Europe has historically been a significant catalyst in the global renewable energy landscape, pioneering advancements in solar photovoltaic (PV) and wind technologies and championing climate change mitigation. Its ambitious policies fostered rapid domestic deployment, leading to technological maturation and reduced costs, which in turn facilitated global adoption. European firms have been instrumental in Southeast Asia’s (SEA) energy transition, providing technology and financing. However, recent trends reveal a significant reduction in Europe’s engagement in the region’s renewable energy sector. Chinese manufacturers now dominate solar PV and are rapidly gaining ground in wind technology, traditionally a European stronghold. Similarly, European capital deployment, both debt and equity, has diminished. “The European Role in Renewable Energy in Southeast Asia in Recent Years”, Eurocham Position Paper 2025 by the European Chamber of Commerce, (Singapore) examines these declining trends, highlighting the erosion of Europe’s “green leadership” influence and the changing technological and financial landscape in key SEA nations, and proposes strategic recommendations to reassert Europe’s pivotal role in the region’s energy transition.

Lowering confidence in Europe’s climate leadership

Despite the European Union’s (EU) enduring reputation in global climate governance, reinforced by the comprehensive European Green Deal, its influence over the green transition in SEA is reducing. The SEA region will face an estimated green investment funding gap of $1.5 trillion by 2030, with only $45 billion committed as of 2023, presenting a substantial window for European stakeholders to expand their leadership in sustainability and to leverage their technical expertise. Despite this opportunity, European climate investments and political engagement in renewable energy initiatives across the region continue to lag. This decline can be attributed to the following three primary factors.

Limited scale of capital deployment

European funding directed towards SEA’s renewable energy sector has lagged in scale compared to other international players. Between 2015 and 2021, China allocated close to $5 billion per year in development finance across the region. In comparison, the EU’s Global Gateway strategy earmarked only €10 billion for the entire 2021-27 period, highlighting the gap in the EU’s financial footprint and underlining its constrained influence relative to other global players.

Realignment of geopolitical focus

The war in Ukraine exposed critical weaknesses in Europe’s energy infrastructure, particularly its heavy dependence on Russian natural gas. In response, EU policymakers have shifted focus towards diversifying energy sources and reinforcing domestic energy resilience. These urgent priorities have sidelined the broader decarbonisation objectives embedded in the European Green Deal as immediate concerns around energy stability and affordability take precedence.

Subdued political engagement and perception challenges

EU-ASEAN climate co-operation continues to operate primarily through technical channels and lacks robust engagement at senior political levels. This has resulted in missed opportunities to advance collaborative climate action. Moreover, the EU’s rigorous environmental, labour and human rights policies are sometimes viewed unfavourably in parts of ASEAN. Disputes over palm oil with Malaysia and Indonesia and concerns about the economic impact of the EU’s carbon border adjustment mechanism (CBAM) on heavy industries such as steel and iron have strained relationships.

Evolving technological and financial dynamics in SEA

The changing role of European original equipment manufacturers (OEMs) and financial institutions in SEA’s renewable energy landscape has been assessed. Once prominent contributors to the region’s clean energy development, European players now face reduced influence, especially in comparison to China’s growing technological and investment presence. Traditionally, most SEA countries relied heavily on energy imports to support rapid industrialisation and expand their manufacturing sectors, where demand often exceeded local supply. However, this dependency is now gradually being reshaped by government-led strategies aimed at diversifying energy sources and fast-tracking the transition to renewables. This trend is backed by ASEAN’s increasing focus on energy security and system resilience.

Vietnam

Vietnam, one of ASEAN’s most rapidly industrialising economies, has witnessed a sharp escalation in energy demand. With installed power generation capacity exceeding 75 GW, the country’s energy mix remains heavily reliant on coal, complemented by renewable sources such as hydropower, solar PV and wind. The Vietnamese government is increasingly turning to renewables to bridge its widening energy gap with an anticipated annual growth in electricity consumption of 10-12 per cent through 2030, among the fastest in the region. The updated Power Development Plan (PDP8) for 2021-30 sets out a long-term vision to significantly raise the contribution of solar and wind power by 2050.

