Southeast Asia's push to knit together its power grids got a boost with the renewal of a multilateral hydropower deal linking Laos, Thailand, Malaysia and Singapore. Analysts say the agreement underscores the region's bid to accelerate the clean-energy transition while hedging against mounting energy security risks.

The agreement, signed on Jan 14, allows up to 100 megawatts of electricity generated in Laos to be transmitted to Singapore through existing transmission lines in Thailand and Malaysia. Though modest in scale, the deal is part of the Association of Southeast Asian Nations' broader plan to build a regional interconnection framework.

Christina Ng, managing director at the Energy Shift Institute, called the capacity "inconsequential" but said the structure is what matters.

"It's what ASEAN needs right now — a repeatable, bankable commercial framework that markets can scale," she said.

Ng highlighted that cross-border renewable trade is increasingly vital as geopolitical tensions threaten shipping routes and fuel costs."Energy security today is less about 'owning fuel'," she said. "It's more about managing exposure to concentrated risks."

Ng said cross-border electricity trade is one of the few tools that can diversify those risks without locking countries further into fossil fuels, which have been subject to significant volatility and risks.

Economic growth

Intra-regional power trade also shows that ASEAN countries are prioritizing economic growth over politics, according to Dinita Setyawati, a senior analyst at Ember, a global energy policy think tank. Setyawati said expanding ASEAN interconnection can strengthen power system resilience while supporting the region's decarbonization goals.

The ASEAN Power Grid, or APG, is one of the key initiatives of the regional bloc to ensure energy security by integrating power infrastructure across countries. The first memorandum of understanding on the APG was signed in 2007 and implemented in 2009. In October 2025, ASEAN's energy ministers signed an enhanced memorandum of understanding on the ASEAN Power Grid and vowed to strengthen regional electricity connectivity through multilateral power trade, integration of renewable energy, and fostering investment in the energy sector.

The Laos-Thailand-Malaysia-Singapore Power Integration Project is the first multilateral cross-border electricity trade project in ASEAN and is part of the ASEAN Power Grid. The project began in 2018, with hydropower from Laos flowing to Malaysia via Thailand. In 2022, Laos started selling hydropower to Singapore using the existing interconnection, with Thailand and Malaysia acting as wheelers to transmit the energy. This arrangement lasted until 2024 before it was renewed early this month.

David Broadstock, partner of the Singapore-based consultancy The Lantau Group, said the need for cross-border energy cooperation and trade in ASEAN is most easily understood in the context of Singapore.

Broadstock said that Singapore can't develop enough renewable energy because it has insufficient wind resources for wind power, unsuitable topography for scalable onshore hydropower, and limited land area for increased solar energy.

"But across other countries in the region, there are places where each or all of these limitations don't apply. So for a country like Singapore, the opportunity is to build hydro, wind or solar energy in other countries and then import it into Singapore," Broadstock said.

He said the role of the ASEAN Power Grid is to enable energy to flow more freely, so that the region's renewable energy potential can be maximized. However, Broadstock said that an incomplete power grid infrastructure deters regional connectivity.

Ng of the Energy Shift Institute said that apart from engineering hurdles, another problem for the ASEAN Power Grid is the interoperability of rules across 11 countries with different technical standards.