Southeast Asia’s heavy industries are the key drivers to the region’s economic growth, yet among the hardest to abate sectors. With climate commitments rising globally and energy demand growing rapidly, industries face increasing pressure to reduce emissions without slowing development. This drives the urgent need for cleaner, more efficient, and innovative strategies to transform industrial energy use.

“Digitalisation, electrification, and renewables are the three key pillars for industrial decarbonisation,” says Adrian Gonzalez, Programme Officer at the International Renewable Energy Agency (IRENA). These pillars must advance together in an integrated and strategic manner to realise the full potential of the energy transition in Southeast Asia.

Strategies for Integration: Planning, Co-location, and Storage

Grid readiness is a critical factor. Without adequate transmission and distribution infrastructure, industries will struggle to access the electricity needed for electrification. Gonzalez emphasises that grid reinforcements and expansion, including interconnections, are essential enablers, particularly important in Southeast Asia.

Advanced planning is not only about infrastructure, but about confidence. Adequate and ambitious transmission and distribution planning gives the needed signals to stakeholders for investments decisions on decarbonising industries and on renewable developments anticipating demand.

In parallel, distributed solutions can deliver near-term benefits. The role of collocated systems, including rooftop solar over massive industrial complexes, complemented by cost-dropping batteries, allow for direct integration of renewables in industrial electricity needs. These systems also enhance supply reliability and ease pressure on surrounding grids during peak demand.

Heat Pumps, Electric Furnaces, and Sodium-ion Storage and More Technologies to Watch

Beyond solar and wind, several emerging technologies are gaining momentum—some already commercially mature. Electric furnaces for steelmaking and heat pumps for low- to medium-temperature processes are set to play a larger role, especially as recycled steel volumes rise.

Others like electric crackers for chemicals, electric kilns for cement, and iron ore electrolysis still need further development but offer significant long-term potential. In the near term, mid-temperature heat pumps can serve as a practical retrofit for gas-based systems, improving efficiency and reducing consumption without full system overhauls.

Energy storage remains a crucial enabler. Sodium-ion batteries, now available at scale, offer a cost-effective solution for stationary applications, especially where industrial flexibility is needed.

Geothermal is also seeing renewed potential. With cost-effectiveness improving across more regions, its baseload capability makes it well suited for industrial users like aluminium smelters and data centres seeking consistent clean power. (A recent report on Industrial decarbonisation on Aluminium Industry can be found here)

Unlocking the Power of PPAs

Corporate power purchase agreements (PPAs) are also key to unlocking renewable energy for industries and serve as a great support for renewable energy developers, allowing for financial security that encourage investments by reducing risks.

To extend their benefits, PPA markets must be transparent and accessible. “Promoting accessible and transparent marketplaces for corporate PPA trading enables the participation for smaller actors that otherwise may be relegated to fossil fuels sourcing.” Gonzalez also notes that integrating requirements of guarantees of origin and other certificates on green PPAs, increase the visibility of the sustainable energy efforts along the product value chain.

This traceability offers value not just to policymakers and financiers, but to customers seeking low-carbon products. It builds incentives for change across the supply chain.

Aligning Policy with Practice

Policy support is the backbone of industrial decarbonisation. The need for dynamic electricity prices that incentivise flexibility in industrial demand, especially where industrial processes already allow for variable operation. These pricing schemes can reduce grid congestion while offering cost advantages to industry.

Access to energy infrastructure remains a major challenge for some industrial users. Grid expansion and reinforcement to facilitate connection to industrial consumers, at the locations and with the power needed, are essential to promote the decarbonisation of traditionally fossil-fuel based sectors.

Equally important is raising awareness about near-term actions. Policy support and dissemination of innovations across stakeholders helps raising awareness of decarbonisation benefits. Incremental approaches, such as retrofitting rather than full overhauls, can offer immediate gains and prepare the ground for longer-term transformation.

Upcoming Insights from IRENA

IRENA is preparing several publications that explore how renewables and digital tools can accelerate industrial transformation. Among them:

• “Quality Infrastructure for Renewables facing extreme weather conditions,” which highlights the benefits of QI for mitigating impact of floods and typhoons in wind and PV plants in Southeast Asia.
• A forthcoming report on “Climate Proofing Power Systems,” to explore how infrastructure can adapt to elaborate on measures and recommendations for the grid infrastructure.
• A digitalisation report, “Digital Catalyst Accelerating the Energy Transition,” developed under Canada’s G7 presidency, that will assess how tools like AI can support smarter power system.
• An additional “Digitalisation Use Cases” report, expected later this year, which will cover Virtual Power Plants, predictive maintenance on power assets and squeezing transmission capacities through AI.

These tools are not just technical additions, but critical enablers for resilient, low-emission energy systems.

Next Frontiers: Ocean Energy, Offshore Wind, and Future-Proof Systems
Emerging technologies such as offshore wind and ocean energy are opening new pathways for clean power in Southeast Asia’s islanded and remote systems. In areas where submarine interconnectors are not feasible, these solutions are becoming cost competitive and increasingly effective when paired with solar to support decarbonisation.

At the same time, digital infrastructure is setting the pace. Data centres are among the earliest adopters of renewable corporate PPAs, demonstrating the value of long-term procurement models. Still, additionality and hourly and geographical correlation between source and consumption should be contemplated to future-proof these agreements.

These insights and more will be discussed at Enlit Asia 2025, Bangkok on 9-11 September, where Gonzalez will join industry leaders to explore the next phase of Southeast Asia’s industrial decarbonisation agenda. Visit www.enlit-asia.com to find out more.