Solar Power Has Become Cheaper Than Gas in Southeast Asia
A new study indicates solar could save the region $45.4 billion by displacing planned gas infrastructure.
Updated on Oct. 6, 2026 in Energy
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Data from Zero Carbon Analytics found that solar electricity was 50 per cent cheaper than gas on average across five Southeast Asian countries in 2025. Despite this price advantage, nations in the region continue to pursue 49 gigawatts of new gas capacity.
Why it matters
The region stands to save US$45.4 billion by favoring solar over planned gas projects, which currently represent a massive infrastructure commitment. This shift highlights a widening disconnect between market-driven renewable costs and regional capacity expansion plans.
The study calculates the levelised cost of electricity—the average net present cost of electricity generation for a generator over its lifetime—using data from BloombergNEF, the International Energy Agency, and Global Energy Monitor. By 2030, solar costs are projected to be 84 per cent lower than gas.
The players
Zero Carbon Analytics
A research group focused on data-driven energy transition insights and climate policy analysis.
Vietnam
A major Southeast Asian economy currently planning 34.5 gigawatts of gas-fired power expansion.
Malaysia
A regional economy with 9.6 gigawatts of planned gas expansion and an established renewable energy supply scheme.
Thailand
A Southeast Asian nation that recently approved a 2,000 megawatt direct power purchase pilot program.
Microsoft
A major technology firm that signed a 10-year agreement in Indonesia to procure 200 megawatts of renewable power.
The details
The analysis relies on comparing the levelised cost of electricity across projects, which factors in capital, operating, and fuel expenses over the full lifespan of a power plant. While the region is pursuing 49 gigawatts of gas capacity, solar is already cost-competitive; in the Philippines, solar generation reached US$54 per megawatt-hour compared to US$99 for gas. Vietnam leads this expansion with 34.5 gigawatts of planned gas capacity, followed by Malaysia with 9.6 gigawatts.
Timeline
2024: Malaysia introduced a renewable energy supply scheme.
2025: Solar power was 50 per cent cheaper than gas across the region.
2026: Vietnam expanded its direct power purchase framework for data centres and EV charging.
2030: Solar is projected to be 84 per cent cheaper than gas.
The Tech Race
This analysis tracks the transition from gas-heavy energy portfolios toward renewable-dominant grids, mirroring global shifts in power generation economics. The race in Southeast Asia involves scaling domestic solar and wind infrastructure to match or beat the planned 49 gigawatts of gas capacity.
The expansion of direct power purchase frameworks in nations like Vietnam and Thailand creates new pathways for data centres and large industrial users to secure stable renewable energy. These market changes will influence regional electricity pricing and the availability of green power options for enterprise consumers in the coming years.
The takeaway
The economic case for solar in Southeast Asia is no longer hypothetical, as solar costs have already dropped significantly below gas-based alternatives. Observers should track upcoming capacity auctions in Vietnam and the Philippines to see if these market signals successfully slow the construction of the planned 49 gigawatts of gas infrastructure.
Further reading
For broader trends in the global transition to renewables, explore our Energy section.
Live Poll
Should your nation prioritize solar power over building new gas power infrastructure?
