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Powering Asia’s Transition – 2025 Retrospective and 2026 Outlook 13 March 2026

2025 Retrospective and 2026 Outlook

Asia’s energy transition reached a genuine inflection point in 2025, not because ambition increased, but because governments across the region turned decisively to the regulatory, market and financial architecture that determines whether capital can move at scale. After years of target-setting, procurement frameworks matured, cross-border electricity trade advanced, climate-disclosure regimes aligned more closely with international standards, and early legal pathways for carbon capture, storage and hydrogen began to crystallise. In parallel, multilateral financing platforms and domestic taxonomies strengthened credibility and comparability, laying the groundwork for bankability at scale.

Now in 2026, the central question is no longer whether the transition will occur, but how quickly capital can translate policy into projects. That pace will be shaped by four cross-cutting drivers evident throughout 2025: market design and procurement reform, grid readiness and regional integration, carbon-market and disclosure infrastructure, and the progression of emerging technologies from pilot to commercial models.

This retrospective distils the most consequential developments of 2025 across Thailand, Vietnam, Singapore, Indonesia, ASEAN, Hong Kong and Japan, and highlights the indicators that will shape investability and execution in 2026.

Thailand

"Thailand’s 2025 energy transition agenda reflected a deliberate shift from policy signalling toward market architecture."

2025 Retrospective

Thailand’s 2025 energy transition agenda reflected a deliberate shift from policy signalling toward market architecture. Four developments proved central: the Draft Climate Change Act, the initial rollout of the Utility Green Tariff (“UGT1”), early regulatory steps toward direct power purchase arrangements and foundational work on a carbon capture and storage (“CCS”) legal framework through amendments to the Petroleum Act.

The Draft Climate Change Act, approved in principle by Cabinet in December 2025, represents Thailand’s first attempt to consolidate climate governance into a single statutory framework. It introduces institutional mechanisms including a National Climate Change Policy Committee, a National Climate Fund and a national greenhouse gas database, alongside enabling frameworks for emissions trading, carbon taxation and a carbon border adjustment mechanism. While implementation details remain pending, the Act signals a clear shift from voluntary climate measures toward structured compliance and market-based instruments.

On the power-market side, the launch of UGT1 in February 2025 enabled eligible corporate consumers to procure renewable electricity through utility-delivered supply bundled with renewable energy certificates. Although limited in scope and duration, UGT1 marked a practical step toward accommodating corporate decarbonisation demand within Thailand’s vertically integrated system. Parallel consultations on third-party access and direct PPA guidelines for data centres further clarified the direction of travel toward more flexible procurement models. Progress on CCS was more incremental but strategically significant, with draft Petroleum Act amendments clarifying licensing pathways for carbon storage.

Challenges and 2026 Outlook

Despite regulatory momentum, renewable deployment faced short-term headwinds in 2025 due to postponed FiT procurement and tariff uncertainty. Looking ahead, 2026 will be pivotal. The draft 2026 to 2050 Power Development Plan is expected to restore long-term visibility on capacity expansion, accelerate renewable deployment including floating solar, and advance Thailand’s net-zero trajectory. The plan also targets raising the clean energy share to above 50% through the expansion of solar farms, wind projects and community‑based solar initiatives. Investor confidence will hinge on tariff clarity, implementation sequencing and the transition from pilots to scalable market mechanisms.

Beyond renewables, 2026 is likely to lay groundwork for advanced clean energy technologies, including small modular reactors (“SMRs”) and expanded CCS, within a more diversified long term energy strategy. While commercial deployment remains distant, regulatory groundwork, feasibility studies and planning frameworks are expected to progress through the year.

Vietnam

2025 Retrospective

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Theo Cleminson

Theo
Cleminson

Senior Associate (Foreign Qualified Lawyer) Hanoi

Mai Dao

Mai
Dao

Senior Associate Hanoi

"Vietnam’s 2025 energy-transition developments were characterised by convergence: long-standing ambitions in offshore wind and industrial decarbonisation aligned with a rapid maturation of the legal and planning framework governing the power sector."

