Expanding ASEAN grid supply chains could mitigate critical transmission equipment shortages 

In June 2024, the Institute for Energy Economics and Financial Analysis (IEEFA) released a report on renewable energy supply chain opportunities in the Asia-Pacific region. The report highlighted the potential for countries to expand their focus beyond manufacturing solar panels and wind turbines when developing energy transition industries. It encouraged embracing a wider array of technologies and services to deliver clean electricity to the grid effectively. In the Association of Southeast Asian Nations (ASEAN), governments are increasingly keen to penetrate the green tech market. This goal drives localization policy development that aims to attract capital, foster intellectual property development, and create jobs within their countries. Solar panels and wind turbines are the most identifiable symbols of the energy transition, and government policies often focus on encouraging — or even mandating — the local production of these components. However, overly ambitious local content requirements risk choking the growth of these industries, particularly before domestic market demand for those goods has a chance to take off. Focusing too narrowly on specific energy technology components could divert attention from more beneficial local production opportunities. Constrained grid equipment access threatens connection delays Creating fully grid-integrated energy supply projects requires a wide array of complementary materials, components, and services that go beyond making solar panels or wind turbines. As IEEFA has reported, these “balance of system” elements can account for 55% to 80% of the total investment cost in a solar or wind project, thus representing attractive areas for localization. Meanwhile, due to electricity grid constraints, countries worldwide suffer long queues for bringing renewable energy projects online. Despite the growing need to connect additional energy sources to customers, most of the world has neglected transmission system investment. This challenge is most acute in the United States, where 1.6 terawatts (TW) of renewable projects and 1TW of storage, a combined equivalent of double the country’s current installed grid capacity, are waiting for connection slots.  Globally, countries must urgently address the challenge of connecting new generating assets, whether solar, wind, nuclear, or fossil fuel, to customers in a rapidly electrifying world. According to the International Energy Agency, the world has a US$320 billion (bn) grid investment gap through 2030, posing a significant barrier to achieving stated net-zero targets. Despite this urgent need, grid modernization and build-out face a looming global crisis, exacerbated by constrained access to critical grid equipment. High-voltage transformers, switchgear, circuit protection systems, and cabling are essential to maintaining and upgrading grid infrastructure but are increasingly in short supply.  Backlogs in transmission and distribution systems manufacturing