The power lines that thread through Southeast Asia are no longer mere carriers of current, they now trace the seams of a region reshaping its energy future. As the clean energy shift picks up pace around the world, one crucial element remains underappreciated: the modernisation of power grids.

For more than a century, these grids have been the backbone of electricity systems, supplying homes, businesses and industry. Today, making them bigger, smarter, and more resilient is critical to support the growth of renewables and drive the decarbonisation of electricity. Without modern infrastructure, solar panels and wind farms may never reach their full potential, remaining disconnected from the very systems they’re meant to power.

In fact, the International Energy Agency (IEA) estimates that over 80 million kilometers of grids must be added or upgraded by 2040 to meet net-zero targets, equivalent to rebuilding the entire existing global grid. This will require about US$21 trillion in investments, with ASEAN alone needing over $US3 trillion by 2050 for its clean energy transition.

But the challenge isn’t just scale, it’s strategy. Unlike wealthier regions that can absorb the shock of grid reforms, developing nations in ASEAN must juggle rising electrification demand with the political imperative of affordable power. Navigating a path forward calls for a strategic balancing act to keep energy fair, stable, and future-ready, all at once.

The need for modernising Southeast Asia’s power grids

ASEAN is on track to account for 25% of global energy demand growth between now and 2035, eventually growing to overtake that of the European Union (EU) by 2050. At the same time, the rapid emergence of renewable generation sources like solar PV and wind are changing the flow of electricity on the grid, introducing intermittency into the power flow.

Modernised grids are vital to ensure that clean energy supply can reliably keep pace with rising demand. Grids need to both operate in new ways and become more flexible to accommodate the changes in output from variable renewables production. This includes deploying data-driven grid technologies and energy storage solutions through digitalisation.

Moreover, replacing aging and obsolete grid assets is critical to safeguard energy security, especially with higher risk of outages due to climate change. When Hurricane Maria ravaged Puerto Rico in 2017 for instance, the U.S. island’s 50-year-old energy infrastructure was destroyed, leaving 3.4 million people in the dark in the largest blackout in U.S. history.

To achieve better reliability and resiliency, today’s power grids must evolve to be more dynamic, digital, and decentralised – much like the shift from analogue telephones to the internet. That said, expanding and modernising ASEAN’s power grids will require annual investments in this space to double to nearly $30 billion by 2035, according to the IEA.

The investment is huge, but it needs to be compared with the cost of doing nothing: ASEAN risks losing over 35% of GDP by 2050 due to climate change. Delaying these investments any longer could result in higher long-term costs, with outdated grid systems becoming a bottleneck for achieving clean energy transitions, wasting billions annually.

Diverse energy models, shared pressure points

With the unfolding demands of a cleaner power grid, grid operators face new pressures in their mandate to provide safe, affordable, reliable, and sustainable energy. Electricity tariffs offer a revealing look into how diverse ASEAN nations are responding to the challenge, as they navigate the balance between market forces and public pressure.

Singapore currently leads the region with the highest household electricity prices at ~US$0.25/kWh, reflective of its market-based electricity pricing and limited domestic energy resources. The Philippines, facing high fuel import dependence and grid fragmentation, follows closely at US$0.20-0.22/kWh.

Meanwhile, Vietnam has also introduced tariff hikes of over 10% in recent years to shore up financial pressures on its national utility, EVN, as investment needs grow. Since grid operators generally recover costs through consumer-paid tariffs, expanding grid infrastructure without financial reform risks exacerbating energy inequality.

In Cambodia for instance, prices can reach US$0.18/kwH in non-urban areas where infrastructure costs are higher, placing a greater burden on lower-income households. This reflects ongoing challenges in expanding reliable electricity infrastructure in the country, with many rural villages still not fully connected to the national grid.

Despite different starting points, electricity utilities and grid operators across ASEAN face common stressors: rising costs, fuel market volatility, and the urgent need to green their grids. Unless addressed head-on, the push to modernise grids could unintentionally widen the divide between those with access to affordable energy and those without.

*Tariff prices are based on research data as of 13 June 2025.

