Asia’s clean energy transition: More than just a supply chain problem

Southeast Asia has been pushing for cleaner energy, but it’s behind schedule. This push is driven by rising energy demand, heavy reliance on fossil fuel imports, and growing pressure—both domestic and international—to cut emissions and reduce pollution. The region set a goal to get 23% of its total energy from renewable sources by 2025. As of 2022, it had only reached 15.5%, according to the ASEAN Centre for Energy. With less than a year left, that target seems out of reach.

Several countries have also set long-term net-zero goals—Singapore aims to hit net zero by 2050, Indonesia by 2060, and Thailand by 2065. The International Renewable Energy Agency believes the region could cut energy-related emissions by 75% by 2050, but only if it speeds up clean energy adoption and becomes more energy efficient.

To keep pace with global climate goals, the International Energy Agency says ASEAN needs to triple its solar and wind capacity by 2030. That means adding around 164 gigawatts (GW) of solar and 65 GW of wind. If successful, renewables could supply about 23% of the region’s electricity. But right now, fossil fuels—coal, oil, and gas—still make up over 83% of the total energy mix.

ASEAN also aimed to have 35% of its installed power capacity come from renewables by 2025. In 2023, the share stood at 33.6%. Current trends suggest it’ll only reach 34.1%. However, the ASEAN Targets Scenario (ATS) suggests that if renewable energy policies and capacity additions are fully implemented, renewables could exceed the goal, reaching 39.6% by 2025 and 69.4% by 2050.

To get there, the region would need to increase its solar and wind power by more than five times in the next five years. Solar PV is expected to dominate new capacity additions. Some projections say it could reach 241 GW by 2030 if efforts ramp up. And in places like Vietnam, Indonesia, and Thailand, solar and wind are already cheaper than fossil fuels—making the transition more realistic and affordable.

Still, money remains a major roadblock. The ASEAN Centre for Energy estimates the region will need between $20 billion and $56 billion in renewable energy investments each year until 2030.

Better grid connections and infrastructure will also be key. If countries link their power systems, studies show energy costs could drop by 12%. That kind of integration could also let renewables supply up to 92% of electricity in the region by 2050. But this won’t happen without serious investment and stronger cooperation between governments.

Countries in Southeast Asia are moving at different speeds when it comes to clean energy. In Singapore, the SolarNova program has been a key part of its solar strategy since 2014. The initiative helps government agencies install solar panels on public housing and other buildings by pooling demand and reducing costs. So far, it has added over 1,000 megawatt-peak (MWp) of capacity—enough to power about 88,000 homes and supply roughly 5% of the country’s electricity needs.

The program is backed by the Economic Development Board and the Housing & Development Board, with technical support from the Solar Energy Research Institute of Singapore. More rooftop projects are expected as the program expands across thousands of buildings.

In parallel, the Ministry of Sustainability and the Environment (MSE) and other agencies aim to double national solar capacity to 2 gigawatt-peak (GWp) by 2030. That would cover around 2% of total electricity use. Singapore’s longer-term goal is to raise that figure to 10% by 2050.

Indonesia also made headlines by opening Southeast Asia’s largest floating solar farm at Cirata in 2023. “We managed to build the largest floating solar farm in Southeast Asia and the third biggest in the world,” said President Joko Widodo. It’s a major step, even as coal remains a big part of Indonesia’s energy mix.

Vietnam has led the way on solar, accounting for nearly 70% of ASEAN’s solar power in 2022. But it still relies heavily on coal. The IEA says Vietnam needs to triple its solar and wind capacity by 2030 to stay on track.

The idea of a shared power grid is gaining attention. Linking national grids could allow countries to move electricity across borders and use more clean energy. But building such a system would take time, political will, and billions in funding.

Southeast Asia has made progress—but it’s not moving fast enough. If the region wants to hit its climate targets, it’ll need to act quickly, invest more, and work together. The decisions made over the next few years will shape its energy future.

The global transition to clean energy depends on reliable supply chains. But today, those systems are under pressure.

A major issue is the rising cost and limited availability of key raw materials. Technologies like solar panels, wind turbines, and batteries rely on minerals such as lithium, cobalt, and rare earth elements. As demand for electric vehicles and renewable energy increases, so does competition for these resources. Lithium prices alone surged by over 400% between 2021 and 2022, driving up manufacturing costs and slowing production.

