IEA warns Southeast Asia's energy security at risk as electricity demand surges

An International Energy Agency report warns that Southeast Asia faces severe energy security risks as electricity demand is projected to grow 5.4% annually through 2030. Driven by data centers, industrial expansion, and cooling needs, this surge coincides with supply disruptions from the Iran war, which has blocked the critical Strait of Hormuz. Heavily dependent on Middle Eastern imports, regional ministers are meeting in Manila to discuss emergency stockpiles and the long-delayed ASEAN Power Grid.

IEA energy security warnings

• ▪The International Energy Agency warned in its October 2026 Asean Energy Security Review that Southeast Asia faces widening electricity security challenges due to tightening supply, variable renewables, and constrained networks.
• ▪International Energy Agency Executive Director Fatih Birol stated that Southeast Asian nations must build energy security directly into decisions spanning oil stocks, gas infrastructure, electricity grids, and energy efficiency.

Electricity demand growth projections

• ▪Indonesia is projected to drive approximately 40% of Southeast Asia's electricity demand growth through 2030, followed by Vietnam at 26%.
• ▪Southeast Asia's electricity demand is projected to grow at an average annual rate of 5.4% from 2026 to 2030, driven by industrial expansion, cooling needs, and data centers.

Regional electricity interconnection initiatives

• ▪Only nine of the 18 priority projects identified under the ASEAN Power Grid initiative have been completed since the plan was first proposed in the late 1990s.
• ▪The Lao PDR-Thailand-Malaysia-Singapore Power Integration Project successfully demonstrated the technical and commercial feasibility of multilateral cross-border electricity trade in Southeast Asia.
• ▪The International Energy Agency estimates that implementing the current pipeline of regional electricity interconnection projects in Southeast Asia will require $27 billion between 2025 and 2040.

Natural gas consumption and imports

• ▪Natural gas contributes nearly one-fifth of Southeast Asia's total energy supply, with regional liquefied natural gas imports more than trebling between 2015 and 2025.
• ▪Southeast Asian natural gas consumption is projected to increase by 18%, or over 30 billion cubic meters per year, between 2025 and 2030, driven by 24 gigawatts of new gas-fired generation capacity.

Impact of the 2026 Middle East conflict

• ▪The effective closure of the Strait of Hormuz following the February 28, 2026 military strikes triggered fuel shortages, soaring costs, and energy-conservation measures across Southeast Asia.
• ▪The Philippines declared a national energy emergency within weeks of the February 28, 2026 outbreak of the Iran war amid warnings that domestic fuel supplies could run dry in 45 days.
• ▪Prior to the February 28, 2026 U.S. and Israeli military strikes on Iran, Southeast Asian nations imported approximately 50% to 60% of their crude oil and one-third of their natural gas from the Middle East.

Debatable claims

• ▪Political and market differences make a fully integrated ASEAN Power Grid unrealistic
• ▪Continued reliance on fossil fuels is necessary to maintain Southeast Asia's economic competitiveness
• ▪Government fuel subsidies do more harm than good during energy crises
• ▪Southeast Asian nations should prioritize building strategic petroleum reserves to counter supply disruptions