Energy Storage Essential to ASEAN’s Knowledge-Based Economy Transition and Reducing Fossil Fuel Dependence

Rising coal and gas costs are making the transition to renewable energy increasingly critical for Southeast Asian economies, while energy storage will be essential to integrate renewable power and maintain affordable, reliable electricity, according to energy experts.

Speaking ahead of the Energy Storage Summit Asia 2026 in Bangkok, Shuvendu Bose, an energy expert and senior advisor to the Ministry of Energy of the United Arab Emirates, said Southeast Asian countries need to accelerate the transition away from fossil fuels to remain competitive in a rapidly automating global economy.

Bose stressed that his comments represented his personal views and not those of the UAE government.

Rising Energy Costs Threaten Regional Competitiveness

Southeast Asia is expected to remain an important global manufacturing hub, but increasing automation and the growth of artificial intelligence could reduce the importance of low-cost labour in determining industrial competitiveness.

As automation increases, energy costs could become one of the most important factors determining where manufacturing investment is located.

However, the cost advantage historically associated with coal and gas is becoming less certain.

International coal prices have risen significantly over the past two decades, while new LNG projects are expected to face higher development costs as lower-cost gas fields decline.

Bose argued that continued dependence on coal and gas could therefore keep electricity tariffs elevated, putting pressure on the competitiveness of Southeast Asian manufacturing.

Renewable energy, meanwhile, continues to become increasingly cost-competitive.

For Southeast Asian economies, the energy transition is therefore becoming about more than emissions reduction—it is increasingly linked to economic competitiveness and energy security.

Energy Storage Becomes Critical

While solar and wind generation costs continue to fall, their variable output creates challenges for power system operators.

Energy storage can help bridge this gap by providing flexibility and allowing renewable electricity to be stored and dispatched when required.

According to Bose, this will require a combination of:

• Utility-scale battery energy storage systems

• Standalone and co-located BESS

• Solar-plus-storage projects

• Distribution-level energy storage

• Transmission network optimization

• Demand-side flexibility

  
  

Strategically deployed storage can also help flatten electricity demand curves and reduce the need to build generation and grid infrastructure solely to accommodate short periods of peak demand.

This could allow Southeast Asian countries to improve the utilization of existing power infrastructure while reducing the cost of maintaining additional capacity for peak periods.

Thailand Pushes Storage and Virtual Power Plants

Thailand is also moving toward greater renewable energy integration and energy system flexibility.

Dr Veerapat Kitafuengfoo, Permanent Secretary of Thailand’s Ministry of Energy, said the country can no longer rely on volatile fossil fuel markets indefinitely.

Thailand’s long-term energy plans include streamlining rooftop solar regulations, investing in energy storage and developing virtual power plants (VPPs), alongside stronger energy efficiency requirements for households and commercial buildings.

The government sees these measures as important steps toward improving energy security while supporting its long-term net-zero pathway.

ASEAN Cooperation Becomes Increasingly Important

Experts also emphasized that individual countries cannot achieve the regional energy transition in isolation.

ASEAN countries have different renewable energy resources, including solar, wind and hydropower. Greater regional cooperation could allow countries to share electricity and balance differences in generation and demand.

This will require greater coordination on:

• Cross-border electricity trading

• Grid interconnections

• Electricity market design

• Regulatory frameworks

• Renewable energy targets

• Energy storage deployment

• Clean energy technologies

  
  

Regional cooperation could lower system costs while improving energy security and supporting the development of new clean energy industries.

Storage Is No Longer an Option

Energy storage is increasingly being viewed as a fundamental component of Southeast Asia’s future power system.

As fossil fuel costs remain volatile and renewable energy deployment accelerates, BESS can provide the flexibility needed to make variable renewable generation more reliable and dispatchable.

For ASEAN economies seeking to compete in an increasingly automated and energy-intensive global economy, the combination of renewable energy, energy storage, grid flexibility and regional interconnection could become a critical foundation for long-term economic competitiveness.

The energy transition in Southeast Asia is therefore moving beyond climate policy. With fossil fuel costs putting pressure on electricity prices, renewable energy and storage are increasingly becoming strategic tools for protecting energy security, industrial competitiveness and economic growth.