The way Southeast Asia’s power grids are structured could hold back its clean energy transition, even as the region stands among the world’s fastest‑growing electricity markets, a new study has found.
Despite Southeast Asia being one of the emerging economies accounting for nearly 80 per cent of additional electricity consumption in the coming decade, its biggest utilities are not neutral grid operators.
Instead, they are integrated companies whose business models could make them less inclined to tap small players like rooftop solar and other distributed energy resources, according to a new analysis by Germany-based think-tank Agora Energiewende.
The study examined how in the European Union, a stand‑alone distribution system operator (DSO), is responsible solely for planning, financing, building and operating these local networks. In contrast, distribution networks in Southeast Asian are run by utilities that also sell and buy power, creating built‑in incentives to favour new infrastructure and their own supply over rooftop solar, flexibility and efficiency, researchers suggested.
For instance, the report noted how state‑owned power company PLN in Indonesia is a vertically integrated monopoly that generates or procures electricity, manages transmission and distribution, and sells power to consumers. In Thailand, regional distributors such as the Metropolitan Electricity Authority (MEA) and Provincial Electricity Authority (PEA) interface with a single national buyer, while in the Philippines, private concessionaire Meralco runs both the local grid and procures or generates the electricity it retails.
When the same entity runs both the grid and earns money from other activities — like building infrastructure, buying power under long‑term contracts or selling electricity to customers — conflicts of interest are hard to avoid, the report warned.
“An entity that combines distribution functions with retail sales may not provide fully non-discriminatory grid access for distributed generation, such as rooftop solar PV. An entity that procures power may also be less inclined to facilitate distributed generation that competes with its existing supply arrangements,” said the research.
The Agora report noted that independent regulation can reduce these tensions such as ring‑fencing accounts, whereby the finances of the grid business are clearly separated from the company’s other activities, as well as setting performance‑based incentives, and enforcing non‑discriminatory access rules.
But it argued that policymakers in emerging regions like Southeast Asia need to be acutely aware of these structural biases as they rethink the role of distribution grids in an era of rapid demand growth and rising shares of variable renewables.
“Where demand growth and distributed energy resource deployment are outpacing grid infrastructure and governance upgrades, societies are already paying the price… Delayed connections undermine the financial viability of clean energy and electrification projects and can raise costs for consumers and businesses. They also slow progress on decarbonisation,” it said.
