Why Asia Pacific’s next growth phase depends on energy security

As the Asia-Pacific (APAC) region pushes deeper into industrial expansion, reliable and affordable energy is playing an increasingly decisive role in where middle-market businesses expand and sustain growth.

Regional investment is moving into power-intensive, infrastructure-dependent sectors. That shift is increasing pressure on electricity systems across major growth markets. India has the fastest-growing electricity demand globally, followed by Southeast Asia, underscoring the scale of future power needs.

The lower-carbon transition adds further considerations. APAC’s 121 gigawatts of coal capacity and US$130 billion in unrecovered coal capital highlight the cost and complexity of shifting away from established energy systems. Meanwhile, Singapore’s target to import 6 gigawatts of low-carbon electricity by 2035, equal to roughly one-third of projected demand, points to the importance of cross-border power supply in supporting the transition.

Middle-market businesses entering or expanding in the region need to look beyond immediate power availability. The more important test is whether the energy system can support the next stage of growth while absorbing fuel-price volatility, enabling credible lower-carbon options, and reducing disruption to suppliers, customers, and day-to-day operations.

“Energy security is often treated as a given until disruption exposes how quickly it can affect costs, logistics, and the wider economy.”

Peter Tan
Partner & Industry Lead – Energy, Commodities & Renewables Practice
Singapore

Energy reliability is changing location strategy

Historically, businesses deciding where to locate or expand have focused on labour cost, incentives, market access, and supply-chain depth. As data centre development accelerates and advanced, high-load industries grow across APAC, businesses are now assessing factors such as grid readiness, electricity pricing, and fuel exposure more closely.

Alex Sun, Senior Manager at RSM in China, says “Long-term energy planning has become part of broader investment due diligence.” This is particularly relevant for businesses comparing China with other regional investment destinations. China continues to offer one of APAC’s most reliable, large-scale industrial power systems, supported by continued investment in grid infrastructure and renewable generation. For manufacturers especially, that reliability remains a competitive advantage.

“Many businesses still underestimate the importance of future grid capacity rather than today’s electricity availability. A location may currently have sufficient power, but future expansion can be constrained if grid infrastructure cannot support additional industrial demand.”

Alex Sun
Senior Manager
China

Businesses pursuing China+N strategies can reduce concentration risk through diversification, but that may also create new exposure to operational and market vulnerabilities in locations where energy security is less certain.

Craig Amos, National Energy and Resources Leader at RSM in Australia, says conversations around energy reliability have moved well beyond routine operational planning. In Australia, he describes it as “one of the top sovereign issues, not just a board-level issue.” That concern is shaped by scrutiny over power prices, grid investment, diesel security, gas availability, and the transition away from coal-fired generation.

Affordability is setting the pace of lower-carbon energy adoption

APAC’s energy transition is gaining momentum, but the pace varies across markets. Renewable investment is growing, governments are building transition pathways, and global customers are increasing Environmental, Social, and Governance (ESG) expectations across supply chains. Yet affordability remains central, particularly for middle-market businesses.

Peter Tan, Partner & Industry Lead – Energy, Commodities & Renewables Practice at RSM in Singapore, says “Achieving a successful low-carbon transition will require broad adoption by the mid-market, as these companies account for a substantial share of economic activity. While they support lower-carbon power where it is commercially viable, cost remains a key consideration. Larger multinational companies are generally more willing to pay a green premium.”

Global enterprises often have public decarbonisation commitments and are better placed to absorb any higher costs associated with renewable power. Those costs may come through direct purchases of lower-carbon electricity, or through certificates and contracts used to support emissions-reduction claims. Middle-market businesses, meanwhile, may face the same customer expectations but have less room to raise prices or absorb additional costs. As a result, transitioning to more renewable energy needs to support not only decarbonisation, but also resilience, compliance, and cost discipline.

The scale of the transition challenge is substantial. The International Renewable Energy Agency (IRENA) estimates that Southeast Asia alone will need around US$200 billion annually in renewable energy and energy efficiency investment to support green industrial growth. Today, coal remains an important part of the energy mix in several markets because it is available, scalable, and relatively low cost.

“The security and reliability of energy supply is carrying more weight than green power in current decision-making. That does not reduce the importance of decarbonisation. It shows that the transition will be judged by whether it can provide firm and dispatchable power generation alongside emissions reduction.”

Jacob Elkhishin
Partner, National & Global Lead – ESG
Australia

Grid capacity: the unseen constraint shaping APAC’s energy transition

APAC’s energy transition depends on more than new renewable power generation. Equally important is the ability to move electricity from where it is produced to where it is needed, at the time it is needed.

Jacob Elkhishin, Partner, National & Global Lead – ESG for RSM in Australia, says “The complexity of energy infrastructure is often misunderstood outside the sector. Unless you are a transmission or distribution operator, generator, or energy market regulator, the practical realities of running a reliable grid can be difficult to see.”

“Many people hear the debate about energy and electricity and see it as a generation issue. But the reality is more complex. Energy systems are governed by engineering, physics, and infrastructure constraints. Generation is only one part of the equation. Storage, transmission, integration, and distribution all determine whether power can be delivered reliably and at scale.”

Craig Amos
National Energy and Resources Leader
Australia

APAC’s next growth cycle will place heavier demand on local energy systems where industrial activity is becoming more concentrated. Albert Meintjes, Partner at RSM in Australia, says data centres linked to artificial intelligence (AI) have brought this issue into sharper focus. 

"The immediate question is not whether they are affecting electricity prices today, but where the power to run them will come from," he says. "With AI driving significant growth in data centre development, there is increasing public interest in whether electricity generation and network infrastructure can keep pace with demand, and what that could mean for future electricity prices. As a result, developers and operators are increasingly engaging with governments, regulators, energy providers, and other stakeholders to address these concerns and build confidence in how future energy needs will be met."

Semiconductor clusters, mineral processing facilities, and advanced manufacturing parks also place concentrated demand on local energy systems. That makes regional power trading more strategically relevant, because it can help connect high-demand locations with generation capacity beyond their domestic markets.

For example, the Lao PDR-Thailand-Malaysia-Singapore Power Integration Project began multilateral electricity trading in 2022, increasing its capacity to 200 megawatts as of 2026. Singapore’s 6-gigawatt import target also points to a more connected future, but the gap between concept and regional scale remains significant.

For middle-market businesses, energy due diligence should look at whether a site can reliably support long-term operations. That means understanding how secure the grid connection is, whether power supply could be constrained or curtailed, how resilient the business would be during disruption, and whether the surrounding energy infrastructure can support future growth.

“From agriculture to artificial intelligence, energy is becoming part of the discussion about what future growth will require, where that power will come from, and whether the grid can support it.”

Albert Meintjes
Partner
Australia

Energy resilience will shape the next phase of growth

APAC’s industrial growth depends on the strength and adaptability of its energy systems. Rising demand is placing greater strain on infrastructure, while the pace of change differs across markets depending on existing supply, investment capacity, and the maturity of grid networks.

The availability of power today may not be a sufficient guide to future resilience, particularly where local networks could face additional pressure and expose operations to higher costs or disruption. As demand grows, the shift towards lower-carbon energy will depend on whether infrastructure can support reliable, affordable supply.

Middle-market businesses that factor energy security into site selection, investment planning, supply-chain decisions, and transition strategy will be better placed to manage cost volatility, meet customer expectations, and scale successfully across the region. 

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