Layered Market Approach to ASEAN Power Grid Development

Nuki Agya Utama, Yanfei Li, Koki Akabane, Romeo Pacudan and Jonathan Hedgecock
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Nuki Agya Utama: Economic Research Institute for ASEAN and East Asia (ERIA)
Yanfei Li: Economic Research Institute for ASEAN and East Asia (ERIA)

No 2026-RPR-04 in Books from Economic Research Institute for ASEAN and East Asia (ERIA)

Abstract: ASEAN’s regional power-trading landscape is entering a new phase as expanding renewable energy deployment, growing interconnection capacity, and rising system-flexibility needs create momentum for shorter-term cross-border electricity trade. This report assesses ASEAN’s readiness to introduce short-term bilateral electricity trading and proposes a phased transition roadmap based on aLayered Market Approach. The approach provides an incremental and voluntary pathway that allows ASEAN Member States to participate according to their regulatory maturity, infrastructure, and national priorities, while allowing long-term power purchase agreements to coexist with emerging short-term trading mechanisms. The analysis finds that ASEAN’s readiness for short-term bilateral trading is moderate overall, with stronger preparedness in theGreater Mekong Subregion–Peninsular corridor, where existing interconnections and pilot initiatives provide a foundation for early implementation. The report proposes a harmonised bilateral trading model as an intermediate step toward a future regional secondary market, enabling short-term exchanges while preserving national system sovereignty. A phased roadmap is outlined, beginning with voluntary pilot trades amongst frontrunner countries, followed by regulatory harmonisation, expanded regional participation, and eventual development of a regional day-ahead or secondary market. The report concludes that piloting short-term bilateral electricity trading represents a practical next step towards deeper regional power-market integration. By adopting a layered and phased approach that builds on existing mechanisms, ASEAN can enhance system flexibility, facilitate renewable energy integration, and progressively develop more integrated regional electricity markets while maintaining national sovereignty and diverse market structures

Date: 2026
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