Funding hurdles hit ASEAN Power Grid

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March 8, 2026 | 12:00am

MANILA, Philippines — Despite growing momentum, ASEAN’s multibillion-dollar plan to link the power transmission networks of its member countries by 2045 still faces major financial challenges, research and analysis firm BMI said.

The Fitch Solutions unit said financing would continue to be the “primary bottleneck” for the ASEAN Power Grid (APG), with strong government support required to unlock the necessary capital.

“Cross-border submarine cables involve capital-intensive assets spanning multiple jurisdictions, with uncertain revenue streams and complex sovereign risk exposure,” BMI said.

Given this, emerging ASEAN markets with tighter fiscal space and weaker utility balance sheets are likely to deal with significant funding gaps in developing interconnector infrastructure, it said.

Amid rising electricity demand, APG aims to strengthen energy security in the region by enabling cross-border power trading.

This has long been an ambitious vision, but slow execution has held back progress. Over the past year, however, momentum has grown as the region moves toward unified rules for subsea interconnectors.

In October last year, ASEAN energy ministers endorsed the terms of reference for the framework aimed at establishing the physical cross-border infrastructure of subsea power cables across the region.

The framework is expected to be finalized this year as the Philippines assumes ASEAN chairship.

But BMI considers the timeline “fairly ambitious,” given the complexities of key unresolved issues, including commercial and financing structure.

“It is worth noting that multilateral financing initiatives linked to APG are beginning to emerge, but these alone are far insufficient,” BMI said.

Over the next decade, multilateral lender Asian Development Bank has committed up to $10 billion for APG to help the region meet the need for modern, interconnected energy systems.

Even so, BMI noted that the funding still falls far short of the estimated $100 billion needed by 2045 for transmission infrastructure alone.

Around $800 billion in power generation and transmission investments is needed to support ASEAN’s goal of connecting its electricity networks, according to the World Bank Group.