On ridges in the remote highlands of southern Laos, 133 wind turbines began spinning in August, powering what has become Southeast Asia’s largest onshore wind farm.
The Monsoon Wind Power Project, with an installed capacity of 600 megawatts, sends electricity 27 kilometers to Vietnam, where it connects to another 44 km of grid under a 25-year deal. The USD 950 million project is operated by a Thai-led consortium that includes Japan’s Mitsubishi Corporation and was built by China’s Power Construction, or PowerChina.
Impact Electrons Siam (IES), the Thai renewable energy company spearheading the project, said it plans to invest an additional USD 1.7 billion to add up to another gigawatt of capacity by as early as 2030, an expansion that would make it one of Asia’s largest wind power facilities.
“Apart from sending [power] to Vietnam, we can spare some [capacity] and work with other countries now that we have proved that this can work,” CEO Nat Hutanuwatr told Nikkei Asia. “The door might be open for other countries, especially Singapore. They really need this kind of power now.”
The Monsoon wind farm offers a glimpse of the “supergrid” that Southeast Asia envisioned more than three decades ago. The ASEAN Power Grid (APG) is designed to strengthen the region’s energy security, aiming for fully integrated cross-border operations by 2045.
Yet progress has remained slow. Of the 18 planned power interconnection projects, just half have been completed, most of which are land-based, and many remain in early planning. The initiative has been hampered by uneven political will and the high costs of crossing seas. The region will need at least USD 100 billion by 2045 just to build transmission lines, according to the Asian Development Bank (ADB).
ASEAN officials estimate the total cost could reach USD 764 billion. Mismatched electricity markets and technical standards also pose significant obstacles.
Even so, analysts say political and industrial momentum is building as countries confront soaring demand for clean energy, pressure to decarbonize and the need to attract foreign investment in growth areas such as data centers, and to quickly shift to high-value manufacturing like semiconductors. The stakes are high in a region where fossil fuels still account for more than 90% of the energy mix.
ASEAN ministers are set to meet in Kuala Lumpur this month, where they are expected to outline a road map for common standards and regulations.
“The biggest impediment to energy integration is political will to drive the vision,” said Sharon Seah, senior fellow at the ISEAS-Yusof Ishak Institute in Singapore, although she noted an “uptick in momentum” under Malaysia’s chairmanship of the bloc this year. “Institutional, regulatory and technical issues can be easily overcome once we have the political will.”
First endorsed in 1997, the regional bloc is now targeting more than 17.5 GW of cross-border capacity by 2040, up from 7.7 GW in 2024.
Matthew Wittenstein, a senior energy connectivity official at the United Nations Economic and Social Commission for Asia and the Pacific, said the initiative lacked rigorous analysis in its early years. ASEAN’s consensus-based approach in part complicated efforts to reconcile the so-called energy trilemma of affordability, security, and sustainability, he said.
“But now there’s been a growing recognition that actually it’s not really as much of a tradeoff as policymakers assumed,” added Wittenstein, who has worked on the power grid for about a decade. A joint study by Singapore and the US Department of Energy last year forecast that regional power trade could lift ASEAN’s gross domestic product growth by 0.8 percentage point to 4.6% and create 2,000–9,000 jobs every year.
Meanwhile, a study by the Economic Research Institute for ASEAN and East Asia (ERIA) estimated power costs for consumers could drop by up to 3.9% with a more integrated regional grid.
The grid’s importance is underscored by surging energy demand. Southeast Asia is on course to account for a quarter of global energy demand growth through 2035, second to India, according to the International Energy Agency. Regional energy demand is expected to surpass that of the European Union (EU) by midcentury. Eight ASEAN members have pledged to reach net zero emissions, most by 2050, with the Philippines and Myanmar the only two without a net zero target.
“Every country now has climate targets to achieve, and in order to do that, they cannot do it alone,” said Nadhilah Shani, head of power generation and interconnection at the ASEAN Centre for Energy. A joint report by Bain & Company and Singaporean state investor Temasek Holdings estimates that expanding regional connectivity could cut the cost of decarbonization by USD 800 billion, or 11%, compared with each country acting alone.
The Monsoon wind project was also far from smooth sailing. Although construction took just over two years and finished four months ahead of schedule, the planning and negotiations dragged on for more than a decade after its inception in 2011, its operator, IES, said. In particular, CEO Nat recalled that it was “not easy” to convince governments to buy the wind energy, as many regarded renewables as “a liability instead of an asset.”
