That creates a problem.

The ASEAN nations enjoy vast but as yet largely untapped potential for renewable energy, especially PV solar, and onshore and offshore wind. The IEA puts potential supply at 20 terawatts, roughly 55 times the region’s present generation capacity. And this energy would be cheap. But the increase in overall demand is for now far outpacing new supply from renewables. Until that changes, ASEAN nations remain dependent on rising fossil fuel imports that expose them to price risk, potential supply disruptions, and increasing greenhouse gas emissions.

Asian corporate executives have focused recently on coping with tariffs and trade restrictions, potential supply chain disruptions and geopolitical insecurity—rather than energy and power. In the latest EY-Parthenon Global CEO Outlook survey, Asia-Pacific CEOs expressed greater unease than their peers in Europe and the Americas about geopolitics, macroeconomics and trade. They must not lose sight of how investment in modernizing energy supply and transmission today will provide considerable benefits including, but not limited to, low-cost power. And they should mobilize all sources of finance, private and public, for projects to achieve this.

That is why the recent announcement from the Asian Development Bank, the World Bank and ASEAN of a new financing initiative to support a connected ASEAN power grid (APG) is so important. It comes ahead of an enhanced memorandum of understanding set to be signed later this year by the ASEAN nations to finally realize the vision for a connected grid that has tantalized since the 1990s.

Building it will be expensive, estimated at over $750 billion. But the returns—cheaper and more reliable electricity, enhanced energy security and regional co-operation, lower emissions—will justify the cost, as long as finance can be mobilized.

At the ASEAN ministers on energy meeting in October, the ADB committed up to $10 billion over the next ten years. The World Bank is providing an initial $2.5 billion. The multilaterals will also offer grants, guarantees, political risk insurance and other concessions to attract private capital, as well as technical assistance.

Why has this connected grid not been built already? Partly for technical reasons. ASEAN nations use different voltages in their transmission systems. Their national grids stand at varying levels of sophistication. They employ distinct operating standards and regulatory frameworks. Politics has also played a part. Countries have previously prioritized domestic industrial development and national energy policies.

Increasing urgency around energy transition has shifted those priorities and focused on how to transmit renewable energy from the widely distributed sources that provide it to the consumers that need it, even in other countries. The key now is to progress beyond simply connecting countries’ networks to a more widespread upgrading of national grids.

In May, leading energy companies from Malaysia, Singapore and Vietnam agreed a strategic partnership to explore the use of undersea cables to transmit electricity generated mainly from Vietnam’s offshore wind farms through the Peninsular Malaysia National Grid to homes and businesses in Malaysia and Singapore.

Vietnam is prioritizing investment in offshore wind as part of a strategy to become a regional renewable energy hub. Singapore, while lacking the natural resources for large-scale renewables, intends to be a key enabler of cross-border trade in clean energy. It has given conditional approval for ten projects to import it, including solar power from Australia; solar, hydropower and potentially wind power from Cambodia; and solar power from Indonesia; as well as offshore wind from Vietnam. Thailand could be another big importer.

High return on investment

The vision for an ASEAN power grid, connecting a population likely to hit 780 million by 2040 across a $10 trillion regional economy, triple the size in 2022, was laid out one year ago at COP29. Doubling the number of interconnections across the 10 ASEAN countries could boost connected capacity from 7.2 gigawatts in 2022, to 33.5 GW fifteen years from now.

This will take more than undersea cables and high voltage direct current lines capable of transmitting power over long distances with minimal leakage. To succeed at scale a resilient ASEAN grid must cope with the key challenge faced in all renewables—intermittency. This necessitates investments in industrial-scale battery and other storage and conversion technology to balance increasingly variable supply with rising demand. Managing that balance is essential to keep grids stable and prevent outages, including amid extreme weather events that coincide with peak power off-take.

Upgrading domestic networks should include integration of new digital technology, familiar from the internet of things, to monitor and measure systems continuously, spot potential weaknesses before they trip supply, and enable steady maintenance instead of expensive repairs.

An ASEAN power grid paves the way to lower cost manufacturing and enhances competitive advantages, as the region continues to move up the manufacturing value chain.

In the longer term, it can also improve climate-resilient food security and pitch the region into a positive feedback loop. Related investment in agritech might also boost production of biofuel, potentially making air travel greener and helping to decarbonize other sectors that are difficult to electrify.

A significant proportion of total employment across Asia Pacific is in sectors directly impacted by climate, like farming and fishing, putting populations at high risk from global warming and rising sea levels. With the ASEAN grid, governments, large utilities, energy companies and financers are coming together to address this risk, and build a project that promises huge benefits for generations to come.