Vietnam’s 2025 energy-transition developments were characterised by convergence: long-standing ambitions in offshore wind and industrial decarbonisation aligned with a rapid maturation of the legal and planning framework governing the power sector.

The entry into force of the 2024 Law on Electricity in February 2025, together with an extensive suite of implementing decrees and circulars, translated high-level reform into an operational regulatory framework. These instruments addressed power development planning, direct power purchase mechanisms, renewable-energy development, licensing requirements, tariff determination and competitive power-market operations, collectively enhancing transparency and predictability for investors.

This regulatory consolidation coincided with the approval of the Revised National Power Development Plan VIII in April 2025. The Revised PDP8 increased overall capacity targets and reinforced Vietnam’s strategic pivot toward renewable and new energy sources, aligning power-sector planning with the national 2050 net-zero commitment. The subsequent issuance of the PDP8 Implementation Plan in May 2025 marked a transition from planning to execution, setting out project categorisation, timelines and responsibilities across central and provincial authorities.

Later in the year, Resolution 253 on National Energy Development for 2026–2030 introduced further structural reforms. These included expansion of DPPA eligibility, removal of price caps, tighter bidding and PPA-negotiation timelines, and mechanisms for direct appointment of investors for qualifying offshore-wind projects. Together, these measures signal a clear intent to unlock large-scale offshore wind and corporate procurement as core pillars of Vietnam’s energy transition

Multilateral cooperation intensified in 2025, with the Just Energy Transition Partnership (“JETP”) mobilising substantial international financing for Vietnam’s eligible power projects. Vietnam was also selected as one of the first three pilot countries under the new ADB–GEAPP partnership to advance battery‑energy‑storage development, while the French Development Agency (“AfD”) provided a €67m grant to upgrade southern transmission infrastructure.

Challenges and 2026 Outlook

Notwithstanding regulatory progress, Vietnam continues to face structural challenges. Transmission bottlenecks remain a key risk as renewable capacity expands faster than grid reinforcement. Planning rigidity and complex licensing and bidding processes have historically slowed project development.

Legislative reforms scheduled to take effect in 2026 are expected to address many of these bottlenecks by introducing more flexible planning updates, streamlined investor selection mechanisms and targeted incentives for green-energy projects. Planned investment of approximately US$18bn in transmission infrastructure between 2026 and 2030 will be critical to translating Vietnam’s ambitious planning framework into deliverable projects. As these reforms roll out, 2026 is likely to mark a transition from regulatory consolidation to accelerated project execution.

Singapore

2025 Retrospective

Singapore’s 2025 energy-transition strategy continued to balance decarbonisation ambitions with the realities of energy security for a resource-constrained island state. Natural gas remained the dominant generation source, reflecting its role in system stability and flexibility, while solar deployment expanded steadily across rooftops, reservoirs and infrastructure assets, supported by growing energy-storage capacity. At the same time, Singapore deepened its reliance on regional electricity imports as a structural feature of its transition strategy rather than a transitional measure.

Policy signals in 2025 reinforced this pragmatic approach. The submission of Singapore’s updated Nationally Determined Contribution in February 2025, committing to emissions reductions of 45 to 50 MtCO₂e by 2035, set a clear medium-term trajectory aligned with longer-term net-zero goals. This was complemented by continued strengthening of carbon-pricing mechanisms and mandatory climate-disclosure regimes, reinforcing cost signals and transparency for both emitters and investors.

Singapore International Energy Week 2025 underscored the city-state’s role as a regional transition hub and innovation testbed. Announcements spanning floating LNG infrastructure, a virtual power plant regulatory sandbox and expanded international cooperation on nuclear energy highlighted Singapore’s focus on system resilience, flexibility and diversification. In parallel, Singapore intensified exploration of mitigation technologies, particularly carbon capture and storage, through pilot projects and cross-border collaboration. These initiatives reflect recognition that mitigation, alongside imports and efficiency gains, will be essential to decarbonising hard-to-abate sectors over time.

Challenges and 2026 Outlook

Physical and system constraints remain central to Singapore’s transition challenge. Solar potential, whilst significant relative to land availability, is inherently intermittent and limited as a share of long-term electricity demand. Diversification through low-carbon imports, hydrogen-compatible generation and emerging technologies is therefore essential, but involves technological, economic and geopolitical risks that must be actively managed.

