# AI, energy security needs are driving surge in South-east Asia’s energy infrastructure deals > Source: > Published: 2026-08-19 23:30:00+00:00 # AI, energy security needs are driving surge in South-east Asia’s energy infrastructure deals The deal value in the region is up 2.5 times year on year to US$9.2 billion in Q1, based on CGSI data [SINGAPORE] The number of deals in South-east Asia in 2026 is on the rise, particularly in the energy infrastructure space, said industry watchers and investment bankers. That includes the areas of power generation, infrastructure and data centres, they told *The Business Times.* Deal value surged 2.5 times year on year to US$9.2 billion in Q1 2026, based on data from Chinese investment firm CGSI. Deals involving Singapore came in at the highest, at US$7 billion in 2025; Malaysia posted the strongest year-on-year increase to US$5.3 billion. Asean receives about 60 per cent of its imported crude oil and around a third of its gas from the Middle East – much of it through the Strait of Hormuz – so a supply shock is felt quickly amid Iran war disruptions. Governments are therefore pushed to approve and finance projects faster than they otherwise would, even amid higher financing costs. Analysts at business advisory firm CFGI Singapore told BT: “What the conflict has added (to the deals) is urgency; once governments see the effect it has on domestic energy supply, energy security moves to the top of the agenda.” But fundamentally, the core drivers of these deals are still the artificial intelligence boom, and the surge in data-centre investments that come with it. The global buildout in artificial intelligence will have a load factor which is “always increasing”, said James Ong, group head of asset management at CGSI, and remains the root cause behind energy deals ramping up. He added that the war in Iran has triggered higher financing costs behind the deals and energy prices, but as AI’s energy needs are “structural”, its story will persist in 2026 – irrespective of the war premium being paid. Within South-east Asia, companies from Indonesia, in particular, are snapping up resources or energy-related facilities or companies in Australia and Singapore, an investment banker told BT. These include mining and marine businesses. In Australia, it is being done through joint ventures because of the nationally sensitive nature of the industry, he said. He cannot be named as he is not authorised to speak to the media. Over in Singapore, he added, Indonesian companies are also buying resources companies, including recycling firms. Deals are also growing between China and Asean – and running both ways, said CGSI. Ong, noting that Chinese foreign direct investment into Asean manufacturing is climbing in Vietnam, Indonesia and Thailand, said: “Chinese companies are expanding south, with Asean economies growing in parallel. Cross-border deal flow is increasingly structuring around the corridor.” ## Why regional power generation deals are on the up Market observers told BT that data centre and AI compute-driven demand, and the rise of electric vehicles, are sending the demand for power in the Asia-Pacific up. For example, Malaysia plans to add six to nine gigawatts (GW) of new gas-fired capacity by 2030, much of it for compute-related needs – but because the country’s gas supply is falling, a second wave of investment in importing gas is needed. This will be done by receiving terminals and floating storage units state-owned Petronas has approved and is developing. Renewables-focused deals are also picking up, considering how it sits alongside gas in the power-generation stream. Luv Parikh, head of Infrastructure Asia at Partners Group, said: “The structural shift towards increased renewable power generation capacity is driven by the fact that renewable energy is now at grid parity and is faster – and in most cases easier – to build than coal or gas plants.” But the analysts have a caveat, and it is that investors are mainly backing renewable deals that can supply power reliably; these include deals for solar paired with battery storage, and geothermal infrastructure in Indonesia and the Philippines. They noted that geothermal power is “particularly valued”, as it can dispatch energy round the clock, independent of weather conditions; it also carries lower lifecycle emissions than gas or coal, making it a prime renewable option in the region. ## Grids are hard to invest in Grid infrastructure is potentially both the largest need in Asean, but also the hardest to invest in, said these market observers. This is due to their high capital requirements and transmission output, even as the region works together on the Asean Power Grid (APG). The APG, a regional initiative to connect the electricity networks of South-east Asian nations, aims to boost energy security, the sharing of renewable resources, and support multi-lateral power trade in the region. It has reached about 7.7 GW for cross-border interconnection projects, with a target of 17.6 GW by 2040. All of Asean’s grid supply clusters are based in the same places as demand, mainly in the Malaysia-Singapore corridor, Indonesia, Vietnam and Thailand. CFGI Singapore analysts noted that the cross-border nature of grid infrastructure deals in Asean has started to draw development and “multi-lateral money”, particularly through the APG, and the interconnection running from Laos down through Thailand and Malaysia, to Singapore. Other growth themes and sectors flagged by Partners Group’s Parikh include digital infrastructure, social infrastructure and infrastructure services, with Singapore and Malaysia presenting the “most actionable opportunities” in these areas. ## Not all assets are equally investable But not all power generation or grid infrastructure assets – and their deals – are the same, said analysts. For now, the infrastructure types most favoured by investors are defensive and “cash-generating” instead of growth bets – since capacity that can actually be delivered is more valuable than “potential capacity”, said CFGI Singapore. The transactions that attract institutional capital share a common profile, which are contracted revenue often under: - Long-term power purchase agreements; - Creditworthy offtakers, which are financially stable buyers who promise legally to purchase a producer’s goods, power or output; - Grid-connection certainty; and - Currency structures that match or hedge the investor’s liability profile. Other considerations include completed projects or those where construction is near-completed, to remove development risk. The CFGI Singapore analysts said: “Regulated tariff frameworks, fuel-cost pass-through provisions, and foreign-exchange mismatch are key risk factors that separate fundable projects from those that remain stranded in pipelines.” With the right variables in place, higher costs are less of an issue. “The deals being done are not cheap, as contracted infrastructure in supply-constrained markets commands full prices; but they are investable, and the breadth of the buyer universe at exit reflects that,” they added. Decoding Asia newsletter: your guide to navigating Asia in a new global order. Sign up here to get Decoding Asia newsletter. Delivered to your inbox. Free. Copyright SPH Media. All rights reserved.