finalizing the business strategy essential for completing the Asean Power Grid blueprint by October, according to Malaysia's Deputy Prime Minister Fadillah Yusof
Headline: Malaysia Leads the Way in ASEAN Power Grid Initiative, Aiming for Full Integration by 2045
The ASEAN Power Grid (APG) is set to take a significant step forward, with Malaysia spearheading the efforts to formalise a business model and implementation framework for the regional electricity network. A Memorandum of Understanding (MoU) on APG implementation is expected to be signed during the Energy Ministers’ Meeting in October 2025, marking a crucial milestone in the integration of the 10 ASEAN countries' electricity networks.
The APG initiative, which aims to fully integrate the regional electricity networks by 2045, has been identified as a vital tool for promoting collective energy resilience, expanding energy trade, reducing fossil fuel dependence, and boosting regional energy security. The APG is expected to serve over 670 million people and accelerate the use of regional renewables by linking surplus generation (like hydro in Laos) to deficit markets.
The MoU represents a pivotal step in the transition of the APG from concept to coordinated implementation. It aligns with the culmination of the ASEAN Plan of Action for Energy Cooperation Phase II (2021–2025) and sets the stage for the next APAEC phase (2026-2030), indicating a strategic push to operationalize the APG and its business framework in the coming years.
In support of this, ASEAN institutions along with development partners have identified priority interconnection projects and cooperation frameworks, such as the ASEAN Interconnection Masterplan Studies (AIMS), which plan to more than double transmission capacity by 2040 through around 18 new interconnectors including subsea and high-capacity cables.
Meanwhile, Malaysia's Ministry of Energy and Natural Resources is seeking input from all industry players, including large multinationals and small and medium-sized companies, regarding the rates for renewable energy trade. An announcement on the rates is expected before the end of the year.
The Securities Commission Malaysia (SC) is also working to boost financing towards climate adaptation in the region. The SC has created a guide on adaptation and mitigation to the Asean Taxonomy, which will provide a framework for identifying adaptation projects and financing options in the region and prioritise key focus areas for adaptation.
In addition, the SC is embedding sustainability considerations into the products and services offered by all market players. Participants under Malaysia's Corporate Renewable Energy Supply Scheme (CRESS) are subject to wheeling charges paid to Tenaga Nasional, which have been criticised by industry players as being too high.
Financial institutions such as the World Bank, Asian Development Bank, and American firms have shown interest in financing the APG's development. Delivering on Malaysia's National Energy Transition Roadmap (NETR), which aims for a 70% renewable energy mix by 2050, requires a fundamental transformation of the energy ecosystem.
The upcoming Capital Market Masterplan 4 will integrate the NETR and other national priorities. The Malaysia edition of the website's Unlocking capital for sustainability forum discussed actions for achieving the region's vision of creating a more resilient future. The forum brought together more than 200 representatives from government, business, finance sectors, and civil society.
As the current ASEAN chair, Malaysia is eager to make progress on the APG, which experts have said is critical to decarbonise the region's energy sector. The APG is also seen as a compelling investment platform for institutional and private investors seeking long-term, climate-aligned imperatives. The roadmap for the APG's development will include harmonising regulatory frameworks and financing models to reduce investment barriers. Systemic investments in smart grids, advanced energy storage, and cross-border infrastructure are necessary to support decentralised, secure energy systems.
Transmission systems will need to be upgraded to support multi-directional power flows and greater flows of renewable energy. The APG is expected to bring significant benefits to the region, including increased energy security, optimised renewable energy use, and support for regional decarbonization goals. The formalisation of the business model for the APG is a significant step towards realising these benefits and creating a more sustainable and resilient future for the ASEAN region.
- Malaysia's leadership in the ASEAN Power Grid (APG) aims to promote a full integration of the regional electricity networks by 2045, fostering energy resilience, expanding energy trade, and boosting regional energy security.
- The APG initiative is expected to serve over 670 million people, accelerating the use of regional renewables by linking surplus generation to deficit markets, such as hydro in Laos.
- The signing of the Memorandum of Understanding (MoU) on APG implementation, scheduled for October 2025, represents a crucial milestone in the transition of the APG from concept to coordinated implementation.
- To operationalize the APG's business framework, ASEAN institutions are identifying priority interconnection projects and cooperation frameworks, like the ASEAN Interconnection Masterplan Studies (AIMS), which plan to more than double transmission capacity by 2040.
- Malaysia's Ministry of Energy and Natural Resources is seeking input from industry players regarding the rates for renewable energy trade, with an announcement expected before the end of the year.
- The Securities Commission Malaysia (SC) is working to boost financing towards climate adaptation in the region, creating a guide on adaptation and mitigation to the ASEAN Taxonomy and embedding sustainability considerations into products and services offered by market players.
- Financial institutions, such as the World Bank, Asian Development Bank, and American firms have shown interest in financing the APG's development, which is critical to decarbonise the region's energy sector, and will incur systemic investments in smart grids, advanced energy storage, and cross-border infrastructure for a more sustainable and resilient future.
