The ASEAN region faces both opportunities and challenges in scaling up renewable energy capacities. Notably, the Philippines secured over 10 GW of renewable energy capacity by 2029 through its 4th Green Energy Auction (GEA-4) conducted in 2025. The auction capped solar power bids at 72 USD/MWh, significantly below the market’s average wholesale price of 94 USD/MWh. This demonstrates that competitive bidding can provide long-term renewable electricity supplies at costs lower than existing market rates. Transitioning to competitive auctions is therefore an efficient pathway for ASEAN countries to expand renewable energy while reducing costs simultaneously.
However, state-owned utilities in several ASEAN countries suffer from weak financial health, raising the perceived investment risks and financing costs associated with renewables. The prevailing “single-buyer” market structure means state utilities—often deeply indebted—are considered high-risk buyers, increasing equity and debt costs for renewable projects. Power Purchase Agreements (PPAs) also face challenges such as delayed payments or regulatory changes, undermining project financing certainty. While corporate renewable PPAs are emerging worldwide as a key mechanism to boost renewables, they remain at a nascent stage in ASEAN due to regulatory and approval complexities.
Countries like Malaysia, Singapore, Thailand, and Vietnam are experimenting with PPA expansions, but their share relative to total power demand remains modest. Malaysia operates a Corporate Green Power Program enabling renewable electricity procurement via renewable energy certificates (RECs), while Singapore allows buyers to contract with licensed power retailers to access renewable power through the grid. Thailand pilots up to 2 GW of corporate PPAs facilitating direct renewable purchases by large consumers, and Vietnam’s 2024 PPA framework accommodates both physical and virtual contracts.
Simplifying permitting processes is crucial to avoid costly project delays. Growing local community engagement and benefit-sharing frameworks can also reduce social opposition to large-scale renewable projects, limiting uncertainty. ASEAN countries are making commitments to phase down fossil fuel-based generation, including coal power plants. For instance, Indonesia plans to reduce coal-fired plants by the mid-2030s through conversions like biomass co-firing and carbon capture technology. The Philippines is halting new coal plant construction and exploring emissions trading incentives for early retirements. Vietnam aims to close or repurpose all coal plants by 2050. However, such transitions require aligning power system flexibility and stable operations with long-term contracts for fossil capacity, demanding comprehensive reforms.
Currently, most ASEAN members (except Vietnam) are still at early integration stages of variable renewables, with limited grid impacts evidenced so far. This allows relatively low-cost management of renewables’ output variability. But many countries operate with inflexible long-term contracts and surplus coal generation capacity, which limits the ability to reduce fossil output during low-demand or high renewable output periods. The inadequate ancillary services compensation mechanisms and inclusion of such services in PPAs restrict renewables’ flexibility response.
In summary, ASEAN’s renewable energy growth depends on clear and detailed long-term energy plans to reduce investor uncertainty and finance costs, robust reforms to improve PPA frameworks and market structures, streamlined permitting, expanded corporate renewable procurement, fossil generation phase-out aligned with grid flexibility enhancement, and active community engagement. These measures are critical to transition ASEAN’s energy sector towards affordability, efficiency, and decarbonization.
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