Smart grids could save ASEAN USD 2.3B by 2040

By Francis Allan L. Angelo

Modernizing Southeast Asia’s power grids could prevent up to USD 2.3 billion in economic losses by 2040, according to a new report by energy think tank EMBER.

The report, titled ASEAN’s Low-Carbon Future Flows Through Smart Grids, underscores how outdated grid infrastructure is becoming a critical bottleneck to the region’s energy transition and economic resilience.

Without urgent investment in digital grid modernization, countries in the Association of Southeast Asian Nations (ASEAN) risk missing climate targets, delaying renewables integration, and losing billions in economic productivity due to reliability issues.

The report projects that regional electricity demand will more than double by 2040, requiring up to USD 171 billion in grid investment, with nearly one-fifth directed toward digital technologies.

Failure to act could cost ASEAN nations USD 2.3 billion annually in grid-related economic losses, driven by inefficiencies, outages, and delays in clean energy deployment.

“Smart grids are the invisible enabler of the energy transition,” said Mylene Capongcol, co-author and former director of the Philippine Department of Energy’s Renewable Energy Management Bureau.

According to EMBER, countries such as Vietnam, Indonesia, and the Philippines will require grid investment levels equivalent to 1–2% of GDP to remain on track with climate commitments.

The study recommends national governments prioritize digital grid infrastructure—including smart meters, automation, and demand-side response systems—as foundational for resilient and clean power systems.

Currently, ASEAN countries lag far behind China, the EU, and the U.S. in grid modernization efforts, particularly in digitalization and regional interconnectivity.

“A future-ready grid is the next frontier for ASEAN’s energy security,” said Harsh Vijay Singh, EMBER’s Asia Program Lead, adding that “without digital upgrades, clean energy ambitions will remain stranded.”

Only a handful of ASEAN members—most notably Singapore—have begun adopting nationwide smart grid programs, while others remain at the pilot stage or still rely on legacy systems.

The report stresses that even with growing renewable energy targets across the region, investment in wind and solar will be ineffective unless grid infrastructure is upgraded in parallel.

In Vietnam, for example, over 4 GW of renewable capacity remains curtailed due to local grid congestion and the absence of digital forecasting and balancing tools.

Similarly, Indonesia’s lack of grid coordination across islands has led to underutilized clean energy assets and continued dependence on fossil fuels.

The Philippines faces similar constraints, with the country’s archipelagic geography posing both a technological and financial challenge to full-scale smart grid deployment.

The report also notes that delaying digital investment will increase costs later, as countries will be forced to retrofit aging infrastructure rather than build smart systems from the outset.

According to EMBER, digital grid upgrades can reduce transmission and distribution losses by 5–10%, enable greater consumer participation in energy markets, and allow real-time monitoring for better demand management.

Beyond economic efficiency, smart grids are essential to meet ASEAN’s commitment to sourcing 35% of installed capacity from renewables by 2025 and achieving net-zero emissions in the coming decades.

The EMBER report calls for regional cooperation mechanisms, including shared R&D, regulatory harmonization, and co-investment strategies, to help smaller or less-developed ASEAN members accelerate their smart grid adoption.

It also emphasizes the need for international climate finance and multilateral development banks to prioritize grid digitalization in their funding portfolios.

“Smart grid investments offer one of the highest returns in the clean energy space,” said Singh, urging policymakers and lenders to treat grid modernization with the same urgency as renewable energy projects.

While some ASEAN countries have launched energy transition roadmaps, most lack detailed grid digitalization timelines, making implementation timelines uncertain and vulnerable to political shifts.

To support capacity-building, EMBER recommends creating regional knowledge hubs, training programs for utility staff, and technical assistance partnerships with more advanced grid operators.

As ASEAN economies grow and electrification expands across transport, buildings, and industry, the need for flexible, intelligent grids becomes even more critical.

Digital tools such as AI-powered demand forecasting, smart inverters, and grid-edge devices are now essential components of a resilient power sector—not futuristic luxuries.

The report concludes that without comprehensive grid modernization, ASEAN’s path to a low-carbon future will remain technologically unfeasible and economically costly.