Vietnam’s limited domestic reserves of coal and natural gas make it vulnerable to international market fluctuations and supply instability. Additionally, the extended lead times required for thermal power development have further prompted the government to prioritise renewables as a more secure and scalable solution. Between 2017 and 2021, the country saw the deployment of over 20 GW of renewable capacity, comprising around 5 GW of wind energy, and widespread adoption of both utility-scale and rooftop solar PV, driven in part by favourable feed-in tariff (FiT) incentives. While solar installations largely used Chinese technology, European wind turbine manufacturers, especially Siemens Gamesa and Vestas, captured close to half the market share during this period.

Looking ahead, Chinese wind technology is expected to take the lead in upcoming projects, primarily due to its more competitive pricing and the sharp decline in the levellised cost of electricity (LCOE) for onshore wind. On the investment side, European equity participation remained limited during the earlier deployment phase. Although European lenders were more involved through export credit-supported financing, most project funding was sourced from regional banks and multilateral development institutions, marking a missed opportunity for European investors to solidify their presence in this high-growth market.

Regulatory uncertainty continues to be a major deterrent for European engagement. The power purchase agreement (PPA) framework has been widely viewed as commercially unviable, lacking key investor protections such as curtailment guarantees and fair exit provisions. These concerns were reinforced by the Vietnamese government’s 2024 proposal to retroactively reduce FiT rates for existing solar and wind projects, a move that can impact up to $13 billion in investment, including an estimated $4 billion tied to foreign-owned assets and over 5 GW of renewable capacity.

Philippines

As a country heavily dependent on imported energy, the Philippines has undertaken an assertive push towards renewable energy development to reduce its vulnerability to global fuel price fluctuations and supply disruptions. By 2023, the country had reached a total installed generation capacity of 28.3 GW, with coal and gas making up a significant portion of the energy mix. This reliance on imported fossil fuels underlined the need for a more resilient, diversified and cost-effective energy strategy.

In response, the government has launched an ambitious energy transition agenda aimed at increasing the share of renewables to 35 per cent by 2035 and 50 per cent by 2040. These targets, backed by supportive policies and regulatory reforms, reflect a firm commitment to wind and solar as strategic pillars of the country’s future energy system. Among these, the key policy is the Green Energy Auction Programme (GEAP), operational since 2022, which provides a structured mechanism for scaling up renewable capacity. Additionally, the removal of foreign ownership restrictions in the renewable sector has further opened the door to international investors, including increased participation from European companies in recent years.

While these reforms have successfully attracted European equity investments in the development and construction of renewable energy projects, access to the lending market remains a challenge. The Philippines has a well-developed local banking system that dominates project financing, making it difficult for European financial institutions to play a more prominent role in providing debt capital.

However, Europe’s influence has been waning on the technology front. Prior to 2022, European OEMs, particularly Siemens Gamesa, held a strong position in the country’s wind sector. Since then, the tide has shifted, with a growing number of new wind projects opting for Chinese technology due to its cost advantages and faster delivery timelines. Most projects under construction or nearing execution are now aligned with Chinese turbine manufacturers, reflecting a significant market shift.

Indonesia

Indonesia, the region’s largest economy and most populous nation, also commands the highest installed power generation capacity in SEA at 91.2 GW. With abundant coal reserves, its energy system has traditionally leaned heavily on coal-fired generation to provide reliable and low-cost electricity. Currently, renewable energy makes up only 14.6 per cent of total installed capacity, though the government has set a goal to increase this share to 23 per cent by 2025 as outlined in its National Electricity Supply Business Plan (RUPTL) for 2021-30. Achieving long-term net zero emissions by 2060 will require annual investments of several billion dollars.

Despite its size and potential, Indonesia remains behind its regional peers in solar and wind deployment. Solar PV installations stand at roughly 700 MW, while wind capacity has become constant at 150 MW, with no additional projects completed in the past five years. The strong dominance of coal, both in cost and energy security terms, has limited incentives for large-scale renewable development.

Indonesia’s cautious approach to decarbonisation is also shaped by its centralised and state-dominated energy structure. The state utility, PT Perusahaan Listrik Negara (PLN), controls over 60 per cent of electricity generation, with independent power producers (IPPs) holding just over a quarter of the market. This concentration of control has led to a slow and managed transition pathway rather than market-driven change.

However, the momentum is building. The launch of the Just Energy Transition Partnership (JETP) in 2022, involving a $20 billion commitment from the EU and other European countries, has opened the door for a more ambitious shift. The partnership aims to accelerate the deployment of both despatchable and variable renewable energy, signalling that Indonesia is increasingly open to deeper European involvement in its transition efforts.

