When heavy storms triggered a fault on a major power line in Indonesia’s Sumatra in late May, blackouts plunged homes and businesses across the island into darkness, leaving millions to cope without power in the humid heat for up to a day.
Failed traffic lights caused chaos on the streets of Medan, one of the country’s biggest cities, and restaurants and shops had to shutter or throw out food after fridges stopped working. Four people were reported to have died from carbon monoxide poisoning from generators.
A power outage caused by damage to cables on a high-voltage transmission line, the first of two to strike Sumatra in a fortnight, highlighted the huge challenge facing Indonesia and much of neighbouring Southeast Asia – the maintenance and upgrading of inadequate grid capacity that industry analysts say is proving an obstacle for billions of dollars in planned clean power investments.
Experts told Climate Home News the Galang–Simangkuk transmission line, which was relatively new and only began operating seven years ago, should have been able to withstand the storms that caused transmission towers to collapse in early June.
“It should not have had these grid failures,” said Wai-Shin Chan, Hong Kong-based head of research at Asia Research & Engagement, a consulting firm, warning that climate change would bring more frequent episodes of extreme weather.
“The grid resilience is really not there,” Chan said.
The Indonesian Air Force helped state-owned utility PT Perusahaan Listrik Negara (PLN) transport emergency power towers to restore electricity supplies within 24 hours, but the two incidents could cause longer-lasting damage to investor confidence – hurting the delivery of much-needed reliable clean electricity supplies.
PLN did not respond to a request for comment.
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Grid bottlenecks and projects stuck on hold
With electrification high on the agenda of the COP31 climate talks later this year, there is growing global focus on the need to bolster grid infrastructure to cope with increased electricity use and more renewables in the power mix.
In Southeast Asia, energy experts say inadequate grid capacity and maintenance is already proving a major factor in the region’s stuttering rollout of new clean energy projects.
About 50% to 60% of renewable energy projects in Vietnam, Thailand and Indonesia were cancelled or stalled between 2021 and 2025, according to a recent report by consultancy Bain & Company and Standard Chartered. In Indonesia, 48% of announced projects were subsequently dropped or delayed during that period.
Progress in the region is also being hampered by issues ranging from unclear power purchase agreement (PPA) structures, a failure of power policies to keep up with investor needs, permitting and licensing approval delays, grid connection constraints, limits to private sector involvement in electricity markets, and policy and tariff uncertainty, energy experts said.
Some renewable energy projects have also faced opposition due to their environmental impact and issues related to land rights.
But Bain researchers found grid infrastructure was the biggest bottleneck for Southeast Asia’s energy transition, with about $18 billion per year needed in investment for modernisation and upgrades.
The International Energy Agency (IEA) has warned that electricity grid and storage investment in the region was higher in 2015 at $15 billion compared with $12 billion in 2025, even as electricity demand and renewable energy growth accelerated.
“It’s a concern for long-term power development in the region,” Chan said.
“If these risks – grid curtailment, policy uncertainty, permitting and PPA – are not adequately addressed, investors just don’t have the confidence to hit the final investment decision button,” he added.
A stuttering energy transition
Ramping up progress on solar, wind, hydro and geothermal projects is vital for Southeast Asian nations to hit their targets on cutting planet-heating carbon emissions.
Indonesia has pledged to reduce emissions by 31.9% by 2030 compared with business-as-usual levels, or by 43.2% with international support, on the way to reaching net zero by 2060.
Renewables accounted for about 18% of Indonesia’s energy mix in April 2026 according to local media reports, falling short of the country’s initial 23% target for 2025, with the majority of its energy needs met by coal, oil and gas. In 2025, a new National Energy Policy postponed achieving the target to 2030.
“The region carries significant weight in global terms, given its share of world population and energy consumption,” said Joseph Jacobelli, an impact investor and author of Asia’s Energy Revolution and Powering the Unstoppable Green Shift.
“Every delay in renewable energy deployment extends dependence on fossil fuels and pushes net zero targets further out of reach,” he said.
There are cost benefits of increasing renewables in the overall power mix, too.
In many parts of the region, new renewable power – especially solar and onshore wind – is cheaper than building new fossil fuel generation. The global energy shock unleashed by the Iran war has highlighted the energy security benefits of renewables, though it also raised concerns about coal backsliding in countries including Indonesia.
Surging oil prices exposed Southeast Asia’s vulnerability to fossil fuel supply disruptions, causing energy prices to soar and widespread fuel shortages that led the World Bank to downgrade the region’s growth projection.
