region needs more “dispatchable” renewable energy, such as hydropower, geothermal power, and solar projects combined with energy storage. Revisiting existing fossil fuel contracts to allow more flexible operation can also help make room for renewables. Involving local communities early in project planning can further speed up deployment, especially when communities see direct benefits. Simplifying approvals through single-window or “one-stop shop” systems can reduce delays.

Distributed solar energy, especially rooftop solar for homes and businesses, is another major opportunity. At present, ASEAN’s total rooftop solar capacity is lower than that of the Netherlands alone. Better net-metering policies, which allow consumers to sell excess electricity back to the grid at fair prices, along with subsidies to reduce upfront costs, can unlock this potential. By acting together on these measures, ASEAN can turn its renewable energy potential into real progress toward a cleaner, more secure, and affordable energy future.