Southeast Asia is planning US$540 billion of green investment in power and electric vehicles (EVs), but more than a third of that money is unlikely to be spent under current conditions as governments prioritise energy security over climate goals, according to a new report by Bain & Company and Standard Chartered.
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About US$315 billion of the US$540 billion in announced green capital expenditure between now and 2030 is on a “credible path” to deployment, found the report titled The Southeast Asia’s Green Economy Report 2026: The New Calculus released on Monday.
The shortfall underscores how the region is not lacking in capital but has a “problem with making funds convertible to investible projects on the ground,” said Dale Hardcastle, partner at Bain & Company.
Hardcastle noted how the “rules of the green economy have changed in the past 24 months”, as energy security, growth and affordability have moved up the priority list over climate, pushed by trade tensions, energy price shocks, and geopolitics.
“As we look at what’s happened over the last year with the trade war, energy security and resilience has been most important. What has changed is a much different, more difficult balancing act as governments think about capturing some growth while balancing those very ambitious climate targets by 2030,” Hardcastle said in a press briefing.
Southeast Asia has announced US$540 billion in green power and EV capex as of 2026, but only about US$315 billion is likely to be realised under current market conditions. Image: Bain & Company
As a result, capital is flowing to sectors where commercial demand, policy and infrastructure readiness align, and stalling where any of these elements is missing, the report warned.
It pointed to how of approximately US$40 billion in annual green capital expenditure deployed across the region between 2021 and 2025, half of the funds went to grid development sited in green industrial zones where “demand is real and commercially viable.”
But cancellation rates remain in the grid, with about 50 to 60 per cent of renewable energy projects around the region have been terminated between 2021 and 2025 due to system constraints including unclear power purchase agreement structures, permitting, and grid connection rules.
For instance, the report cited how Denmark’s Ørsted, the world’s largest offshore wind developer, abandoned plans for 5 gigawatts (GW) offshore wind projects off the coast of Vietnam’s Ninh Thuan province. It was reported in the media that the decision was triggered by uncertainty over the country’s policy framework and route to market.
In Thailand, key projects including the 50 megawatts (MW) South Khao Yai Thiang wind farm and SAMART’s waste-to-energy plants (10 MW each) were delayed, attributed to land use constraints and approval bottlenecks.
Meanwhile, 40 to 50 per cent of nickel and battery investments for electric vehicles were also scrapped.
Nickel prices fell more than 70 per cent from the 2022 spike because supply, especially from Indonesia, grew faster than demand, creating a severe glut and crushing margins for many planned projects, including those of BASF–Eramet’s US$2.6 billion nickel refinery and LG’s US$7.7 billion battery complex.
Even with EV demand now rising due to the Middle East conflict, developers who just lived through a brutal down‑cycle will be cautious about recommitting billions until they see a sustained tightening in the nickel market and more stable policy signals, said analysts.
Southeast Asia has 24 to 36 months to address these bottlenecks, with an additional US$80 billion in green capital expenditure that the region could attract by 2030, roughly one‑quarter more investment than under the current, sluggish trajectory, the report added.
Data centers and EVs emerge as key drivers of long-delayed grid upgrades
Big, concentrated new loads like data centres, EVs and green industrial parks can force and finance the grid upgrades Southeast Asia has been postponing, according to the Bain and & Company report.
It estimated that over the next three to four years, these new loads will drive more than 100 terawatt-hours of additional electricity demand in the region, backed by over US$200 billion in committed capital expenditure.
“This vast new electricity load risks straining infrastructure, undermining competitiveness, and offsetting climate gains. On the other hand, this growing energy demand raises the prospect that it could offer a demand-side anchor for renewables projects and financing. Realising that promise hinges on the development of a robust power grid,” said Patrick Lee, chief executive officer for Singapore, Asean, South Asia at Standard Chartered.
More than 70 per cent of Asean’s data centre demand is concentrated in two clusters, Singapore and Johor. This concentration of demand is placing significant strain on transmission networks that were not designed for such rapid, localised growth. Image: Bain & Company
Reducing wait time between when big users need electricity and when they can actually get a firm, high‑capacity grid connection will be critical to capturing this investment, with the Bain & Company survey showing that 90 per cent of regional data center operators and hyperscalers cite grid connection delays as a top constraint and most are willing to pay a premium for guaranteed timelines.
Southeast Asia is hitting a grid “breakpoint” as data centre and industrial demand outpaces network upgrades, leaving developers competing for scarce capacity and longer waits for power, said the study.
In Malaysia, data centre requests already exceed 11 GW, about 40 per cent of Peninsular capacity, spurring the country’s leading utility company, Tenaga Nasional Berhad (TNB) to pledge roughly US$10 billion in grid upgrades.
Thailand faces shortages in industrial hubs like Chon Buri and Rayong, with around US$1 billion earmarked to reinforce the Eastern Economic Corridor grid, the country’s flagship regional power, smart city, and renewable energy development initiative. Indonesia’s main data centre clusters are largely fully booked, and new grid connections in Indonesia can take up to three years while Vietnam’s frequent peak‑time outages further heighten time‑to‑power and reliability risks for new data centres.
Meanwhile, the EV ecosystem build out and modern, renewables-ready grids as tightly linked, said the report, as attracting EV factories, battery plants and green industrial parks depends on access to clean electricity, while clustering that demand gives utilities the confidence to invest in bigger and earlier grid expansions.
Anchor loads from EVs and green industrial clusters can co-finance and de-risk grid upgrades through long term offtake and tariffs, turning what used to be a cost that was easy to postpone into strategic infrastructure essential for competitiveness and jobs, it added.
