Replacing Southeast Asia’s planned expansion of gas-fired power with solar energy could unlock savings of up to $67 billion, according to new analysis from Ember, highlighting a strong economic case for accelerating renewable energy adoption as energy markets face fresh volatility.
Solar vs Gas: A Growing Cost Divide
Under ASEAN’s current energy transition pathway, gas capacity is expected to nearly double from 106 gigawatts to around 200 gigawatts by 2030. However, Ember estimates that operating gas-fired power plants at current LNG price levels would cost approximately $71 billion annually, potentially rising to $109 billion under future price scenarios.
In contrast, generating the same amount of electricity using solar would cost roughly $42 billion per year, nearly half the cost, reinforcing solar’s long-term competitiveness, according to Ember analysts Dinita Setyawati and Muyi Yang.
Energy Security Risks Intensify
The ongoing disruption linked to the Strait of Hormuz and halted LNG supplies from Qatar has triggered sharp price volatility across Southeast and East Asia. The crisis is expected to reshape regional energy markets, intensify competition for LNG in spot markets, and deepen geopolitical fragmentation.
Dr Dinita Setyawati emphasized that fossil fuel import dependence continues to expose emerging Asian economies to energy shocks, warning that rising prices could further destabilize energy security.
Rising Power Costs and Inflation Pressures
Countries heavily dependent on gas face immediate financial strain. In Singapore, where gas accounts for about 95 percent of electricity generation, power costs could rise to around $260.8 per megawatt-hour, nearly double recent levels.
The broader economic impact is also significant. Higher fossil fuel costs, typically priced in US dollars, are expected to pressure regional currencies, weaken industrial output, and drive inflation. During the Russia-Ukraine conflict, inflation peaked at 8.5 percent in Singapore and 6.1 percent in Thailand in 2023, offering a warning of potential repeat scenarios.
Japan and Regional Exposure
Japan, one of the world’s largest oil consumers, remains highly vulnerable due to its reliance on Middle Eastern imports for over 90 percent of its crude oil. With oil prices already near $100 per barrel, a rise to $110 could further accelerate inflation and consumer price increases.
Coal Not a Viable Alternative
The report cautions against reverting to coal as a temporary solution. Coal prices have climbed about 15 percent to $134 per tonne, pushing coal-fired electricity costs to around $76 per megawatt-hour. This remains significantly higher than solar combined with battery storage, estimated at around $40 per megawatt-hour.
In Thailand, increased coal usage could add approximately 3.2 million tonnes of CO2 emissions annually, equivalent to about 5 percent of its 2037 emissions target.
Call for Accelerated Renewable Investment
Dr Muyi Yang noted that reducing dependence on fossil fuels requires a broader economic transformation, as oil and gas underpin multiple industrial sectors.
The report calls for faster deployment of renewables, expanded grid infrastructure, increased energy storage, and stronger regional cooperation. Initiatives such as investments by State Grid Corporation of China, which plans to spend about $550 billion on transmission and storage between 2026 and 2030, signal the scale of action required.
ASEAN policymakers are also reinforcing collaboration through initiatives like the ASEAN Power Grid, aiming to strengthen energy security and accelerate the transition toward sustainable power systems.
BABURAJAN KIZHAKEDATH