Balancing grid investments and consumer protection

 Securing the future of ASEAN’s energy system depends on carefully navigating the trade-offs between investment needs, consumer affordability, and grid efficiency. Fortunately, a mix of financing mechanisms are available to support grid investments while minimising the financial burden on consumers.

These include innovative blended finance that combines public, private, and philanthropic funds to de-risk investments and mobilise private capital for large-scale projects that might otherwise be too risky for private investors alone. The attracted private capital eventually reduces reliance on public funds for grid investments in the long-term.

Malaysia’s Green Technology Financing Scheme (GTFS) for instance provides government guarantees to financial institutions to encourage lending to green projects. Since its inception in 2010, GTFS has approved a total financing amount of over RM5 billion, covering projects across sectors including energy, building, transport, and waste.

Beyond financing, innovative tariff structures are also essential for balancing cost recovery, system efficiency and fairness. Starting 1 July 2025, Malaysia will introduce an electricity price restructuring, in Peninsular Malaysia by replacing the current Imbalance Cost Pass-Through (ICPT) mechanism with the new Automatic Fuel Adjustment (AFA) mechanism. Governed by the Ministry of Energy Transition and Water Transformation and regulated by the Energy Commission (Suruhanjaya Tenaga), this shift reflects a broader national effort to advance the energy transition while maintaining energy security.

As part of the new electricity price structure, electricity bills will be itemised into three distinct components: generation charge, network charge, and retail charge. The generation charge captures fuel costs, generation capacity, and global fuel price adjustments. The network charge accounts for the operation costs for the transmission and supply system maintenance. Meanwhile, the retail charge, covers customer services such as billing and account management. This unbundled structure is designed to improve cost transparency and help consumers better understand what drives their electricity bills.

Electricity tariffs will be adjusted monthly, under the AFA, to reflect the market fuel prices and exchange rates. This improves transparency and allows for quicker adaptation to global price fluctuations, ensuring that consumers are not locked into outdated pricing models. The restructuring also replaces the existing tiered system with a structure based on actual consumption patterns, helping to deliver fairer and more predictable rates for different user groups, including low-income households and small businesses.

One of the key benefits of AFA is its ability to create a more equitable pricing framework. By reflecting real-time cost movements, it ensures consumers are charged more accurately based on actual fuel and market conditions, avoiding both undercharging during high-cost periods and overcharging when fuel prices fall. in Peninsular Malaysia stand to benefit from greater rate stability and clearer visibility into how prices are set, helping to build trust and support for the broader energy transition.

Further, the introduction of expanded Time-of-Use (ToU) scheme marks a significant step forward in demand-side energy management. Unlike standard tariffs, ToU is not applied by default, consumers must opt in and, more importantly, assess whether the structure aligns with their daily routines. Through this scheme, electricity is priced lower during off-peak hours, incentivising users to shift their consumption accordingly.

To make an informed decision, households and businesses are encouraged to review their energy usage patterns and estimate potential savings using TNB’s online bill calculator. If the numbers are favourable, customers may switch their tariff contract to the Time of Use (ToU) structure via the following channels:

• myTNB portal – www.mytnb.com.my
• Email to tnbtou@tnb.com.my
• Visit your nearest Kedai Tenaga

This approach empowers consumers to manage costs more actively and play a greater role in shaping a smarter, more responsive energy system, where efficiency, affordability, and sustainability go hand in hand. In energy planning, timing matters, and ToU gives users more control over how and when electricity is used.

For more information, visit www.mytnb.com.my/tariff

 Turning the balancing act into shared opportunities

 Ultimately, securing the future of ASEAN’s electricity grids hinges not just on building modern power grids, but on doing so without leaving communities behind. Every nation faces its own mix of trade-offs, but the region’s shared imperative is clear: deliver energy that is fair, stable, and ready for a rapidly changing world.

A coordinated effort among governments, regulators, and market participants will be key for innovating on both policy and pricing, thereby turning a delicate balancing act into a shared platform for achieving a sustainable, equitable energy future.