The energy landscape in Southeast Asia is shifting faster than ever. Countries like Viet Nam, the Philippines, and Indonesia, which together account for nearly 60% of the region’s electricity demand and emissions, are moving away from coal and other polluting fuels. Instead, they are emerging as prime destinations for renewable energy investment. Strong policies, smart market reforms, and clear investment frameworks are now creating opportunities for these nations to lead ASEAN’s clean energy future.
Ambitious Renewable Targets Driving Investment
Viet Nam, the Philippines, and Indonesia have set bold targets for renewable energy by 2030. Viet Nam plans to reach 73 gigawatts (GW) of solar power, the Philippines aims for 14 GW, and Indonesia targets 13 GW. These figures reflect some of the most ambitious commitments in the region. Achieving them, however, depends on tackling challenges like unclear regulations, permitting delays, and financial risks.
In 2024 alone, these three countries attracted $4.6 billion in clean energy investment, marking a $1.1 billion increase compared to the previous year. While this growth shows strong momentum, further policy clarity and market reforms could help attract even more long-term private investment.
Viet Nam is taking steps to enable direct power purchase agreements, allowing renewable energy producers to sell electricity directly to buyers. This move can potentially double the share of renewable energy in the country’s electricity mix. At the same time, the electricity market is slowly opening up to private and foreign participants, which allows for innovative financing models and stronger investment confidence.
The Philippines is also embracing market openness. The country has removed foreign ownership restrictions in the renewable energy sector. It has also introduced competitive energy procurement methods, like the Green Energy Auction. This approach incorporates storage solutions and streamlines approvals through digital permitting systems, making it easier to launch renewable projects quickly and efficiently.
Indonesia is updating regulations by adding risk-sharing in power agreements, introducing new ownership models, and valuing carbon credits. These changes show that clear rules and innovative policies are crucial to unlock Indonesia’s large solar and wind potential.
Technology and Financing Are Game Changers
Technology and financing play a crucial role in determining whether renewable projects succeed. In Indonesia, battery storage projects have boosted solar project returns from 14% to 23%, making investments far more attractive. Similar strategies in Viet Nam and the Philippines have also improved returns and increased grid reliability, ensuring that electricity remains stable even as more renewable sources are added.
Despite progress, financial viability is still sensitive to small changes in costs. A 10% shift in power tariffs or upfront capital can change project returns by as much as 45 percentage points. Other risks include fluctuating exchange rates, changes in equipment costs, and delays in permits. Addressing these challenges through clear regulations and innovative financing solutions is essential to encourage more investment.
Blended finance, which combines public and private capital, as well as local currency financing, is emerging as a key tool. These approaches help lower investment risks, making renewable projects more appealing to both domestic and international investors.
Policy and Market Reforms Unlocking Potential
The transition to renewable energy depends heavily on policy stability and market clarity. Predictable tariffs, clear rules for risk-sharing, and well-designed auctions are crucial. Fast-tracking project approvals, supporting hybrid and storage-enabled systems, and improving grid integration also play major roles in attracting investments.
Viet Nam, the Philippines, and Indonesia are showing leadership in implementing these measures. By enabling private sector participation and encouraging foreign investment, they are creating environments where clean energy projects can thrive.
These reforms are helping to turn historically coal-heavy economies into renewable energy hotspots. By establishing stable, predictable policies and supporting innovative financing models, the three countries are demonstrating how clear rules and smart investments can rapidly accelerate the clean energy transition.
