Iran War Accelerates Southeast Asia’s Renewable Energy Push

Several countries in Asia have recognised the need to accelerate the deployment of renewable energy to reduce reliance on fossil fuel imports and support energy diversification.The ongoing conflict in the Middle East has significantly reduced fuel trade in recent months, leading to fears of shortages as countries worldwide scramble to find different suppliers and switch to alternative energy sources. The International Energy Agency (IEA) has previously pointed out the significant potential Asia has to increase its renewable energy capacity, and now several governments are putting the agency’s advice into action.An October report published by the IEA stated that “Southeast Asia’s energy security challenges are intensifying as demand grows, reliance on imported fuels rises, and interactions across energy systems become increasingly complex – creating a greater need for coordination and planning.” In the report, the IEA recommends stronger national preparedness and deeper regional cooperation in energy to help the region overcome ongoing supply disruptions and volatile prices.Over the last decade, energy demand per person in Southeast Asia has risen by nearly 30 per cent, driven by economic growth, industrial development, and urbanisation. Meanwhile, the region’s crude oil output has decreased by 40 per cent since its 1990s peak, driving up oil imports. The region has also increased the import of liquefied natural gas (LNG) in recent years, leaving it highly vulnerable to price fluctuations and trade disruptions.The IEA predicts that electricity demand in Southeast Asia will increase by around 5.4 per cent per year between 2026 and 2030, driven by greater use of cooling, expanding industries, and the growth of data centres. Meeting the growing demand will require significant investment in the region’s grids, new generating capacity and system flexibility. The review therefore recommends that Association of Southeast Asian Nations (ASEAN) countries diversify their sources and routes of supply, make greater use of domestic energy resources where economically viable, and expand energy efficiency and electrification.Fuel shortages and high prices, driven by the war in Iran that began in February, have prompted several Asian governments to focus on expanding renewable energy capacity to strengthen energy security. Between February 28 and August 31, Indonesia, Malaysia, Thailand, Singapore, Vietnam, and the Philippines announced 37 renewable energy and electrification policies and 29 fossil fuel policies. Some of these measures were already under consideration before the war began.According to an investigation by Zero Carbon Analytics, most of Southeast Asia’s new fossil fuel policies focus on short-term relief, with implementation periods of less than six months, while the majority of renewable energy and electrification policies target long-term change. Of the 37 renewable energy and electrification policies announced, 24 have implementation periods of around three years or more, compared to just six of the 29 fossil fuel policies.Renewable energy capacity across the Asia-Pacific region, excluding China, is expected to expand by more than 840 GW between 2026 and 2031, more than doubling the capacity added during the previous six-year period. The expansion would bring the region’s total installed renewable energy capacity to almost 1,700 GW by 2031, according to the IEA’s latest Renewables 2026 report. India is expected to account for nearly half of the capacity growth, followed by Southeast Asian countries, which are forecast to contribute around 20 per cent of the increase.The IEA has revised its renewable energy capacity forecast for the Asia-Pacific region upwards by 15 per cent, or 87 GW, compared with last year's projections for the overlapping 2026–2030 period. Stronger solar photovoltaic deployment in India, South Korea, Indonesia and Australia has outweighed weaker expectations for wind and hydropower. The agency has also raised its forecasts for the Philippines and several other regional markets, while revising expectations for Japan and Chinese Taipei downwards.Despite the improved outlook, the IEA highlighted several ongoing challenges facing renewable energy development, including inadequate grid infrastructure, financing difficulties, permitting delays and land acquisition problems. These issues are particularly significant in Indonesia, the Philippines, Thailand and Vietnam, where governments have strengthened renewable energy policies but continue to face difficulties translating targets into operating projects. Greater investment in electricity grids, energy storage and system flexibility will be essential to support further expansion.Solar photovoltaic installations are expected to account for almost 80 per cent of renewable energy capacity additions across the Asia-Pacific region, excluding China, between 2026 and 2031, followed by onshore wind at 12 per cent and hydropower at 7 per cent. Competitive auctions are expected to drive more than half of utility-scale renewable capacity growth. The region is also forecast to remain the world's second-largest hydropower growth market, although delays to conventional hydropower projects in India and Vietnam have prompted a modest downward revision. However, India's pumped-storage hydropower outlook has improved, reflecting the growing need for energy storage and grid flexibility as solar and wind capacity expands.The ASEAN region is expected to see a sharp acceleration in renewable energy deployment through 2031, with solar photovoltaic installations leading the expansion. The IEA expects stronger rooftop solar incentives, expanded installation quotas and improved access to corporate power purchase agreements to support growth in countries such as Indonesia, Vietnam and the Philippines. The agency estimates that ASEAN's renewable energy capacity growth could be 37 per cent higher than its main forecast if governments accelerate permitting, strengthen grid infrastructure and fully implement planned energy policies.Several Asian countries were already planning long-term energy diversification before the war in Iran began. However, severe restrictions on fuel trade in recent months have underscored the need for rapid diversification and reduced reliance on fossil fuels, prompting several governments across the region to strengthen energy policies and accelerate the rollout of new green energy capacity.By Felicity Bradstock for Oilprice.comMore Top Reads From Oilprice.com$7 Billion in Oil Debt Has Nigerian Banks Holding Back LendingFusion's Next Race Is Over Superconducting Tape, Not PlasmaGlobal Power Grid Expansion Surges 50% to Record High