In 2026, progress will hinge on moving mitigation technologies beyond pilot stage, strengthening grid-management frameworks to address intermittency and inertia risks, and advancing diversified and resilient regional power-import arrangements. Mobilisation of green financing, including through the Future Energy Fund, will be critical in supporting these objectives. Singapore’s transition will ultimately be judged not only on emissions outcomes, but on its ability to deliver a secure, flexible and investable low-carbon power system under tight physical constraints.

Indonesia

"The year demonstrated that decarbonisation in a large, coal-dependent archipelagic system is as much about institutional design and risk allocation as it is about capacity targets."

2025 Retrospective

Indonesia’s energy transition in 2025 was defined less by headline ambition and more by structural recalibration. The year demonstrated that decarbonisation in a large, coal-dependent archipelagic system is as much about institutional design and risk allocation as it is about capacity targets.

The first half of the year saw the adoption of a new 10‑year electricity supply business plan (“RUPTL 2025–2034”) by PT Perusahaan Listrik Negara (Persero) (“PLN”), alongside two major regulatory instruments intended to strengthen the legal and financial framework for renewable‑energy deployment. As Indonesia’s state‑owned, vertically integrated utility and the country’s dominant power‑offtaker, PLN sets system‑planning assumptions, determines procurement pipelines, and shapes the commercial terms under which most independent power projects are financed. Its RUPTL therefore remains the central reference point for developers, lenders and policymakers.

Regulatory interventions during the year focussed on incremental de-risking rather than wholesale market restructuring. MOF Regulation 5/2025 established a new mechanism for government guarantees covering certain PLN payment risks under renewable PPAs. MEMR 5/2025 introduced a standardised framework for renewable PPAs by updating minimum contractual provisions and providing clearer guidance on risk allocation, refinancing and environmental attributes. Additionally, there was the continued parliamentary deliberation of the New and Renewable Energy Bill (RUU EBT). The result was a framework that improved consistency and documentation discipline while preserving PLN’s conservative risk posture.

PLN’s move toward bundled, multi-site renewable procurement represented a notable shift in execution strategy. By aggregating projects into consolidated tenders, PLN aimed to accelerate contracting timelines and reduce transaction friction, albeit at the cost of increased scale, complexity and balance-sheet demands for bidders. In parallel, multilateral initiatives under the Just Energy Transition Partnership and the ADB-led Energy Transition Mechanism continued to shape Indonesia’s long-term transition narrative, particularly through early coal-retirement frameworks and concessional financing structures.

Challenges and 2026 Outlook

Indonesia’s principal constraint remains systemic rather than conceptual. Grid congestion in resource-rich regions, layered procurement approvals and cautious risk allocation continue to slow the conversion of policy intent into bankable projects. The government’s announcement of a major transmission-expansion programme in mid-2025 was therefore strategically significant, but its effectiveness will depend on execution discipline, inter-agency coordination and delivery speed.

Looking ahead, Indonesia’s 2026 outlook will hinge on how effectively the policy foundations laid in 2025 translate into executable projects. Key markers include: the scale and pace of PLN’s bundled renewable PPA awards and whether contracting cycles accelerate; progress on power‑wheeling regulations under RUU EBT and the degree to which they unlock corporate procurement; operationalisation of the MOF 5/2025 guarantee mechanism, including clarity on eligibility and treatment in financing structures; and delivery of initial transmission‑expansion milestones, particularly in provinces with significant renewable potential but limited existing infrastructure

If these elements align, Indonesia has the potential to shift from incremental progress to accelerated deployment. If not, the transition risks remaining policy-heavy but project-light, even as coal and gas continue to dominate the generation mix.

ASEAN

2025 Retrospective

"Regional integration increasingly shifted from long-term aspiration to practical system necessity, particularly as domestic grids strain under scale and intermittency."

At the regional level, 2025 reinforced the strategic importance of cross-border power trade as ASEAN economies confront rising electrification demand, accelerating renewable deployment and increasing penetration of variable generation. Regional integration increasingly shifted from long-term aspiration to practical system necessity, particularly as domestic grids strain under scale and intermittency.