At the same time, the solar industry is facing a different kind of problem: oversupply. In 2024, Chinese manufacturers shipped more than 680 gigawatts (GW) worth of solar PV modules—well above what was used or exported. Data from the China Photovoltaic Industry Association shows that only 277 GW were installed within China and 238 GW exported. That leaves as much as 165 GW of modules in storage, creating excess inventory and driving price instability. Manufacturers are now scaling back production and reassessing deployment plans to rebalance the market.

Trade policy is adding to the strain. In April 2025, the U.S. imposed a new 10% tariff on solar imports from Southeast Asia. Chinese solar products remain under a much steeper 125% tariff. The move is meant to block Chinese companies from bypassing trade rules by shifting operations to neighboring countries, but it’s also raising costs. Prices for solar panels are expected to rise by 3 to 6 cents per watt, while battery systems—where China still dominates—could see even bigger price jumps.

In response, several Southeast Asian countries are working to strengthen their own clean energy supply chains. In Malaysia, programs like the Greening Value Chain initiative help manufacturers cut energy use and switch to recycled materials. The country is also developing battery recycling centers and has launched a green electricity trading platform to support regional energy integration.

Indonesia is investing in its electric vehicle sector, including a new battery cell plant built by Hyundai and LG Energy Solution. The project aims to strengthen Indonesia’s EV supply chain while tapping into its large nickel reserves.

Thailand is promoting its Bio-Circular-Green Economy model and has joined the Indo-Pacific Economic Framework to attract investment and improve supply chain resilience in areas like agriculture, food, and biotech.

Vietnam, meanwhile, is working closely with China to expand cooperation in sectors such as 5G, artificial intelligence, and green technology—part of a broader push to boost its role in regional supply chains.

Singapore continues to lead in green financing and long-term sustainability planning. Its strategic location and strong infrastructure make it a central hub for supply chain coordination across the region.

Together, these moves reflect a growing regional effort to reduce dependency on traditional markets and create more self-sufficient, adaptable supply systems.

Geopolitical tensions are complicating the picture further. Since late 2023, disruptions in the Red Sea have forced many cargo ships to reroute around Africa, adding up to two weeks to Asia-Europe shipping times. Traffic through the Suez Canal and the Bab al-Mandab Strait has fallen by nearly 60%, pushing up freight and insurance costs. For industries like clean energy, which depend on speed and predictability, these delays are a serious problem.

In short, clean energy is moving forward, but not without obstacles. Rising prices, shifting trade rules, regional adjustments, and global disruptions all present real challenges. To stay on track, countries will need to invest in supply chains that are not only greener—but also stronger and more flexible.

Despite falling technology costs and growing urgency around climate change, Asia’s clean energy transition continues to face major financial and bureaucratic obstacles. Southeast Asia alone needs between $190 billion and $390 billion in cumulative investment through 2030 to stay on track with renewable targets—translating to roughly $20–40 billion annually.

While solar panel prices fell by around 85% between 2010 and 2020, recent supply chain disruptions have pushed costs back up—key materials like polysilicon and steel have seen price increases of around 20–30% since 2021, making projects more expensive and slowing momentum.

Several countries in the region are attempting to bridge the investment gap with a mix of public funding, international loans, and targeted policy tools. The Philippines, for example, needs an estimated $337 billion by 2040 to reach its clean energy and efficiency goals.

The OECD’s Clean Energy Finance and Investment Roadmap recommends a one-stop-shop approval process to help cut through red tape, especially for offshore wind and energy efficiency projects. Despite being ranked fourth globally in renewable investment potential by BloombergNEF, the country still struggles with fragmented policies and sluggish implementation.

Malaysia has set a 2025 target of 20% renewable energy capacity in the power mix and requires approximately $7.9 billion to get there. The government is using green financing tools like its Green Technology Financing Scheme, alongside tax incentives, to support new projects. Recent solar auctions have yielded prices below those of gas-powered electricity—around $0.056 per kilowatt-hour—but fossil fuels still make up about 80% of Malaysia’s electricity generation.

In Singapore, a S$5 billion ($3.7 billion USD) government fund is supporting infrastructure and hydrogen innovation, with plans to import up to 4 GW of low-carbon electricity from neighbors like Vietnam and Indonesia. At the same time, the city-state is investing in talent, aiming to train 1,000 nuclear energy professionals by 2030 to prepare for future diversification.

Thailand is expanding solar and wind capacity through a 5 GW feed-in-tariff program, backed by an $820 million loan from the Asian Development Bank. But coal remains dominant, supplying around 55% of the country’s power.

Across the region, long-standing issues with permitting continue to delay projects. In the Philippines, developers often face wait times of up to two years for permits due to overlapping agency requirements.