“This situation pushes us to accelerate [the energy transition], we must move faster,” Indonesian President Prabowo Subianto said in March, adding that the government was focused on solar projects that would deliver a total installed capacity of up to 100 GW.
At the same time, progress on moving away from coal has been sluggish. Both Indonesia and Vietnam signed up for Just Energy Transition Partnerships (JETPs) – a funding initiative set up by the G7 to help developing nations shift away from coal – though a lack of favourable financing is holding back these plans.
The US withdrew from its JETP deals with the two countries last year, reflecting President Donald Trump’s wider energy policies, and Indonesia abandoned plans to close a major coal power plant.
Lack of finance, or lack of faith?
But a shortage of financing to bring new renewables projects online is not the cause of foot-dragging in Indonesia, where installed solar capacity reached only about 20% to 30% of the government’s 2020-2025 target, Bain researchers said.
Of an estimated $540 billion in green capital expenditure announced across Southeast Asia’s power and electric vehicle value chains between now and 2030, only about $315 billion is on a credible path towards deployment under current conditions, according to the report.
Between 2022 and early 2026, more than a quarter of the 452 new solar projects announced in Southeast Asian countries were postponed or cancelled, according to Global Energy Monitor‘s Global Solar Power Tracker.
In Indonesia, the Batam Bintan Karimun solar farm was initially expected to come online by 2024 but was cancelled in 2023 for unknown reasons, Kasandra O’Malia, a project manager at Global Energy Monitor, told Climate Home. The project also included plans for Southeast Asia’s largest associated battery storage facility.
Another high-profile Indonesian development that has stalled is a 3,500 MW solar and storage project proposed on Riau Island to export clean electricity to Singapore. While not formally abandoned, there have been few updates to this project since April 2022.
“This execution gap is not really to do with money – there is available capital – but the finance is not being deployed effectively because the risks have not been adequately redressed,” Chan said.
In a bid to foster investor certainty, Indonesia’s government approved a new 2025-2034 Electricity Supply Business Plan (RUPTL) for PLN in May 2025, replacing years of delays over the country’s power development roadmap.
As well as aligning government policy, streamlining permitting, simplifying purchase procedures and targeting 70 GW of new generation, with renewables accounting for the vast majority of additions, the plan includes the construction of about 47,800 kilometres of new transmission lines and substations with a total capacity of 108,000 megavolt-ampere, spread across Indonesia.
The Ministry of Energy and Mineral Resources, several domestic and international renewable energy developers, and the Indonesia Renewable Society, did not respond to requests for comment.
Another way to soothe investors’ nerves would be for governments to use public money to de-risk investments, but there is little appetite for this approach in the region, Chan said.
A more effective tool would be ensuring stable, investment-friendly energy market policies and regulations, said Alnie Demoral, a Manila-based energy analyst at climate think-tank Ember who previously worked with solar developers and investors.
Renewable energy developers, investors and authorities can spend years negotiating the project’s costs, permitting and whether grid connection will be available to bring clean power online, she said.
Often the longest discussions focus on the power pricing tariffs that governments set for renewable energy producers. Changing policies or disagreement on underlying cost assumptions can stall or delay a project before it reaches financial close, she added.
“Governments have to do their part by making sure the investment environment is stable,” Demoral said.
“But this is a two-way process. The private sector and developers must also ensure that their assessments of the project are based on robust assumptions.”
AI data centres add to the strain
At the same time, rapid growth in power-hungry AI data centres is putting extra strain on the region’s overstretched grids.
AI data centres, which use much more power than regular data centres, are becoming one of the largest drivers of new power demand in Southeast Asia as governments in the region jostle for more multibillion-dollar investment in the sector.
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The slow pace of renewable energy deployment and grid modernisation, coupled with ongoing reliance on fossil fuels in the electricity mix, will make it difficult for the region to meet a new, fast-growing source of additional demand without increasing emissions.
Emissions from data centre power use in Indonesia are expected to quadruple between 2024 and 2030, according to Ember.
AI data centres operate around the clock and will often use any power that is available – be it renewables or fossil fuels, said Chan, urging policymakers to first ensure they can meet the power needs before courting data centres.
Many new AI data centres are planned for areas with insufficient high-voltage transmission capacity, according to the Bain report, suggesting that countries should focus on new high-voltage lines, larger substations and stronger interconnections between regions.
The researchers note that AI data centres also typically take about one to three years to build, while major electricity transmission lines and grid updates can take five years or more, adding that power grid investments must happen before renewable energy or AI projects.