Progress under the ASEAN Power Grid was most visible through expansion of the Lao PDR–Thailand–Malaysia–Singapore Power Integration Project toward multi-directional power flows. This development demonstrated not only technical feasibility, but also growing institutional coordination across regulators, system operators and governments. It marked a meaningful evolution from bilateral trading arrangements toward a more networked regional model capable of supporting renewable balancing and energy security.

Momentum was reinforced by multilateral development banks, which announced significant financing commitments aimed at grid integration, interconnection infrastructure and enabling systems. These commitments increasingly framed cross-border transmission not merely as infrastructure, but as a decarbonisation enabler. Approval of APAEC Phase III in October 2025 established a new five-year blueprint emphasising connectivity, energy security and accelerated transition, while the Enhanced ASEAN Power Grid Memorandum of Understanding provided a clearer governance framework for regional electricity cooperation.

Beyond physical infrastructure, 2025 also saw renewed focus on market instruments to support regional trade. Discussions around harmonised renewable energy certificates, common technical standards and regulatory alignment gained momentum, recognising that physical interconnection alone is insufficient without compatible market frameworks to attract private capital.

Challenges and 2026 Outlook

Despite progress, ASEAN’s transition remains constrained by uneven regulatory maturity, divergent national priorities and varying grid readiness. In 2026, success will be judged by the region’s ability to convert policy frameworks into bankable interconnection projects supported by harmonised rules and credible commercial structures. Alignment between regional ambition and domestic execution will be decisive, particularly in unlocking corporate demand and long-term private investment for cross-border renewable trade.

Hong Kong

2025 Retrospective

"With limited physical capacity for large-scale renewable generation, Hong Kong deliberately positioned finance, regulation and market integrity as its primary transition levers."

Hong Kong’s 2025 energy-transition narrative was shaped by constraint-driven sophistication. With limited physical capacity for large-scale renewable generation, Hong Kong deliberately positioned finance, regulation and market integrity as its primary transition levers, rather than pursuing capacity expansion that is structurally constrained.

The entry into force of IFRS S2-aligned climate-disclosure requirements in January 2025 marked a step-change in transparency and governance. Mandatory disclosure of climate risks, metrics and targets strengthened investor confidence and aligned Hong Kong with leading global financial centres. This was reinforced by continued work of the Cross-Agency Steering Group on taxonomy expansion and sustainability assurance, addressing credibility gaps that increasingly define transition finance.

Hydrogen policy advanced cautiously but deliberately. Progress of the Gas Safety Amendment Bill provided statutory foundations for regulating hydrogen as a fuel, while the expansion of pilot projects doubled the number of approved hydrogen demonstrations within a year. These pilots, particularly in transport, logistics and backup power, generated technical, safety and operational data essential for future regulatory calibration and cost assessment.

In parallel, Hong Kong continued to focus on incremental decarbonisation of the built environment, recognising that buildings account for the majority of local emissions. Expansion of zero-carbon-ready building certifications and enhanced guidance on embodied carbon reflected a pragmatic strategy focussed on measurable emissions reduction within physical constraints.

Challenges and 2026 Outlook

Hong Kong’s challenge is not policy coherence, but physical limitation. Domestic renewable generation will remain marginal, necessitating reliance on cross-boundary electricity supply, distributed generation and imported low-carbon fuels. Key indicators for Hong Kong’s 2026 trajectory include: the finalisation of 2026 hydrogen subsidiary legislation and its impact on bankable hydrogen deployment models; the effectiveness of taxonomy expansion and assurance frameworks in supporting transition‑finance growth; progress in scaling decarbonisation investments in the built environment, including performance‑based retrofit models; and continued expansion of distributed renewables and waste‑to‑energy within local constraints.

These developments will determine how effectively Hong Kong converts its 2025 policy groundwork and market infrastructure into investable, scalable pathways reinforcing the city’s role as a leading transition‑finance hub for the region.

Japan

"Japan’s 2025 energy-transition developments reflected a deliberate recalibration toward bankability and system realism under the Green Transformation framework."

