Southeast Asia's Green Power Transformation: 28% Annual Increase in Photovoltaic Demand by 2025, Urgent Reform of the Power Grid

Under the acceleration of global energy transition, Southeast Asia has become one of the important markets for the development of renewable energy. According to the latest supply and demand database from InfoLink Consulting, as of 2024, the demand for photovoltaics in the entire Southeast Asian region is expected to fall between 8-12 GW, with demand expected to increase to 9-15 GW by 2025. This growth trend benefits from policy promotion and market liberalization in various countries. Under the optimistic expectation of increased demand, InfoLink will explore the current demand status and future development directions of the top four major photovoltaic markets in Southeast Asia.

Thailand: Centralized photovoltaic dominates the market and household demand accelerates growth

Thailand's photovoltaic demand is expected to be around 1.5-3.5 GW in 2024 and is projected to reach 2-3.7 GW by 2025. The country plans to regularly launch large-scale renewable energy tenders between 2022 and 2030. The latest progress is the second phase of renewable energy bidding in 2024, with photovoltaic projects accounting for approximately 2.6GW. Based on the gradual development of large-scale projects, it is expected to support overall demand after 2025 in the long term.

In addition, Thailand officially launched a trial of DPPA (Direct Power Purchase Agreement) in June 2024, setting a maximum green power purchase scale of 2.000MW for some large users. This policy will effectively stimulate the demand for photovoltaic power from industrial users. In addition to the DPPA trial, the Thai government has also launched a series of favorable policies, including the 2022-2030 FiT grid electricity price plan and household photovoltaic plan, which are expected to support the long-term development of the Thai photovoltaic market.

Philippines: The development of renewable energy policies is relatively complete, but insufficient power grid consumption may hinder progress

The photovoltaic market in the Philippines is expected to experience approximately fivefold growth in 2024, rapidly rising to become a leader in the Southeast Asian market from only MW level demand in 2023. By the end of 2024, the demand for photovoltaics is expected to be around 2-2.4GW, and is expected to further increase to 2.2-3.GW by 2025.

The main driving force for market growth comes from the Green Energy Auction Program (GEA) in June 2022. As of the second round of bidding in July 2023, photovoltaic projects have totaled approximately 3.24 GW, driving a large-scale development boom in the market. However, the development of renewable energy in the Philippines was once stalled due to policy uncertainty. In June 2024, in order to update the details of renewable energy development projects, new project applications were suspended until the end of November 2024 when the government restarted. Despite the gradual clarification of policies, the insufficient capacity of the power grid to absorb electricity may become a major challenge for the development of the country's market. At the same time, the demand for upgrading existing infrastructure will become increasingly urgent.

Malaysia: Steady growth of photovoltaic market, policies to promote liberalization and increase household use

Malaysia's photovoltaic demand is expected to fall between 1.2-1.8GW in 2024, and may remain stable or slightly increase to 2GW in 2025. Although the overall demand growth rate is limited, recent policy adjustments have demonstrated the government's support for the development of photovoltaics. In terms of household projects, the increase in NEM3.0 (net metering policy) quotas will further stimulate the growth of demand for small-scale photovoltaics; In terms of centralized projects, Malaysia has launched its fifth large-scale tender scheme (LSS5) in April 2024, with a total of 2GW of photovoltaic projects. In addition, the CRESS (Corporate Renewable Energy Supply Scheme) implemented in September 2024 allows large industrial and commercial users with additional electricity demand to directly negotiate between the purchasing and supplying parties in the future, without the need for the Malaysian National Energy Corporation as an intermediary. This measure is expected to promote market liberalization. By the end of 2024, Malaysia has further relaxed its regulations on self use projects, providing greater flexibility for industrial and agricultural users.

Another highlight is the SolarforRakyat plan implemented in March 2024, which provides a tax exemption quota of 350MW for the project and stipulates that the project must be installed before March 2025, which is expected to drive the peak of shipments in the first quarter of 2025. Based on the above, it will accelerate Malaysia's goal of achieving a 70% share of renewable energy generation by 2050, and also reflect the stable growth potential of the Malaysian photovoltaic market in the future.

Vietnam: FiT reform, DPPA landing, further unleashes photovoltaic demand

Vietnam, as one of the countries with the greatest growth potential in the Southeast Asian photovoltaic market, is currently rapidly rising. In 2021, Vietnam suspended the fixed electricity price subsidy mechanism for FiT, which led to a slowdown in the development of the renewable energy market. By the end of 2023, Law No. 19 was officially passed, changing the FiT system to an annual review mode and restarting the renewable energy subsidy mechanism. This change once again injected new development momentum into the local market.

Subsequently, the local government launched a series of supportive policies in 2024, among which the implementation of DPPA enabled enterprise users to directly sign power purchase contracts with developers, reducing their dependence on the national power grid and promoting more enterprises to invest in photovoltaic projects; In addition, Notice No. 356/TB-VPCP, which will take effect in July 2024, significantly simplifies the application process for self use rooftop photovoltaic projects and relaxes installed capacity restrictions, providing greater installation flexibility for households and small commercial users. As of 2024, Vietnam's photovoltaic demand is expected to be around 1-1.6 GW, and it is expected that demand will further climb to 1.4-2.4 GW by 2025, with a growth rate of about 40-50%, demonstrating a stronger growth trend compared to other Southeast Asian countries.

The demand for photovoltaics in 2028 is expected to grow by over 70% compared to 2024, and the carrying capacity of the power grid urgently needs to be improved

In the Southeast Asian photovoltaic market, although the demand in some countries is relatively low, they have been actively promoting energy transformation in recent years. Due to geographical limitations, Singapore's photovoltaic installed capacity is relatively limited. Since ASEAN launched the Laos Thailand Malaysia Singapore Electricity Integration Plan (LTMS-PIP) in 2022, Singapore has attempted to achieve energy diversification through green power trading among multiple countries and plans to import 4GW of green power by 2035. With the popularization of cross-border transmission technology, ASEAN is accelerating discussions on the development of submarine cables and related infrastructure to promote regional power interconnection.

On the other hand, Indonesia is currently facing the challenge of weak infrastructure, coupled with the abolition of rooftop net metering in 2024, which will have a certain impact on household demand. However, with the continuous bidding for large-scale projects, the market demand in the country is still expected to be supported. In addition, Indonesia has abundant hydropower resources. According to data from the Indonesian Ministry of Energy and Mineral Resources, the potential installed capacity of water-based photovoltaics is as high as 14.7GW, which also brings development opportunities for demand.

In the long run, with the continuous growth of photovoltaic demand in Southeast Asian countries, it is expected to grow by more than 70% in 2028 compared to 2024. However, most regions still face various challenges such as insufficient power grid consumption capacity, lengthy project approval processes, and early policy implementation. As the market gradually matures, the government should strengthen regional cooperation and improve power grid facilities, and accelerate the process of project implementation to lay the foundation for energy transformation.