Interconnector projects in Southeast Asia can indeed attract large-scale private funding from institutional investors, but only if regional governments create more stable and predictable business environments. According to the authors of the newly released report, while these projects can provide competitive financial returns, success depends on establishing clear rules for how projects earn money and allowing early investors to eventually sell their stakes to unlock further capital.
The report states that “institutional investors are increasingly interested in ASEAN’s energy transition, and interconnector projects can attract this capital through clear revenue frameworks, affordable long-tenor debt and structured exit pathways.” Furthermore, financial modeling confirms that “interconnectors can deliver returns competitive with other core infrastructure assets, but only if certain conditions are met.”
To attract long-term investors like pension funds, the region must move beyond the current system where state-owned companies try to pay for everything on their own. For private investors to step in, they need a guarantee that they will receive steady payments for keeping the lines available, rather than just being paid when electricity is flowing. Additionally, because power grid projects take decades to pay off, there needs to be a way for early-stage investors to sell their ownership portions once construction is finished, allowing them to move their money into the next project.
The report “Financing the ASEAN Power Grid” was published by the International Energy Agency in Paris in March 2026. Lead author James Bragg and a team of analysts provide a comprehensive framework for unlocking the capital required to build a more integrated and sustainable energy future for Southeast Asia.
