After the Gulf Crisis: Rethinking ASEAN Energy Security through Regional Grid Governance

The ongoing Gulf crisis is pushing ASEAN member states to rethink both energy security and the energy transition. While energy security in the ASEAN region has long been shaped by access to affordable oil and gas, dependence on major exporters, price volatility and critical maritime routes has made this model particularly vulnerable to geopolitical disruption. This exposure remains substantial across several ASEAN markets, with Middle Eastern supplies accounting for 95 per cent of the Philippines’ oil imports and 49 per cent of Vietnam’s gas imports before the crisis. Against this backdrop, energy diversification with a focus on cleaner electrification is moving closer to the centre of long-term resilience planning.

Regional grid integration is therefore becoming increasingly important to the region’s resilience agenda, but the broader shift towards electrification also redefines energy security risk. Electrification may reduce some exposure to oil and gas vulnerabilities, but it also creates new dependencies linked to technologies, critical materials and technical standards. As electricity demand grows across ASEAN, energy resilience will increasingly hinge on grid stability, secure supply chains, cross-border governance and cybersecurity.

ASEAN’s crisis response reflects this shift, with electricity playing a growing role alongside traditional fuel security. While immediate measures focused on petroleum security, including faster ratification of the ASEAN Framework Agreement on Petroleum Security (APSA) and stronger emergency response mechanisms, the wider regional resilience package looked beyond oil and gas towards energy diversification. ASEAN leaders also reaffirmed the need to diversify the energy system through renewables, biofuels, electric vehicles and cross-border power connectivity projects such as the ASEAN Power Grid (APG). This places cleaner electricity systems more firmly within energy security planning alongside climate policy.

This shift forms part of a wider reconfiguration of ASEAN’s energy system, reinforced by a structural rise in electricity demand across the region. Regional power demand grew by more than 60 per cent between 2015 and 2025 and is projected to rise by around 4 per cent annually through 2035, making electricity system resilience a growing energy security concern. Cross-border electricity trade can therefore play an increasingly important role in long-term resilience and regional supply security. It can help diversify regional energy sources and reduce part of the region’s exposure to external fuel shocks.

Meeting this electricity demand growth will require substantial investment. ASEAN will need over US$300 billion in investment in grid expansion and modernisation between 2025 and 2040, including around US$27 billion for APG interconnections by 2040. In 2025, ASEAN’s cross-border interconnection capacity stood at around 7.7 gigawatts (GW) and will need to more than double by 2040. Subsea interconnections are also becoming an important part of APG expansion, with several planned links spanning long distances across maritime Southeast Asia.

Deeper regional grid integration can strengthen energy resilience, but it also changes the energy security risk landscape. Some vulnerabilities already exist within national power systems, while greater interconnection and cross-border trade introduce additional risks.

First, power infrastructure is becoming a strategic vulnerability. The Hormuz crisis showed how geopolitical conflicts can make energy chokepoints and infrastructure vulnerable. Electrical systems and regional grid infrastructure are not immune to these disruptions. In addition, grids are increasingly exposed to climate risks, including extreme heat, storms and flooding. The record-breaking heatwave in 2023 strained power systems across Southeast Asia, resulting in power outages and industrial disruptions in Vietnam and Thailand. High temperatures also disrupted electricity supply in the Philippines in 2024.

Second, cleaner electrification shifts rather than eliminates external dependencies. While electrification may reduce some exposure to fuel volatility, it increases reliance on clean technologies, battery materials, renewable equipment and grid components. These supply chains remain concentrated in a limited number of suppliers and processing centres, highlighting the need for greater diversification. Indonesia’s role in nickel and battery development demonstrates Southeast Asia’s potential to support this diversification, but the region should avoid replacing one concentrated dependency with another.

Third, increasing cross-border electricity trade will compound coordination risks. Unlike oil and gas, electricity cannot be easily stored or sourced from distant alternative suppliers during supply deficits. Subsea interconnections may span multiple jurisdictions and involve additional permitting, regulatory and financing requirements. As ASEAN moves from bilateral power deals towards multilateral trade, clear regional rules on pricing, emergency supply, dispute settlement mechanisms and system reliability will become more important for scaling electricity trade.

Finally, electricity system resilience is dependent on robust digital security. Modern power systems depend heavily on software, sensors and control systems to transmit electricity and balance supply and demand in real time. This creates new points of vulnerability, where disruption can come through digital systems rather than fuel shortages or physical damage.

Managing these risks will require regional coordination as grid integration deepens. ASEAN already has a growing set of regional institutional arrangements and initiatives for advancing the APG. The Enhanced APG Memorandum of Understanding endorsed in 2025, together with the ASEAN Power Grid Consultative Committee (APGCC), the Heads of ASEAN Power Utilities/Authorities (HAPUA) and the ASEAN Energy Regulators Network (AERN) form part of the expanded APG institutional architecture across policy, technical and regulatory areas, while the ASEAN Centre for Energy (ACE) serves as the APG Secretariat.

To support implementation, APG Task Forces are advancing work on data and information sharing, renewable energy certificates and regional planning. The ASEAN Interconnection Masterplan Study III Phase 3 has set out minimum requirements for multilateral power trade, and the APG Financing Initiative launched with the Asian Development Bank and the World Bank Group aims to mobilise financing for APG interconnections. The 43rd ASEAN Ministers on Energy Meeting (AMEM) also endorsed the terms of reference for a submarine power cable development framework.

Building on these regional arrangements and ongoing workstreams, ASEAN could prioritise four strategies. First, strengthen regional grid governance on data exchange, cybersecurity and crisis-time information sharing. Second, prioritise regional financing for grid reinforcement, storage and climate resilience. Third, enhance regional cooperation on the resilience of critical grid equipment and clean technology supply chains. Fourth, advance ASEAN’s collective response mechanism for major grid disruptions, outages and emergency support. Together, these priorities can help ASEAN manage the new dependencies and complex challenges arising from deeper grid integration and electrification.

Editor’s Note:
ASEANFocus+ articles are timely critical insight pieces published by the ASEAN Studies Centre.