The current energy crisis has been a powerful catalyst for change across Southeast Asia. Price volatility and supply disruptions have underscored two structural vulnerabilities in the region's energy systems - an over-reliance on imported fossil fuels, and insufficient resilience in fuel procurement and energy infrastructure.
While governments are understandably focused in the near term on managing inflationary pressures and safeguarding economic stability, the longer-term response is increasingly oriented towards strengthening energy resilience and sustainability.
KPMG Singapore Partner, Head of ESG Consulting Sharad Somani told Asia Insurance Review: “We expect this to translate into increased investment in renewable and low-carbon energy as part of a broader, more diversified energy strategy. In particular, three priorities are coming into sharper focus.”
The first, he said, is energy diversification, with countries seeking to balance domestic, regional and international energy sources to improve system resilience.
Second is energy efficiency, where investments on both the demand and supply side – including industrial decarbonisation and efforts to reduce energy intensity – can deliver immediate cost and emissions benefits.
Third is energy independence, with growing emphasis on local and regional clean energy solutions such as solar, wind, energy storage, geothermal and biomass, alongside emerging technologies like green hydrogen and small modular reactors.
“Current developments are therefore reinforcing the case for renewables not just as a climate imperative, but as a strategic and economic opportunity. We see momentum building for a more resilient, diversified and future-ready energy mix across Southeast Asia, supported by clearer policy direction and increasing private sector participation,” he said.
Singapore’s role
Mr Somani also added that Singapore has long played a central role in Southeast Asia’s energy ecosystem, and its importance is becoming even more pronounced in the current environment of geopolitical uncertainty and energy insecurity. “As a trusted regional partner and financial and professional services hub, Singapore is well-positioned to help shape a more resilient and sustainable regional energy system,” he said.
One of Singapore’s most significant contributions lies in advancing regional interconnection and collaboration, particularly through cross-border power trade and the development of the ASEAN Power Grid. Low-carbon electricity imports from neighbouring countries represent a clear win-win proposition – supporting decarbonisation and economic growth in exporting countries while enhancing energy security and resilience for importing markets such as Singapore. Over time, these interconnections can form the backbone of a more integrated and efficient regional power system.
“With Singapore set to chair ASEAN in 2027, there is a timely opportunity to elevate energy cooperation as a strategic regional priority,” Mr Somani said. “The current crisis has helped crystallise a shared recognition that reliance on imported oil and gas is not a sustainable long-term strategy.”
Singapore can use this moment to help facilitate a regional framework for collaboration – bringing together governments, the private sector and financiers to integrate power and gas grids, align standards and build trust-based interdependence. This kind of coordinated regional approach can strengthen energy security, accelerate the transition to low-carbon solutions and enhance resilience across ASEAN as a whole.
Falling back on coal
Many nations within the region are ramping up coal use in order to meet energy needs in the short-term, but the long-term implications are worrying.
“Energy security and affordability are fundamental to economic growth, and in the short-term it is to be expected that some countries have turned to domestically available or readily accessible fossil fuel options to meet urgent energy needs. These decisions reflect immediate priorities around keeping the lights on and protecting livelihoods during a period of heightened uncertainty,” he said.
“However, we believe the longer-term impact of current developments is likely to be more nuanced and, ultimately, constructive for the energy transition. Rather than undermining renewable energy, these developments are prompting governments and businesses to adopt a more diversified, portfolio-based approach to energy procurement. This approach recognises that resilience comes from balancing multiple sources of energy, improving efficiency and reducing over-dependence on any single fuel or import channel.”
In the medium to long term, KPMG expects renewables to remain central to this diversified strategy, supported by parallel investments in energy efficiency and localised clean energy solutions. As systems evolve, countries that pursue a three-pronged focus on energy diversification, energy efficiency and energy independence will be better positioned to manage volatility, control costs and meet sustainability goals.
“Public perception is therefore likely to shift towards viewing renewable energy not as a trade-off against security, but as a critical enabler of a more robust, affordable and future-ready energy system over the coming decade,” said Mr Somani.