Southeast Asia’s Coal Revival Could Actually Accelerate the BESS Market

Southeast Asia’s recent increase in coal-fired power generation may look like a setback for the region’s energy transition.

But the underlying trend suggests something different.

The region invested a record US$17 billion in renewables last year, adding around 8GW of renewable capacity, while clean-energy investment was expected to outpace fossil-fuel generation investment by roughly 2:1.

The recent return to coal is largely a response to LNG supply disruptions and energy-security pressures, rather than a fundamental abandonment of long-term coal phase-out plans.

⚡ LNG disruption exposed Southeast Asia’s biggest weakness

Several Southeast Asian markets have recently increased coal generation.

Thailand began reactivating dormant coal plants in March, while Vietnam and the Philippines have also increased coal use.

The common factor is energy supply security.

Thailand, the region’s largest LNG importer, is particularly exposed to movements in the global spot LNG market.

Vietnam was only beginning to establish LNG-fired generation when the disruption occurred, while Singapore relies on imported gas for around 95% of its electricity generation and has limited ability to switch fuels.

Coal therefore became the fastest available source of dispatchable generation when gas supplies tightened.

Rystad Energy estimates that the disruption could add around:

100 million tonnes

of coal demand in Asia in the near term.

But this does not necessarily mean Southeast Asia is abandoning its coal phase-out.

🌱 The renewable pipeline remains strong

Before the recent disruption, ASEAN’s coal pipeline had already fallen significantly.

Around:

12GW

of planned coal capacity was cancelled in 2024.

At the same time, countries continue to expand renewable investment and infrastructure.

The IEA expects energy investment in Southeast Asia to reach a record:

US$57 billion in 2026

with capital continuing to flow into renewable generation, electricity grids and energy-consuming sectors.

At the ASEAN Summit in Cebu, regional leaders also reaffirmed the need to accelerate renewable deployment, with Indonesia’s President Prabowo stressing that energy diversification is becoming essential rather than optional.

The direction of travel therefore remains broadly unchanged.

The problem is that the region lacks enough flexibility to manage the transition.