IEA: Southeast Asia Set For Renewable Energy Surge

Southeast Asia is expected to accelerate renewable energy deployment and electrification as governments respond to energy security concerns exposed by the conflict in the Middle East and disruptions to shipments through the Strait of Hormuz, according to the International Energy Agency (IEA). 

In its new report Southeast Asia Energy Outlook 2026, the IEA said the conflict in the Middle East and disruptions to shipments through the Strait of Hormuz highlighted the region’s heavy dependence on imported fuels. Before the crisis, around 60% of Southeast Asia's crude oil imports and one-third of its gas imports came from the Middle East. The region's energy import bill is projected to reach $160 billion in 2026 and could rise to around $400 billion by mid-century under current policy settings. 

“Southeast Asia is a crucial region shaping global energy trends and set to account for 20% of the growth in the world’s energy demand over the next decade, second only to India,” said IEA Executive Director Fatih Birol.  

Against this backdrop, the IEA said countries are increasingly looking to diversify energy supplies through domestically available resources, with renewable energy expected to play a central role. The report estimates that investments in renewables, electrification and efficiency helped Southeast Asia avoid around $30 billion in fossil fuel import costs in 2025.  

Under today’s policy settings, the region’s renewable energy capacity is projected to nearly triple by 2035, up from 120 GW in 2024. Timely implementation of announced national targets could expand capacity by around 5 times compared with 2024 levels.  

There is already growing momentum in solar deployment across the region, the IEA highlights. The Philippines, for instance, became the 2nd-largest destination for Chinese solar exports in Q1 2026, with imports roughly 3 times higher than a year earlier. Separately, the country recently announced fast-tracking around 1.47 GW of renewable energy and storage, led by solar PV calling the accelerated deployment a strategic necessity and a national imperative amid the Middle East conflict (see Philippines Fast-Tracks 1.47 GW RE & Storage Amid Middle East Crisis).  

In the Stated Policies Scenario (STEPS), solar PV generation is projected to increase from 44 TWh in 2024 to nearly 200 TWh in 2035 and more than 540 TWh by 2050. Low-emissions sources led by hydro, wind and solar PV provide more than half of electricity generation by 2050. 

Competitive procurement mechanisms are playing a growing role in renewable energy deployment. According to the report, nearly 19 GW of renewable energy capacity was awarded through auctions across the region in 2025. 

Since 2015, electricity generation in Southeast Asia increased 60% led by coal, but hydro and more recently wind and solar PV have gained larger shares. In 2024, the combined capacity of wind and solar PV exceeded 45 GW, up from 4 GW in 2015. Solar PV generation rose from 3 TWh in 2015 to 44 TWh in 2024, while wind increased from 1 TWh to 18 TWh, respectively. 

Overall, solar PV and wind are expected to be major contributors to the future electricity supply in Southeast Asia, supported by a significant increase in battery storage, grid infrastructure and cross-border electricity connections.  

Meanwhile, electricity consumption of the region is projected to increase, largely driven by economic growth, urbanization, rising cooling needs and increasing adoption of electric vehicles (EV).  

The IEA said achieving national energy and climate pledges would accelerate the region’s shift toward cleaner energy. Eight countries in Southeast Asia, including Vietnam and Indonesia, have declared economy-wide net-zero targets, with wind and solar PV expected to play a leading role in meeting them (see Indonesia Announces 100 GW Solar Power Capacity Plan).   

If all announced targets are achieved, low-emission sources will provide around 50% of generation in 2035 and 90% in 2050. Coal- and gas-fired power plants are expected to continue playing a role across all scenarios outlined in the report. 

Birol stressed, “Diversification of energy sources and supply routes is now a central priority, with deployment of different fuels and technologies, electrification and efficiency serving as important levers to reduce import exposure and strengthen resilience. Stronger regional cooperation would also deliver major benefits.”  

The agency also emphasized the importance of energy efficiency measures and stronger regional cooperation, including the ASEAN Power Grid initiative, to improve energy security, lower costs and support the integration of growing renewable energy capacity. 

Investment in grids and storage will need to increase from $13 billion today to $50 billion in 2050 to meet announced pledges. This comprises an estimated $27 billion to realize planned cross-border interconnections under the ASEAN Power Grid, as per the IEA.  

Clean energy investment has risen by 60% since 2015, helping lift total energy investment in Southeast Asia to more than $100 billion in 2025. Even so, the region accounts for only around 3% of global energy investment, according to the IEA. 

The complete report is available for free download on the IEA’s website.