Power grid offers a real shot at ASEAN integration

In an era when ASEAN’s unity is often described more as symbolism than substance, the ASEAN Power Grid (APG) stands out as an ambitious vision that could finally bring tangible integration to Southeast Asia.

Conceived more than two decades ago, the APG aims to connect the power systems of the ten ASEAN member states through a network of cross-border transmission lines. The ultimate goal is deceptively simple yet profoundly transformative: to enable the free flow of electricity across the region, creating a shared market for power trade and accelerating the transition to a greener, more sustainable energy future.

Unlike the bloc’s numerous communiqués and declarations that fade into diplomatic noise, the APG carries a genuine sense of purpose. Its success would mean that electricity generated from hydropower in Laos could light homes in Malaysia, that solar energy from Indonesia could power Singapore’s industries, and that the region could reduce its collective reliance on fossil fuels.

In a way, the APG represents what ASEAN has long aspired to become – a community not merely bound by rhetoric but by infrastructure and interdependence.

The project’s envisioned scale is staggering. The APG envisions a regional network spanning more than 4,500 kilometers, involving dozens of bilateral and multilateral interconnections. Some links, such as the Laos–Thailand–Malaysia–Singapore Power Integration Project (LTMS-PIP), are already operational, allowing power generated from Laos to reach Singapore via Thailand and Malaysia.

Others, such as the Sumatra–Malaysia, Kalimantan–Sarawak, and Indonesia–Singapore interconnections, remain in planning or feasibility stages. Collectively, they form part of a broader effort to create what ASEAN policymakers call the “regional super grid.”

But beyond the cables and substations lies a more profound story, the APG is becoming the clearest embodiment of ASEAN’s elusive unity. For decades, the bloc has struggled to transform its vision of “One ASEAN” into policy reality.

Politically, its members are divided. Some lean increasingly toward China, while others remain close to the United States, and a few, like Indonesia, persist in their traditional non-aligned diplomacy. Amid such fragmentation, the APG is emerging as one of the few projects capable of binding these divergent interests into a common cause.

ASEAN integration test

The APG’s significance goes far beyond energy. It represents ASEAN’s most practical experiment in collective economic integration since the establishment of the ASEAN Economic Community (AEC) in 2015. Where the AEC has often been hampered by regulatory inconsistency and protectionist instincts, the APG offers a concrete, technical pathway toward interdependence.

From a purely economic standpoint, the benefits are obvious. Cross-border power trade would reduce redundancies in electricity generation, lower overall system costs, and enhance supply security. Countries with surplus generation capacity could export to those facing deficits.

More importantly, it would enable the region to harness its diverse renewable energy resources, from Laos’s hydropower, Vietnam’s wind farms, to Indonesia’s geothermal potential, in a coordinated, efficient manner.

This makes the APG more than a conventional infrastructure project, it is also a flagship of ASEAN’s green economic transition. As the world shifts toward decarbonization, ASEAN’s growing energy demand poses a dual challenge, ensuring energy security while cutting emissions. The APG provides a mechanism to do both.

By integrating grids, it allows renewable energy to flow where it’s most needed, smoothing out the intermittency that often hampers solar and wind power. It could, in effect, become the backbone of a regional green economy, the network through which ASEAN’s climate commitments become operational rather than aspirational.

Yet for all its promise, the project’s progress remains uneven. The West Kalimantan–Sarawak interconnection, linking Indonesia and Malaysia, has been operating since 2016, supplying up to 230 MW of electricity from Malaysia’s Sarawak Energy. However, larger-scale projects, such as the Sumatra–Peninsular Malaysia and Indonesia–Singapore cables, are still undergoing feasibility assessments under the coordination of the ASEAN Centre for Energy (ACE).

Part of the delay stems from regulatory fragmentation. Electricity remains a strategic, often politically sensitive sector in most ASEAN countries. Differences in tariff structures, grid codes, and licensing regimes have slowed harmonization.

Without a regional legal framework for power trade, akin to Europe’s energy market integration model, the APG’s growth depends largely on bilateral agreements. That makes progress inherently piecemeal.

Financing paradox

The other major constraint is financing, and here, ASEAN’s geopolitical balancing act is on full display.

Most of the APG’s feasibility studies, technical assistance, and early-stage investments have been funded by Western-backed multilateral institutions, chiefly the Asian Development Bank (ADB) and the World Bank. Both have provided technical guidance, capacity-building, and in some cases, direct funding for interconnection projects.

