Solar could meet ASEAN’s new power needs at half the cost of gas, saving up to USD 67 billion: Ember

Mumbai: Replacing ASEAN’s planned expansion of gas-based power with solar energy could save the region up to USD 67 billion, according to a new analysis by Ember, amid an ongoing energy crisis triggered by disruptions in West Asia.

The closure of the Strait of Hormuz and a halt in Qatari liquefied natural gas (LNG) production have sent shockwaves across energy markets in Southeast and East Asia, the report noted.

Prolonged disruption, it warned, could reshape price dynamics, intensify competition in spot LNG markets, and deepen geopolitical fragmentation.

Under ASEAN’s current energy transition plans, gas capacity is projected to nearly double from 106 gigawatts (GW) to about 200 GW by 2030.

At prevailing LNG prices, electricity generation from gas-fired plants could cost around USD 71 billion annually, rising to as much as USD 109 billion under future price projections. In contrast, generating an equivalent amount of electricity using solar energy would cost approximately USD 42 billion per year—nearly half.

“Current and past crises have shown that dependence on imported fossil fuels undermines energy security. Developing and emerging economies in Asia face heightened risks if prices continue to rise. While energy conservation may offer short-term relief, a shift to domestic renewable sources can better buffer future shocks,” said Dinita Setyawati, Senior Energy Analyst (Asia) at Ember.

Countries with a high share of gas in their electricity mix face the most immediate pressure. In Singapore, gas-fired generation costs could rise to about USD 260.8 per megawatt-hour (MWh), roughly double the levels recorded in February 2026, in line with current LNG price trends.

The report cautioned that the economic fallout would extend beyond the energy sector. Rising prices of US dollar-denominated fossil fuels are expected to weaken Asian currencies, dampen industrial output, and drive inflation.

Previous energy price shocks—including during the Russia-Ukraine conflict—triggered significant inflation spikes across the region. In 2023, inflation peaked at 8.5% in Singapore and 6.1% in Thailand. The current crisis could replicate or exceed those levels, particularly in economies with limited fiscal capacity to absorb shocks.

“Oil and gas are integral to modern economies—from fertilisers to advanced materials—making Asia’s industrial base deeply dependent on them. Reducing this dependence is not merely an energy transition but a broader economic transformation. It may be time for Asia to rethink its fossil fuel-intensive growth model,” said Muyi Yang, Senior Energy Analyst (Asia) at Ember.

Japan, one of the world’s largest oil consumers, faces significant exposure. The country imports over 90% of its crude oil from the Middle East, with prices already hovering around USD 100 per barrel. A further rise to USD 110 per barrel could intensify inflationary pressures.

Singapore, where gas accounts for around 95% of electricity generation, remains particularly vulnerable to LNG price volatility. Authorities have introduced an emergency wholesale electricity price cap to shield consumers and stabilise the market.

The report also cautions against reverting to coal as a short-term alternative. Coal prices have risen by about 15% to USD 134 per tonne, with the levelised cost of coal-fired electricity estimated at USD 76/MWh—still significantly higher than solar coupled with battery storage, which stands at around USD 40/MWh.

Thailand has already directed coal plants to operate at full capacity, a move that could add an estimated 3.2 million tonnes of CO₂ emissions annually—about 5% of the country’s 2037 emissions target under its draft power development plan.