2025 Retrospective

Japan’s 2025 energy-transition developments reflected a deliberate recalibration toward bankability and system realism under the Green Transformation framework. Progress in hydrogen and ammonia, offshore wind and CCS has been driven by policy emphasising stronger delivery capability, fiscal discipline and more resilient supply chains.

Japan advanced its hydrogen and ammonia strategy in late 2025, with four projects selected for the Contract for Difference subsidy scheme under the Hydrogen Society Promotion Act. NEDO funding underscored Japan’s commitment to underwriting early‑stage price risk exposure, building scalable supply chains, and developing new ammonia‑to-hydrogen cracking technology. In the context of increased global emphasis on conventional energy, Japanese policy maintains a long-term industrial strategy designed to anchor domestic manufacturing of alternative energy sources, with LNG at the forefront.

Offshore wind policy underwent a significant reassessment. Government consultation following developer withdrawals from Round 1 sites highlighted weakness in auction design, including excessive weighting on implementation speed, aggressive pricing assumptions and insufficient risk sharing. Proposed reforms, including price floors and ceilings, revised evaluation criteria and stricter penalties potentially applying to the entire corporate group for post-award withdrawal, signal a decisive shift toward investment certainty.

JOGMEC’s Advanced CCUS Projects programme continued to serve as the main investment vehicle to enable operational CCUS projects by 2030. JAPEX received the first exploratory drilling license in September 2025, with results expected soon to determine the feasibility of the proposed site.

From April 2026, emitters under the mandatory emissions trading system will be subject to compulsory emissions reporting, required to maintain an account in the GX-ETS registry, and expected to be operationally capable of acquiring GX credits and participating in GX trading. However, viability of the international emissions trading framework has been called into question by the announcement of US withdrawal from the Paris Climate Accord in January.

Challenges and 2026 Outlook

Japan enters 2026 with important hurdles still to address, such as scaling hydrogen and ammonia production, resolving offshore wind supply headwinds, progressing early-stage CCUS licensing and CO₂ transport frameworks and achieving a functional international emissions trading framework. These challenges sit alongside momentum and a shift in focus with the new government of Prime Minister Takaichi to stimulating DX industries. The task now is to convert this policy direction into workable projects that can support long‑term investment.

Conclusion: From Architecture to Accountability

Across Asia, 2025 marked a shift from ambition to architecture, from announcing targets to building the conditions for delivery. Governments built the legal, regulatory and financial foundations for decarbonisation at scale. Thailand advanced green tariffs, direct procurement pilots and early CCS frameworks. Vietnam undertook far-reaching power-sector and planning reforms. Singapore reinforced its transition through carbon pricing, disclosure and regional integration. Indonesia recalibrated procurement and risk allocation within a state-led system. ASEAN strengthened the institutional basis for cross-border power trade. Hong Kong deepened market integrity through disclosure, taxonomy and assurance. Japan refocused policy design toward workable projects supporting long term investment.

The defining challenge for 2026 will be accountability rather than aspiration. Success will depend on whether grid expansion keeps pace with renewable ambition, whether procurement mechanisms attract long-term capital, and whether emerging technologies move from pilots to bankable deployment. These tests will play out differently across jurisdictions, from execution and transmission in Indonesia and Vietnam, to market design and integrity in Thailand and Hong Kong, to regional integration in ASEAN, to system stability and technology scaling in Singapore and Japan.

What emerges is not convergence, but differentiation. Each jurisdiction faces distinct constraints and opportunities, yet all will be judged by delivery rather than design, and by outcomes rather than intent. For policymakers, the task is to reduce friction and execute. For developers and financiers, the opportunity lies in navigating the regulatory landscapes with discipline and selectivity. Together, these forces will determine whether Asia’s energy transition in 2026 accelerates into delivery or stalls at the limits of implementation.

Tokyo Trainee Mike Gorry and Hanoi Trainee Ha Hoang also contributed to this article.

< Back to insights hub

Key contacts

Theo Cleminson

Theo
Cleminson

Senior Associate (Foreign Qualified Lawyer) Hanoi

Mai Dao

Mai
Dao

Senior Associate Hanoi

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