Southeast Asia (SEA) continues to experience rising energy demand, driven by rapid industrialisation and urbanisation. In most countries, demand has consistently outpaced domestic production, leaving the region reliant on energy imports. To address this imbalance, governments have set national policies and targets aimed at diversifying away from conventional sources, with a focus on energy security and renewable energy. However, as both demand and the need for green infrastructure intensify, the region faces a projected funding gap of $1.5 trillion for green investment by 2030, with only $45 billion committed as of 2023.

International partners such as China, Japan, Europe and the US have a significant role in providing financing, technology, and industrial partnerships. Europe, in particular, has historically played a central role in this transformation. Yet, once at the forefront, Europe is now increasingly seen as falling behind other international partners, as Chinese original equipment manufacturers (OEMs) gain competitiveness and shifting geopolitical priorities reshape the landscape.

Europe’s declining role in renewables

Europe’s role in SEA’s renewable sector has declined steadily. Since the 2010s, Chinese manufacturers have overtaken the Europeans in solar photovoltaic production with European wind OEMs, despite their early advantage, rapidly losing ground. By 2022, European firms still held a significant share in wind markets such as the Philippines, Vietnam, Thailand and Indonesia, but this is now changing as Chinese suppliers dominate new orders for wind farms across the region.

European equity and debt participation has also declined. The European Union’s Global Gateway initiative earmarked €10 billion for SEA between 2021 and 2027, but this remains modest compared to the region’s investment needs and other partners’ commitments.

Several factors underpin this decline: slow capital mobilisation relative to China’s scale, shifting geopolitical priorities following the Russia-Ukraine war and limited high-level engagement with the Association of Southeast Asian Nations (ASEAN). Moreover, Europe’s stringent standards on environment and labour, though important, have at times clashed with domestic priorities, leading to the perception of Europe being less competitive.

Country-wise renewables status and Europe’s role

Vietnam

Vietnam’s energy demand is projected to rise 10-12 per cent annually till 2030. Coal continues to dominate its energy mix, while the share of renewables including, hydropower, solar PV and wind is growing. Vietnam’s Power Development Plan 8 (PDP8) for 2021-30 charts an ambitious path for renewables to reach around 70 per cent by 2050. Between 2017 and 2021, the country added 20 GW of renewable energy capacity. While solar projects relied heavily on Chinese technology, European wind OEMs such as Siemens Gamesa and Vestas secured nearly half the turbine orders. European equity capital played only a limited role, with most financing coming from local banks and multilateral institutions. Regulatory uncertainty, especially concerns over power purchase agreements being un-bankable and policy discussion over retroactive tariff revisions, have discouraged greater European participation.

The Philippines

The Philippines as a net energy importer is focusing on expanding its renewable energy capacity to strengthen energy security. Its targets for a 35 per cent renewable share by 2030 and 50 per cent by 2040, supported by the Green Energy Auction Programme (GEAP) and relaxed foreign ownership and investment rules. These measures attracted European equity investment in the development and construction of renewable energy projects. However, local banks dominate project financing, limiting European debt participation.

Indonesia

With the largest population and economy in SEA, Indonesia relies heavily on coal for the bulk of its 91.2 GW generation capacity. The country holds one of the world’s largest coal reserves, and coal-fired power plants continue to provide energy security at a competitive price. Renewables account for only 14.6 per cent of the mix, well below national targets, with installed wind capacity minimal and solar deployment still limited. A key structural barrier is the dominance of the state utility in the energy market, which restricts private capital inflows. The Just Energy Transition Partnership (JETP), launched in 2022 with $20 billion initial commitment by the EU and other European partners, offers a potential platform for Europe to establish its presence in Indonesia’s renewable sector.

Malaysia

Malaysia’s energy mix is dominated by fossil fuels, though renewables, mainly hydropower and solar, account for over a quarter of the capacity. The country targets 70 per cent renewables by 2050. However, restrictive foreign ownership rules on equity investment and the dominance of Chinese-owned solar production have constrained Europe’s presence. European OEMs face limited space to compete, while equity investors remain restricted by regulations.

Thailand

Thailand has around 53 GW of installed capacity, with fossil fuels comprising more than 75 per cent. Renewables stand at 23 per cent, largely from solar and wind. European firms played a central role in early wind projects, particularly between 2012 and 2017, installing 1.5 GW of wind capacity. However, financing was largely domestic for these projects and new projects are increasingly reliant on Chinese OEMs. Going forward, Europe’s role in Thailand’s renewable build-out appears set to diminish further.

Singapore

Though small in scale and reliant on gas and thermal power generation, Singapore serves as a regional hub for capital, developers and decision-making in SEA’s energy markets. Its initiatives, such as floating solar PV and cross-border imports, create opportunities for European investors to contribute their expertise. In particular, Singapore’s ambition to develop an ASEAN grid resonates with Europe’s own experience in building interconnected transmission networks across countries, offering a potential for partnership.

Looking ahead

SEA’s renewable transition is moving at speed, but Europe’s role is steadily diminishing.  To regain relevance, Europe must act on several fronts. First, it should expand its financial commitments, positioning itself as a dependable capital provider by strengthening initiatives like Global Gateway and scaling the JETP in Vietnam and Indonesia. Second, Europe needs to boost its industrial competitiveness, ensuring its companies remain leaders in areas such as battery energy storage, offshore wind and grid integration. Third, it must better align government and industry strategies, drawing on lessons from Japan’s coordinated industrial model and deploying development finance institutions to de-risk projects. Finally, prioritising sustainability into EU-ASEAN diplomacy, including establishing a dedicated EU-ASEAN Green Dialogue platform, can drive joint initiatives, policy frameworks and technology transfer.

With these shifts, Europe can still play a meaningful role in shaping SEA’s green transformation. Without these, it risks being remembered as a pioneer whose influence faded just as the region’s clean energy story entered its most decisive chapter.

(With inputs from a paper titled The European Role in Renewable Energy in Southeast Asia by the European Chamber of Commerce, Singapore.)