One 100 MW solar farm was delayed by two and a half years because of inconsistent land-use rules across local governments. The OECD has proposed key reforms to reduce these delays—such as aligning agency plans, funding local governments to hire energy experts, centralizing project data, and streamlining environmental reviews.

Malaysia’s 2020 LSS3 (Large-Scale Solar 3) auction illustrates the scale of these bureaucratic challenges. Although 500 MW of projects were awarded, only 365 MW reached commercial operation by 2022. A year-long delay in grid connection approvals, tied to drawn-out negotiations with the state utility TNB, stalled progress. Compounding these issues, many local financial institutions remain cautious about investing in renewables, often viewing them as too risky. High public debt and underdeveloped capital markets further complicate access to funding, leaving countries dependent on international financing.

Still, there are signs of progress. India and Malaysia have attracted investors through transparent renewable auctions, and India’s non-bank financial institutions now offer long-term loans for clean energy projects. With the right reforms—especially around permitting and local finance—Southeast Asia could begin to overcome these roadblocks.

Still, Asia has several advantages that could help smooth the path forward.

Countries like India, Thailand, and Malaysia get plenty of sunlight. That makes them well-suited for expanding solar power. India, in particular, is already among the top five countries in the world for installed solar capacity. Under its National Solar Mission, the country aims to reach 100 GW of solar energy. As of 2021, it had already installed around 46 GW.

Japan and South Korea are focusing on offshore wind. These coastal nations are investing heavily in wind farms out at sea. Japan wants to install 10 GW of offshore wind capacity by 2030, and increase that to as much as 45 GW by 2040 as part of its plan to reach net-zero emissions by 2050. Korea is also focusing on offshore wind energy, with companies like Ingka Group (owner of IKEA stores) exploring renewable energy investments in the country.

There’s also growing interest in hydrogen. Saudi Arabia is investing billions in green hydrogen through its Vision 2030 strategy. It’s building a $5 billion hydrogen plant powered entirely by wind and solar, with plans to produce 650 tons of green hydrogen each day by 2025. The country also plans to export 200,000 tons of hydrogen to Europe annually by 2030.

Improving supply chain systems could help speed up progress. Nicki Tilney from WTW explains, “Diagnostic mapping and monitoring tools and analytics can help to visualize, quantify and assess risks across the chain and in specific locations.” These tools help companies spot vulnerabilities, manage risks, and build stronger systems.

Even when the technology and funding are available, outdated policies can still slow progress. In many ASEAN countries, fossil fuel subsidies continue to make coal and gas cheaper than renewable energy. According to a report by Bain & Company, fossil fuel subsidies in Southeast Asia are about five times higher than investments in renewables, discouraging green investments.

The report also pointed out that Southeast Asia is “woefully off track” in meeting its green investment goals. While green investment grew by 20% last year, it remains far below the $1.5 trillion needed by 2030 to meet climate goals. The region’s energy consumption is expected to grow 40% this decade, with emissions continuing to rise.

To overcome these barriers, governments must update their energy policies. The report stresses the need for greater regional cooperation, stronger incentives for renewable energy, and creative financing approaches.

Tan noted that Southeast Asia still has many opportunities to reduce emissions with ‘low-hanging fruit’ technologies. Phasing out fossil fuel subsidies and simplifying approval processes would be key steps toward accelerating clean energy growth.

South and Southeast Asia have great potential for renewable energy, with governments setting ambitious net-zero targets. To meet these goals, renewable energy deployment, especially solar and wind, must grow five-fold by 2030. Investment in renewables has surged, reaching USD 345 billion in 2022, driven mainly by China.

Asia’s clean energy transition is undoubtedly facing pressure from fractured supply chains—but that’s only part of the picture. The real hurdle may be more structural: a combination of high upfront costs, bureaucratic red tape, policy gaps, and insufficient investment. While supply chain challenges—like raw material shortages, trade tariffs, and shipping disruptions—can delay timelines and raise costs, they are often symptoms of a broader systemic lag.

Ultimately, the region’s energy future depends not just on fixing the logistics, but on bold, coordinated action. Governments and businesses will need to step up—through smarter financing, stronger regional cooperation, and reforms that align policies with climate ambitions. Without these, even the most robust supply chains won’t be enough to meet Asia’s ambitious clean energy goals.

The path forward is clear: Asia must invest not only in clean technologies but in the systems that support them. Supply chains matter, but they are only one part of a much larger equation.