Southeast Asia’s PV market to drive global energy transition

PV has become a key driver for Southeast Asia’s renewable energy development amid global net-zero emissions trend, due to the region’s abundant sunlight, rapid economic growth, and rising demand for green electricity driven by industrial transformation. The five major PV markets—Vietnam, Thailand, Malaysia, the Philippines, and Singapore—are set to boost Southeast Asia into a major PV market with strong policy push.


 

Southeast Asia policy updates

Vietnam

Vietnam approved the long-discussed Direct Power Purchase Agreement (DPPA) on July 3, 2024, allowing electricity buyers to procure green energy via national or private grids. However, buyers must have a minimum monthly electricity consumption of 200,000 kWh. Solar power suppliers using the national grid must have an installed capacity reaching 10 MW, while those using private grids are not subject to this restriction.

The Vietnamese government issued Notice No. 356/TB-VPCP on July 30, 2024, which clearly defines "self-consumption rooftop solar projects" as those where the electricity sold back to the national grid constitutes less than 10% of the total installed capacity (with the threshold relaxed to 20% for northern regions). Following this, rooftop solar projects not connected to the grid will no longer be subject to capacity limits, and the application process will be simplified. The government will later announce specific electricity rate details and supporting measures for solar-plus-storage systems.
 

Thailand

Unlike Vietnam, which has officially approved the Direct Power Purchase Agreement (DPPA), Thailand began piloting its DPPA in June 2024, allowing large consumers to purchase at most 2 GW of green energy. The government will release detailed guidelines and policies regarding the DPPA by the end of 2024.

Thailand is set to unveil its updated Power Development Plan (PDP) in September 2024, focusing on energy security, environmental protection, and electricity price control, aiming to balance economic growth with the energy transition. The Ministry of Energy's proposal to raise electricity prices was rejected following widespread opposition in July. Given the growing urgency for green energy, the updated PDP will further increase Thailand's PV installation targets.
 

Malaysia

Malaysia announced the Corporate Renewable Energy Supply Scheme (CRESS) on July 26, 2024, set to be implemented in September 2024. Similar to DPPA, the scheme aims to liberalize green energy trading, allowing buyers and suppliers to negotiate agreements directly without involving the national energy company.

Notably, the scheme limits electricity buyers to medium- and high-voltage commercial and industrial customers, and it applies only to those with additional power demand—existing users are ineligible for the program. For power suppliers, electricity must still be transmitted through the national grid, with suppliers bearing transmission fees. They are not permitted to use private grids, and the stability of power generation will also be a requirement. However, as the CRESS policy details have yet to be fully released, further clarification on regulations and implementation methods requires official statements.
 

Philippines

For renewable energy policy updates, the Philippines announced a five-month suspension on renewable energy project applications from June 25, 2024, until November 25, 2024. However, authorities emphasized that projects already in the pipeline would not be affected. According to the country's Department of Energy, over 32 GW of PV projects are under review or development as of March.

Future policy updates will likely allow developers to apply for permits by 2025, enabling them to conduct feasibility studies and preliminary investigations for renewable energy projects without waiting for approval from the Department of Energy. At the same time, the new regulations will simplify the administrative process for applying for tax-free imports (such as modules, inverters, etc.).
 

Singapore

Singapore is considered the most mature country regarding PV policies in Southeast Asia. However, due to geographical limitations, PV projects can hardly be widely established within the country. In recent years, Singapore has shifted its focus towards importing green electricity from neighboring countries and is actively promoting cross-border grid integration. Singapore launched the Lao PDR-Thailand-Malaysia-Singapore Power Integration Project (LTMS-PIP) in July 2022, planning to import over 4GW of green electricity by 2035.

A cross-border energy trading platform between Singapore and Malaysia began trial operations in April 2024, with Malaysia supplying 100 MW of green electricity through the grid for Singaporean consumers. Singapore plans to acquire over 200 MW of green electricity through multinational power trading by June 2024.
 

Opportunities and challenges for the Southeast Asian PV market

In addition to policy-driven initiatives such as the liberalization of green energy trading, foreign capital investments have played a crucial role in the Southeast Asian renewable energy sector. Whether through Western-led initiatives such as the Just Energy Transition Partnerships (JETP) or China's Belt and Road Initiative (BRI), Southeast Asia is considered a crucial market with immense growth potential. The business opportunities arising from the energy transition agenda underscore the enormous potential of the Southeast Asian PV market.

Despite the promising outlook, the Southeast Asian PV market faces several challenges. The first major obstacle is the insufficient grid capacity to integrate more solar power. Many countries are working to improve their infrastructure to support the increased feed-in of solar-generated electricity. Another challenge is the competition from Southeast Asian abundant coal and hydropower resources, which limit the space for solar development. Traditional energy industries dominate the region and play a critical role in the economic growth of many countries. The push for an energy transition would also require the premature closure of many coal-fired power plants, some of which have been in operation for less than twenty years, making this transition less economically viable for investors.

Southeast Asia benefits from economic growth, policy support, and international funding but also faces grid integration challenges and competitive pressure from other energy sources. InfoLink projects that PV demand in Southeast Asia will reach 4.5-7.4 GW in 2024, with long-term demand likely growing to 9.7-12.9 GW, suggesting that the Southeast Asian PV market will maintain steady growth in the coming years, becoming a key player in the global energy transition.