Energy security and clean energy investments face protracted decline

ODF spending on renewable energy remains at record lows and new commitments point to no near-term recovery. China has all but disappeared from the sector, while traditional partners hold steady.

The events of 2026 have exposed Southeast Asia’s acute vulnerability to disruptions in global energy supply. The Iran war and resulting price shocks have seen the region’s import bill swell by an estimated $3.36 billion per month.¹ Yet support from development partners for energy security has declined sharply over the past decade, from $10.8 billion in 2015 to $2.3 billion in 2024. Less than 10% of ODF to Southeast Asia in 2024 addressed energy security needs — spanning renewable and non-renewable generation projects, technical assistance and policy advice, and grid transmission and efficiency.

Much of the reduction in energy security support is due to a contraction in China’s lending for energy generation and transmission projects. From 2015 to 2020, China was actively implementing 71 energy projects in the region; from 2021 to 2024, the ongoing project count fell to just 15. In part, this decline reflects the completion of some large-scale energy projects such as the Vinh Tan 1 Thermal Power Plant in Vietnam and the Java 7 Coal-Fired Power Plant in Indonesia, but cancellations, such as Malaysia’s Trans-Sabah Gas Pipeline, also contributed.

The primary providers of energy security ODF in 2024 were the ADB and the World Bank, followed by Germany. Over the last decade, around 40% of the ODF for energy security to the region has been provided through concessional loans, and 50% through non-concessional loans, with the remaining 10% provided through grants.

Indonesia has been the largest beneficiary of energy security ODF, receiving 44% of the regional total since 2015. Laos stands out relative to its size, having received billions in financing from China for hydropower dams. The Philippines has attracted a disproportionately low share of energy security finance, and the Iran war exposed its acute vulnerability and dependence on energy imports.

In response to the 2026 energy crisis, many bilateral development partners have announced large support packages. It is, therefore, reasonable to assume that future data will show increased attention from development partners to the region’s energy security. Japan, for example, has announced the $10 billion Partnership on Wide Energy and Resources Resilience (POWERR Asia) financing package and framework under the Asia Zero-Emission Community. At the time of writing, it is unclear whether this is additional ODF spending or financing repurposed from other priorities.

However, such promises have fallen short in the past. The Just Energy Transition Partnerships — $20 billion for Indonesia and $15.5 billion for Vietnam — have yet to translate into firm commitments, let alone disbursements. In fact, ODF spending on renewable energy has declined by two-thirds since 2018. Traditional partners have remained stable at an average of $638 million annually since 2019, while China’s commitments have all but disappeared.