Solar could save ASEAN USD 67 billion over gas

By Francis Allan L. Angelo

SINGAPORE — Solar energy could meet ASEAN’s projected new power generation needs at roughly half the cost of gas, potentially saving the region up to USD 67 billion, as the ongoing Gulf crisis exposes the vulnerability of fossil fuel-dependent economies across Asia, according to a new analysis from global energy think tank Ember.

Gas capacity is projected to reach almost 200 gigawatts (GW) under ASEAN’s energy transition scenario by 2030, double the current 106 GW. Ember’s analysis found that gas-fired power from the total fleets at current liquefied natural gas (LNG) price levels would cost approximately USD 71 billion per year, rising to as much as USD 109 billion under future price projections.

Generating the equivalent amount of electricity with solar in a single year would cost roughly USD 42 billion, approximately half as much.

“Current and past crises have proven that fossil import dependence is risking energy security. Developing and emerging economies in Asia will be at higher risk if energy prices continue to escalate. While energy saving can be an initial short-term solution, the pivot to homegrown renewables can provide more options to buffer future energy shocks,” said Dr Dinita Setyawati, Senior Energy Analyst – Asia, Ember.

The closure of the Strait of Hormuz and a halt in Qatari LNG production have sent shockwaves through energy markets across Southeast and East Asia. Around 84% of crude oil and 83% of LNG that passed through the Strait of Hormuz went to Asia in 2024.

The report warned that prolonged disruption could reshape price dynamics, intensify competition in the spot market, and risk geopolitical fragmentation across the region.

Countries with a high share of gas in their electricity mix face the most immediate pressure. Gas-fired generation costs in Singapore, for instance, could rise to around USD 260.8 per megawatt-hour (MWh), roughly double the level recorded in late February 2026, based on the current trajectory of LNG prices. In 2024, gas accounted for 95% of electricity generation in Singapore.

A gas price rise to USD 100 per million British thermal units (MMBtu) could spike the cost of gas-fired electricity generation to USD 770/MWh, a plausible scenario given that gas prices peaked at over USD 100/MMBtu in August 2022.

The Singapore government has set a temporary price cap that acts as a circuit breaker, activated only during periods of high and sustained fluctuations, to stabilize prices and protect consumers from price volatility.

The Philippines, one of the most exposed economies in the region, has been hit particularly hard by the disruption. President Ferdinand Marcos Jr. declared a state of national energy emergency on March 24 through Executive Order No. 110, citing the “imminent danger posed upon the availability and stability of the country’s energy supply.” The same order created the interagency UPLIFT (Unified Package for Livelihoods, Industry, Food, and Transport) Committee, chaired by Marcos himself, to oversee the government’s response.

Energy Secretary Sharon Garin confirmed that 98% of the Philippines’ crude oil imports come from the Middle East, while 97% of liquid petroleum products and 91% of liquefied petroleum gas are imported from Asian refineries that are themselves dependent on the Persian Gulf. Garin warned that the nation had about 45 days of fuel supplies left.

Pump prices have surged dramatically since the start of the year, with estimated year-to-date net increases of around PHP 36.30 per liter for gasoline, PHP 57.55 for diesel, and PHP 55.10 for kerosene, sending diesel past PHP 100 per liter. As of the week of March 23, diesel prices were expected to increase by another PHP 11.88 per liter, while gasoline was set to rise by PHP 6.47 per liter.

Department of Economy, Planning and Development Secretary Arsenio Balisacan warned that GDP growth could slow to 3.5 to 4% in 2026 under a worst-case scenario of USD 200 per barrel sustained for six months. MUFG Research estimated that every USD 10 per barrel increase in oil prices cuts Philippine GDP growth by around 0.2 percentage points and raises inflation by around 0.6 percentage points. The peso has already hit a record low past 60 per dollar.

The government has implemented work-from-home measures to cut the use of transportation and suspended fuel excise taxes, with senators also eyeing the reduction or suspension of the 12% value-added tax on petroleum products.

The analysis showed that the economic consequences extend well beyond the energy sector across the region. Rising prices for US-dollar-denominated fossil fuels are expected to weigh on Asian currencies, weaken industrial output, and push up inflation.

Past episodes of energy price volatility, including during the Russia-Ukraine conflict, triggered significant inflationary surges across the region, with Singapore and Thailand recording peak inflation of 8.5% and 6.1%, respectively, in 2023.

“Oil and gas are far more than just fuels. From fertilisers to high-tech polymers, they are the building blocks of modern life, leaving Asia’s industrial base deeply dependent on them. Breaking that dependence is not just an energy switch – it is a full economic transformation. Perhaps it is time for Asia to rethink its fossil-intensive growth pathway,” Dr Muyi Yang, Senior Energy Analyst – Asia, Ember said.

Japan, one of the world’s five largest oil consumers, imports over 90% of its crude oil from the Middle East. Crude oil prices have already surged to around USD 100 per barrel. If prices climb to USD 110 per barrel with no exchange rate fluctuations, gasoline prices are expected to rise by about 30% to around USD 1.24 per liter.

Ember’s analysis also argued against a short-term pivot back to coal as a stopgap measure. Coal prices have risen by approximately 15% to around USD 134 per tonne, and the report found that the levelized cost of coal-fired electricity under these conditions stands at roughly USD 76/MWh, still significantly more expensive than solar plus battery storage at around USD 40/MWh.

Thailand has already ordered its coal plants to run at full capacity, a move that Ember estimated could add around 3.2 million tonnes of CO2 emissions annually, representing about 5% of the country’s targeted emissions by 2037 under its draft power development plan. In comparison, solar generation would cost about 35% less than coal.

Thailand has also announced a price cap on diesel for 15 days as a short-term response to the crisis.

The report highlighted the case for accelerating renewable energy deployment, investing in grid infrastructure and regional interconnection, expanding energy storage, and avoiding locking in further LNG import dependence.

In the Philippines, the Department of Energy has rolled out an aggressive 10-year Green Energy Auction roadmap targeting PHP 25 trillion (around USD 433 billion) in renewable energy investments to add 25 GW of new capacity by 2035. The country has 1.8 GW in potential rooftop solar capacity across homes, commercial buildings, and public facilities.

China’s State Grid Corporation plans to invest approximately RMB 4 trillion (around USD 550 billion) in transmission and storage infrastructure between 2026 and 2030, roughly 40% higher than investment during the previous five-year period. South Korean President Lee Jae Myung has also called for accelerated deployment of clean energy as a medium-term measure on the premise of a prolonged Middle East situation.

ASEAN Economic Ministers have issued a joint statement underscoring the importance of strengthening regional energy security, accelerating the renewable transition, and deepening cooperation on the ASEAN Power Grid.