This reliance on Western-backed financing is not inherently problematic, but it exposes a paradox. While the APG is envisioned as a symbol of ASEAN unity, its financial underpinnings still reflect the legacy architecture of global development finance, where Western institutions dominate the project pipeline.

Meanwhile, China, through the Asian Infrastructure Investment Bank (AIIB), remains largely peripheral in the APG’s financial structure, a surprising omission given Beijing’s growing footprint in Southeast Asia’s energy and infrastructure sectors.

There is, however, an emerging recognition that this imbalance may need to shift. Several policymakers and analysts have suggested that greater participation from AIIB and other Asian-led financiers could help diversify funding sources, accelerate project delivery, and, just as importantly, balance the region’s geo-economic dependencies. After all, ASEAN’s energy security should not be beholden to any single bloc, East or West.

Including Chinese-backed financing would not mean surrendering to Beijing’s influence. Instead, it could strengthen ASEAN’s strategic autonomy, the same principle that underpins its “centrality” doctrine.

In practical terms, collaboration with AIIB could unlock financing for cross-border renewable projects, particularly those involving high-voltage transmission and undersea interconnections, which require long-term capital commitments.

At the same time, Western-backed lenders have increasingly aligned their portfolios with green financing priorities. The ADB, for instance, has launched the Energy Transition Mechanism (ETM) to help ASEAN countries retire coal plants early and reinvest in renewables.

In this sense, both Western and Chinese financial institutions share overlapping objectives, at least nominally, to facilitate Southeast Asia’s transition toward low-carbon growth. The challenge for ASEAN is to harness both sides constructively, turning great-power competition into a complementary dynamic rather than a divisive one.

Green network, fragmented region

The APG’s growing emphasis on renewable energy integration has given it a second life as a green project. What was once envisioned merely as a regional infrastructure backbone has now become central to ASEAN’s climate narrative. This shift aligns with the bloc’s ASEAN Plan of Action for Energy Cooperation (APAEC) 2021–2025, which places the APG at the core of the region’s clean energy ambitions.

Each interconnection built under the APG framework brings the region closer to its collective target, achieving 23% renewable energy in the total primary energy supply by 2025, a goal reaffirmed in successive ASEAN Energy Ministers’ meetings. Through interconnected grids, countries can share renewable surpluses, avoid overcapacity in fossil fuel generation, and stabilize demand fluctuations.

The geopolitical symbolism of this cannot be overstated. At a time when ASEAN is often divided by major power rivalry, with disputes over the South China Sea, trade dependencies, and military alignments, the APG offers a rare common denominator.

Unlike defense or diplomacy, electricity is apolitical. It lights homes, powers factories, and sustains economies regardless of ideology. As such, it could become the most tangible foundation for ASEAN solidarity in an otherwise fractured landscape.

Moreover, the APG dovetails neatly with the global energy transition. With investors increasingly favoring green infrastructure, ASEAN’s interconnected power system could attract significant private capital if regulatory barriers are eased.

The emergence of green bonds, carbon markets, and energy trading platforms across Asia further enhances the project’s financial viability. Some analysts even foresee a future “ASEAN Electricity Exchange,” where cross-border power trade becomes as routine as goods or capital flows.

Still, challenges persist. Political will remains uneven across member states. Energy nationalism, driven by domestic priorities and public perception, can slow cross-border cooperation.

Technical challenges, from synchronizing grids to building undersea transmission lines, also demand advanced engineering and long-term maintenance frameworks. Above all, ASEAN’s consensus-based decision-making often leads to incremental rather than decisive progress.

Yet even with these obstacles, the momentum is building. The recent Joint Ministerial Statement on ASEAN Power Connectivity (2025) reaffirmed the commitment to complete at least six new interconnections by 2030. Indonesia, for its part, has pledged to accelerate feasibility work on its Malaysia and Singapore links. Vietnam is exploring potential expansion of its cross-border grid with Laos and Cambodia.

If these efforts bear fruit, the APG could become ASEAN’s defining project of the next decade, not merely for its engineering feat, but for its political symbolism. For the first time, ASEAN could be bound by a network that is real, visible and indispensable.

In the final analysis, the ASEAN Power Grid represents more than the sum of its circuits and substations. It is a litmus test of whether ASEAN can move beyond speeches and summits toward practical integration.

It embodies not just the promise of shared electricity, but the potential of a shared green future, one where economic pragmatism and environmental stewardship converge.

If the APG succeeds, it will not only illuminate cities and industries across Southeast Asia – it may also rekindle the long-dimmed idea of an ASEAN that is truly united, not by words, but by watts.

Ronny P Sasmita is senior analyst at Indonesia Strategic and Economics Action Institution.