Rising energy demand from data centers, electric vehicles, and other industries underpins the growth in Southeast Asia's green economy, which is projected to expand to $430 billion by 2030 from the current $290 billion, according to an analysis by consultancy Bain & Co. released on Monday.
Investments tend to follow demand, which has been largely reshaped by rising geopolitical tensions and a renewed focus on energy security and economic competitiveness, the firm said.
However, "systems are struggling to convert available capital into delivered projects," Bain & Co. highlighted, noting that the main challenge lies on "ensuring that systems and market architectures keep pace with demand and investment commitments."
Demand for artificial intelligence and electrification may emerge in one to three years, with more than 100 terawatt-hours of new electricity demand expected by 2030, according to the report.
Grid infrastructure, however, serves as the "key binding constraint" as it takes five to 15 years to build, the firm said.
In transport electrification, the fastest growing EV markets were found in several Southeast Asian countries. The consultancy, however, noted that the region captures only about 2% of global EV production, with around 70% of EV value flowing outside to other countries.
"Across both the grid and EV ecosystems, a common challenge emerges: Capital is not the constraint, conversion is," Bain & Co. said.
Investments in Southeast Asia's power and EV value chains stand at around $540 billion, the report noted, but "there is a 35% gap between announced and realized capex, driven by grid bottlenecks, permitting delays, and fragmented market structures."
Addressing these concerns through coordinated action across policy, capital, and delivery can unlock an additional $80 billion in investment by 2030, the firm said.