Malaysia

Malaysia has an installed electricity generation capacity of 45 GW, with approximately 70-75 per cent sourced from fossil fuels and around 27 per cent from renewables, mainly hydropower and solar PV. The country has set an ambitious goal of achieving 70 per cent renewable energy in its power mix by 2050, which would require an eleven-fold expansion of current installed capacity. Although Malaysia remains a net energy exporter of oil and gas, it is progressively diversifying its energy portfolio, with the total renewable capacity having tripled between 2010 and 2021, driven largely by hydropower.

With minimal wind potential, Malaysia’s clean energy transition is expected to continue focusing on solar PV and hydroelectricity. However, foreign participation, especially from Europe, is constrained by investment regulations that limit majority ownership by international stakeholders. In addition, the domestic solar PV market is heavily influenced by Chinese manufacturers, who controlled approximately 80 per cent of solar panel production by 2024. This local manufacturing dominance, coupled with regulatory constraints, has restricted the involvement of European OEMs in Malaysia’s renewable energy sector, limiting their role in what is otherwise a rapidly growing solar market.

Thailand

Thailand’s power generation capacity stands at roughly 53 GW, with more than 75 per cent coming from fossil fuel sources. Renewables account for 23 per cent of the mix, with solar PV and wind comprising over 3 GW and 1.5 GW respectively. The country also imports a significant share of its electricity from hydropower projects in neighbouring Laos. Thailand has committed to achieving net zero emissions by 2065 and has set an intermediate target to raise the renewable share of its energy mix to over 50 per cent as part of its National Energy Plan.

European companies were instrumental in the initial development of Thailand’s wind power sector, particularly between 2012 and 2017, when they captured a dominant share of the market. However, financial involvement from European investors remained limited as Thai banks and local sponsors took the lead in project funding. Today, the competitive landscape is shifting. All forthcoming wind power projects are expected to be built using Chinese turbine technology, signalling a clear transition away from European technology providers.

Singapore

Singapore remains a vital player in the regional renewable energy ecosystem, functioning as a key base for developers, financiers and IPPs operating across SEA. Although the city-state’s energy mix is largely dependent on gas-fired power due to land limitations, the government has made significant strides in integrating renewable solutions, including floating solar farms and widespread rooftop PV installations.

To further green its energy supply, Singapore is actively pursuing renewable energy imports from neighbouring ASEAN nations, including Indonesia, Laos and Vietnam. These cross-border electricity trade arrangements present a meaningful opportunity for European investors and technology providers to participate in integrated regional energy systems. The Energy Market Authority (EMA) has shown a strong willingness to collaborate and incorporate feedback from international partners, including those from Europe.

Singapore also plays an influential role in shaping regional energy infrastructure. The concept of an ASEAN power grid, comparable to Europe’s interconnected energy market, has gained traction and European expertise in developing and managing cross-border transmission networks could be a valuable asset in supporting its realisation.

Important policy recommendations

Several strategic actions must be pursued to regain the lost ground and enhance Europe’s influence in SEA’s clean energy transition.

Rebuilding Europe’s credibility as a green investor: Europe must take deliberate steps to re-establish itself as a reliable source of green finance in the region. This involves repositioning the Global Gateway initiative to place a stronger emphasis on climate-aligned investments and offering targeted support for early-stage project development. It also requires streamlining technical assistance and demonstrating long-term commitment such as through continued backing of JETPs in countries like Vietnam and Indonesia.

This can help reinforce Europe’s image as a steadfast and credible energy transition partner.

Enhancing global competitiveness European firms, spanning technology manufacturers and financial institutions, have not been immune to the broader structural challenges affecting Europe’s economic standing globally. The findings of the 2024 Draghi Report highlight systemic issues undermining Europe’s industrial competitiveness. Within this context, the diminishing presence of European technologies and capital in SEA reflects the need for renewed competitiveness. Europe must focus on strategic levers such as Scope 3 decarbonisation to create market demand for clean energy, backed by ambitious regulatory frameworks and supportive incentives. Moreover, European stakeholders must seize emerging domains such as battery energy storage systems (BESSs), which are expected to play a pivotal role in stabilising next-generation power grids.

Extract from “The European Role in Renewable Energy in Southeast Asia in Recent Years”, Eurocham Position Paper 2025 by European Chamber of Commerce (Singapore)