A SURGE in electricity demand from artificial intelligence and digitalization data centers is adding pressure to already fragile energy systems in Asean+3 economies, according to the Asean+3 Macroeconomic Research Office (AMRO) based in Singapore.
“The rapid expansion of AI and digital infrastructure is driving large increases in [power] consumption,” AMRO director Yasuto Watanabe said in a commentary, titled “Building the Energy Resilience Asean+3 Needs,” published Tuesday.
The Asean+3 economies comprise the 10 Asean member states (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam) plus China, Japan, and South Korea. Established in 1997, the bloc fosters financial stability, trade integration, and regional cooperation.
Watanabe warned that without stronger systems, energy shocks could amplify macroeconomic volatility across the region.
“Power systems need to increase capacity while remaining consistent with climate goals,” he said. “Though renewable capacity has grown, if generation cannot scale quickly enough to match rising demand, governments may face pressure to rely more heavily on fossil fuels to ensure a reliable power supply.”
Electricity demand in the region grew by over 7.0 percent in 2024, and is expected to double by 2050 — one of the fastest growth rates globally, the International Energy Agency said.
AI and digitalization data centers are energy-intensive, Watanabe said, noting that Southeast Asia is becoming a key destination for data center investments, with Singapore, Malaysia, and Indonesia emerging as major hubs for cloud services and AI infrastructure.
Moreover, climate-related events such as heat waves, floods, and storms are becoming more frequent and severe, threatening power generation and transmission infrastructure.
These disruptions can trigger supply shortages, push up electricity prices, and widen fiscal pressures as governments step in with subsidies or emergency measures, Watanabe said.
Geopolitical tensions also add to risks, particularly for economies reliant on imported fossil fuels.
“These risks are particularly relevant for Asean+3 economies, many of which rely heavily on imported fuels, including liquefied natural gas (LNG),” Watanabe said.
“Enhancing preparedness through new financial and insurance instruments and capital-market solutions can help governments manage the fiscal costs of climate shocks and support investment in resilient infrastructure,” he suggested.
“Strengthening energy resilience is not only an energy-policy priority; it is a macroeconomic imperative,” he said. “Asean+3 economies stand at the intersection of climate risk, technological change, and geopolitical uncertainty.”
