Renewable energy remains cost-competitive with fossil fuels, with more than 90% of utility-scale renewable capacity added worldwide in 2025 generating electricity at a lower cost than the cheapest new fossil fuel alternative. For a region with diverse renewable energy resources but continued reliance on imported fossil fuels, falling renewable energy costs offer an opportunity to strengthen energy security and support industrial development. Economic growth, industrialisation and urbanisation are expected to drive electricity demand across Southeast Asia.
In Southeast Asia, existing renewable energy capacity saved Indonesia, Thailand and the Philippines an estimated US$5.7 billion in coal and gas purchases.
Although data centres currently account for a relatively small share of total electricity consumption, demand from facilities supporting artificial intelligence (AI) and digital services is expected to grow. Southeast Asia is an emerging hub for AI-enabled data centres and digital services, adding to the region’s electricity needs.
The International Renewable Energy Agency’s (IRENA) World Energy Transitions Outlook 2026: 1.5°C Pathway estimates that electricity will account for 53% of final energy consumption in the Association of Southeast Asian Nations (ASEAN) by 2050. Buildings are expected to have the highest electrification rate among end-use sectors, at more than 80%, while the rate for transport is projected to exceed 32%.
Meeting this demand will require expanded renewable power generation, modernised electricity grids, additional energy storage and stronger cross-border interconnections. These developments will require substantial investment in generation and supporting infrastructure.
IRENA estimates that cumulative investment of US$2.5 trillion between 2026 and 2050 could enable Southeast Asia to reach almost 3 TW of installed renewable energy capacity by 2050, with renewables accounting for 90% of electricity generation. The ASEAN region has installed a cumulative total of almost 124 GW of renewable power capacity, including 11 GW added in 2025, an increase of almost 10% compared with 2024.
Investment in infrastructure, electrification, electricity grids and supply chains will also affect employment. The energy transition is expected to redistribute jobs across the wider economy, rather than solely within the energy sector.
While fossil fuel industries are expected to lose jobs in many countries and regions, other sectors could see employment growth. In Southeast Asia, agriculture is projected to record stronger employment gains, potentially linked to biofuel development. Driven largely by solar energy, the region is expected to account for 5.5% of the projected 3 million renewable energy jobs worldwide by 2050.
