Southeast Asia Power Markets Remain Stable Amid Middle East Crisis, but Energy Security Takes Centre Stage

Power markets across Southeast Asia are demonstrating resilience despite ongoing geopolitical tensions in the Middle East, though the crisis is prompting a renewed focus on energy security as a core pillar of long-term power planning, according to a recent analysis by Wood Mackenzie.

The report indicates that while regulated pricing mechanisms and long-term LNG contracts are shielding most markets from immediate price shocks, the region remains structurally exposed to global fuel market volatility.

Yanqi Cao, Senior Analyst for Asia Pacific power and renewables research at Wood Mackenzie, noted that although the near-term impact is manageable, the crisis underscores the need for more resilient and diversified energy systems.

In the short term, rising gas and LNG prices are expected to influence electricity tariffs across the region through the second quarter of 2026, with varying levels of impact across markets.

Singapore and the Philippines are likely to face the earliest price pressures. Wholesale electricity prices in Singapore have risen by approximately 20% in the third week of March compared to pre-conflict levels, while the Philippines is witnessing a similar upward trend. However, regulatory price caps in both markets are expected to limit the impact on end consumers.

In contrast, other regional markets are expected to experience delayed or moderated effects due to regulatory frameworks and subsidies. Thailand is unlikely to see fuel tariff adjustments until May, while Peninsular Malaysia may experience only a marginal increase of around 1% in total electricity bills. Vietnam remains relatively insulated due to its lower reliance on gas, which accounts for just 9% of its power mix, while Indonesia’s fully subsidised tariff structure is expected to shield consumers from near-term impacts.

Despite rising fuel costs, most Southeast Asian markets have limited flexibility to shift away from gas and LNG in the short term. While Vietnam and Indonesia may partially offset higher costs through increased coal generation and power imports, countries like Singapore and Thailand—where gas accounts for approximately 85% and 65% of generation capacity respectively—have fewer immediate alternatives. Meanwhile, Malaysia and the Philippines retain coal capacity, but these plants are already operating near maximum utilisation levels.

Over the longer term, the report highlights that sustained global energy market volatility is likely to accelerate structural shifts in the region’s power sector. This includes increased policy and investment focus on nuclear energy and firmed renewable solutions.

All six key markets in Southeast Asia have announced nuclear power ambitions for the 2030–2037 period, with planned capacities ranging from 1.2 GW in the Philippines to between 4.0 GW and 6.4 GW in Vietnam. While execution challenges remain, heightened energy security concerns are expected to drive renewed policy momentum.

At the same time, firmed renewable energy—combining solar and wind with battery storage—is emerging as a scalable near-term solution. Governments across the region are advancing supportive policies, including higher tariff caps for hybrid projects in Vietnam, mandatory storage integration for new renewable projects in the Philippines, storage auctions in Malaysia, and ambitious solar-plus-storage targets in Indonesia. Singapore is also progressing plans to import up to 6 GW of low-carbon electricity by 2035.

Wood Mackenzie concludes that while Southeast Asia remains relatively insulated from immediate shocks due to existing contractual and regulatory frameworks, prolonged global energy disruptions are likely to intensify the region’s focus on energy security and accelerate the transition toward more resilient and diversified power systems.