In the end, Vietnam Electricity (EVN), a state utility, agreed to buy the power on condition that the price remain affordable, and that the Thai company conduct all necessary studies to determine suitable connection points. A power purchase agreement was signed with EVN in 2022.
“The great thing about Vietnam is they never say no,” Nat said. “They just give you really difficult homework.”
Investor support was also critical. The ADB, which had worked with IES since 2015, and led the due diligence process, structured a USD 692.6 million financing package that combined concessional loans and grants from private lenders, including Thailand’s Siam Commercial Bank and Kasikornbank, as well as Japan’s Sumitomo Mitsui Banking Corporation.
ADB energy director Keiju Mitsuhashi described it as an “exemplar project” of the bank’s commitment. In April, the ADB pledged up to USD 10 billion to back the broader APG.
With limited land for renewables, Singapore has emerged as one of the strongest champions of electricity trading in the region. Last year, the city-state raised its target to import up to 6 GW of low-carbon electricity by 2035, about a third of its power supply that year. Natural gas currently accounts for over 90% of its fuel mix. Prime Minister Lawrence Wong has described access to clean energy as “a major national imperative.”
“The industries of the future—artificial intelligence, semiconductors, biopharmaceuticals—are highly energy-intensive,” said Wong in a budget speech in February. “To meet these growing energy needs and to bring down our carbon emissions at the same time, we will need more clean power.”
In September, Singapore doubled its electricity import capacity from Laos and Malaysia to 200 MW and extended an electricity trade deal by two years. Launched in 2022, the Lao PDR-Thailand-Malaysia-Singapore Power Integration Project (LTMS-PIP) became the first multilateral electricity trade agreement in the region.
Neighboring Malaysia, facing surging energy demand from data centers, has also prioritized cross-border links. At the ASEAN summit in May, Kuala Lumpur agreed with Singapore and Vietnam to explore transmitting renewable power from Vietnam through Malaysia to Singapore via a mix of new subsea and overland connections.
Sarawak, Malaysia’s hydropower hub, plans to connect with neighboring Sabah by the end of the year through a 34-kilometer cable. Sarawak Energy is also working with Sembcorp Industries and SP Group in Singapore on plans to export 1 GW of power to the city-state via an undersea cable. “There will be no transition without transmission,” said a Sarawak Energy representative.
Foreign partners are eyeing opportunities. Investment in ASEAN renewables has grown by 15% annually since 2020, compared with 11% globally, reaching USD 43 billion in 2022, according to Zero Carbon Analytics. China remains the biggest investor, with USD 2.7 billion committed between 2013–2023, but Japan and South Korea are playing a growing role, chipping in USD 2.45 billion and USD 583 million, respectively.
But the ASEAN power grid still faces formidable barriers. Unlike the EU, it lacks a harmonized power market and grid codes, forcing developers to navigate different technical standards and regulatory regimes. Most existing initiatives are limited to bilateral power trading, with only a handful of multilateral efforts underway. The LTMS-PIP multilateral interconnections, often touted as a breakthrough, remain essentially a one-way trade that largely relies on existing infrastructure.
Another key impediment is differences in market structures. Singapore operates a liberalized wholesale electricity market where multiple generators compete to sell into the grid. By contrast, Thailand, Laos, and Malaysia use single-buyer models, with state utilities the sole purchasers.
“While jurisdictions can retain authority in the retail market domestically, some level of integration can facilitate the creation of a wholesale market in the region,” said Seah of the ISEAS-Yusof Ishak Institute.
Linking island nations with subsea cables is also vastly more expensive than building overland grids. ASEAN’s ongoing multilateral interconnection effort, the Brunei-Indonesia-Malaysia-Philippines Power Integration Project (BIMP-PIP), will involve costly undersea cables and aim for bidirectional flows of geothermal, solar, and even hydrogen energy. This makes it a far more complex project than the LTMS-PIP.
Analysts say the upcoming ASEAN Summit will test whether leaders can move beyond a patchwork of bilateral deals toward a true regional grid, a change that will require major upgrades. Malaysia’s ministry of energy transition said member states are expected to sign an enhanced memorandum of understanding on the power grid that includes regulatory and technical alignment, as well as a financial mechanism for cross-border trade.
“At the ASEAN level, a multilateral agreement is needed to provide a clear framework for adoption in each country,” said Ardhi Rasy Wardhana of the Centre for Strategic and International Studies in Indonesia. Without that, “bilateral arrangements remain vulnerable to fluctuations in commodity price swings; as they essentially function as exports and imports, they can be weaponized and harmful to one party.”
This article first appeared on Nikkei Asia. It has been republished here as part of 36Kr’s ongoing partnership with Nikkei.