ASEAN is getting closer to a power grid deal. Here’s a look at what’s still missing

Southeast Asian countries have made progress towards setting up an ASEAN Power Grid (APG), a key part of the region’s effort to increase electrification, improve energy security and reduce emissions. But the ministers gathered at this year’s energy meeting left major implementation questions unresolved, from rules governing subsea cables to the terms of Indonesia’s participation.

The Philippines closed its year chairing ASEAN energy cooperation with what Energy Secretary Sharon Garin called a landmark accomplishment for the APG.

Speaking to reporters on Oct. 8, Garin said energy ministers had reached consensus on an enhanced memorandum of understanding for the APG, although signatures were still pending. Garin added that Indonesia, which had not signed when the meeting began, formally conveyed its intention to do so during the ministers’ late session on Oct. 7.

The joint statement adopted at the 44th ASEAN Ministers on Energy Meeting, however, does not mention the memorandum or any signatures. On subsea cables, it says countries are “generally supportive” of draft regulatory guidelines, while “some countries will continue their respective domestic consultations and internal process.” 

Work on the broader submarine cable framework is expected to accelerate under Singapore’s ASEAN chairship in 2027.

Subsea cable rules remain unresolved

Several priority APG projects depend on subsea cables, including proposed links between the Philippines and its neighbors and between Peninsular Malaysia and Sarawak.

Speaking at a workshop hosted by the Global Renewables Alliance on Oct. 8, Nadhilah Shani, Head of the Power Generation and Interconnection Department and APG Secretariat at the ASEAN Centre for Energy (ACE), said these projects pose different challenges from conventional overland interconnections between utilities.

“It’s a high-risk capital project, and we do need a bigger investment and how to de-risk this project so that private investment could come in as well,” she said.

Shani said the proposed framework is intended to align permitting, technical specifications, supply chains and cost allocation across countries, issues that cannot be addressed by bilateral conversations.

Indonesia pushes for fairer electricity trade terms

Indonesia’s hesitation also reflects unresolved commercial terms for regional electricity trade.

At an industry forum on Sept. 22, Indonesian Energy and Mineral Resources Minister Bahlil Lahadalia said he had not signed the APG agreement because the terms were not yet “win-win,” citing the price Singapore would pay for a planned 3.4 GW of green electricity exports. He said an arrangement in which Singapore received 70% of the profits and Indonesia just 30% would not be acceptable, according to local outlet Monitor Indonesia.

The ASEAN Energy Investment 2026 report, released during the ASEAN energy meetings, warns that policy changes in one country could disrupt cross-border electricity trade, underscoring the importance of durable intergovernmental agreements in securing project financing.

Philippines faces costly grid upgrades

For the Philippines, which remains physically disconnected from neighboring power systems, regional interconnection is still a distant prospect.

“As part of the initial studies, we were very far from realizing this interconnection with the rest of the ASEAN,” said Luningning G. Baltazar, Director IV of the Department of Energy’s Electric Power Industry Management Bureau. She estimated that the Philippines would need at least USD 8 billion to strengthen its domestic grid before connecting to neighboring systems.

Garin said a World Bank-supported study on a Philippines-Indonesia interconnection is due for completion in 2027. Such links could eventually support power-short areas including Zamboanga and Palawan, she said.

The ministers’ joint statement also welcomed progress on the Brunei-Indonesia-Malaysia-Philippines project, including work toward establishing a dedicated working group.

Garin said ASEAN’s 2045 target for completing the APG is also under review as governments look for ways to accelerate implementation, although no revised timeline has been agreed.

A USD 764 Billion Investment Challenge

Funding committed so far remains small relative to the scale of investment required. The ASEAN Power Grid Financing Initiative, launched in October 2025, offers up to USD 10 billion from the Asian Development Bank and an initial USD 2.5 billion from the World Bank. ACE estimates that realizing the regional grid by 2045 will require around USD 764 billion.

But Baltazar said the challenge goes beyond the availability of capital, with greater attention needed to making ASEAN Power Grid projects attractive to investors.

Robert Cooke, Grids and Electrification Advocacy Lead at the Global Renewables Alliance, said regional forums can establish common direction but cannot resolve every project-level commercial issue. Ministers’ meetings typically seek “the lowest common denominator between all of the members,” he said at a media forum on Oct. 9, while binding agreements are usually negotiated project by project.

Cooke pointed to UK interconnectors with Belgium and Norway, which operate under different commercial structures. One uses a price floor and ceiling, while another relies on shared ownership.

ASEAN already has a functioning model of its own. The Lao PDR-Thailand-Malaysia-Singapore project, whose second phase doubled trading capacity to 200 MW, operates through coordinated bilateral power purchase agreements. ACE says that approach is now helping inform development of the planned Brunei-Indonesia-Malaysia-Philippines link.