“Growth in data centres and AI is already adding pressure to constrained grids,” said Christina Ng, the Kuala Lumpur-based co-founder of Energy Shift Institute, an Asia-focused, independent energy finance think-tank.
“The risk is that new demand is met through high-emitting electricity if clean power and clean grid investment do not keep pace.”
Main image: A technician walks next to solar panels that partially provide electrical power to the Grand Mosque of Istiqlal in Jakarta, Indonesia (Photo: REUTERS/Willy Kurniawan)
The post Southeast Asia’s fragile grids threaten billions in clean energy investment appeared first on Climate Home News.
Southeast Asia’s fragile grids threaten billions in clean energy investment
Prepared by a coalition of nine Western Australian union, industry, conservation, and community organisations—including UnionsWA, the Conservation Council WA, and the Smart Energy Council—the WA Clean Energy, Jobs & Industry Plan provides a practical roadmap to transform Western Australia into a clean energy powerhouse while creating thousands of secure local jobs.
Western Australia stands at a pivotal crossroads: lead the global clean energy economy or watch investment, future industries, and secure jobs go elsewhere. The WA Clean Energy, Jobs & Industry Plan outlines a transformative blueprint to harness the state’s world-class solar and wind resources. Discover how legislated renewable targets, green iron manufacturing, and a dedicated regional training strategy can generate tens of thousands of local jobs, lower household bills, and build a resilient, net-zero future for all Western Australians.
WA needs a clear and forward-thinking plan if it is going to become a competitive renewable energy powerhouse and maintain its economic strength through the energy transition.
“Western Australians know a faster renewable energy transition will lower their household expenses and prevent harmful climate pollution. But the community also needs clear direction to ensure this transition will create jobs, lower costs and not cause undue environmental harm.
“Here, sectors representing a broad range of interests have laid the groundwork for those outcomes, clearly outlining what is needed to create a future for WA that is good for the environment, for the climate, for workers and for the economy.
Summary
The WA Clean Energy, Jobs & Industry Plan sets out a strategic roadmap to position Western Australia as a global clean energy superpower while creating thousands of secure local jobs.
The report establishes three overarching goals:
- Creating local employment.
- Maintaining industrial competitiveness.
- Lowering household energy costs
To realize this vision, the framework details actionable measures to follow on from the recent WA Government announcement of a 75% Renewable Energy Target by 2031 for the South West Interconnected System. This includes developing a statewide Renewable Energy Target, coordinating statewide workforce and training pipelines, strategically planning regional infrastructure to safeguard high-value biodiversity and cultural heritage, and ensuring equitable benefit-sharing through household electrification incentives and First Nations equity partnerships. Ultimately, the plan highlights that establishing clear policy and regulatory certainty will unlock lower energy bills, boost power reliability, and secure the state’s global competitiveness in emerging green commodity export markets.
Key Findings
- Statewide Renewable Energy Target and Emissions Reduction Targets: The report calls for a statewide RET and 1.5°C aligned emission reduction targets to remove policy risk, lower capital costs, and attract clean energy investment.
- Transformative Job Creation: Accelerating the transition offers massive employment prospects, including up to 8,800 solar and battery jobs by 2050, as well as 24,000 ongoing and 11,000 construction jobs in a commercial green iron industry.
- Industrial Electrification & Competitiveness: Requiring large gas users to adopt binding electrification timetables and providing concessional financing will protect existing energy-intensive manufacturers from rising energy costs and impending domestic gas shortfalls.
- Green Commodity Export Leadership: Western Australia can build new export markets in green iron, green ammonia, and offshore oil/gas decommissioning by constructing shared common-user infrastructure and setting dedicated Green Commodity Export Targets.
- Coordinated Workforce & Training Pipeline: To address critical skill shortages the plan recommends establishing a WA Clean Energy Jobs Plan 2050, three regional training hubs, and dedicated pathways for female and under-represented apprentices.
- Environmental Safeguards & Community Benefits: Fast-tracked development must be paired with State Planning Policies that avoid high-biodiversity and cultural heritage lands, mandate new data centres to run on additional renewable power, and deliver household electrification rebates and First Nations equity partnerships.
What you can do
WA has an opportunity to lead on sustainable, clean energy and associated industries. You can help by:
- Sending an email to Environment Minister Murray Watt and Prime Minister Anthony Albanese, calling on them to reject Browse.
- Sharing this story to help more Australians understand what’s at stake.
- Encouraging your friends and family to take action.