Some Asia Pacific Power Buyers Prefer Spot Markets Over Long-Term Renewable Contracts, Lantau Group Says
Lantau Group's Mike Thomas says tracking spot prices is safer for some buyers as Southeast Asia's renewable energy deals surge to US$9.2 billion in Q1.
For some power buyers in Asia Pacific, tracking spot electricity prices is a safer route to staying competitive than locking in long-term renewable energy contracts. That was the assessment from The Lantau Group's Mike Thomas on Monday (2026-09-14), with surging electricity price volatility across the region cited as the argument for market exposure over contract certainty.7
Southeast Asia's energy infrastructure deal volumes give that debate concrete weight. Regional energy deals reached US$9.2 billion in the first quarter of 2026, 2.5 times higher year on year, according to data from Chinese investment firm CGSI. Malaysia posted the strongest year-on-year gain, with deals reaching US$5.3 billion, while Singapore-linked transactions topped US$7 billion across all of 2025.6
The buyer strategy split reflects a genuine dilemma in fast-growing markets. Long-term contracting opportunities in renewable energy portfolios have increased alongside volatile market prices, Thomas noted — some buyers are seeking price certainty precisely because spot exposure has become uncomfortable. But companies that locked in contracts at unfavorable rates have found themselves paying above-market costs while competitors on spot exposure benefit from falling prices.7
Vietnam illustrates where the stakes are highest. Brookfield Asset Management and Foxconn, the Hon Hai Technology Group, announced a partnership in June (2026-06-10) to develop up to 1GW of renewable energy in the country, targeting wind, solar, and battery storage to support industrial operations and supply chains. A deal at that scale removes significant generation capacity from the merchant market, tightening access to renewable power for other industrial buyers operating under Vietnam's still-evolving PPA rules.4
Malaysia's regulatory position is more advanced. The country has begun separating the roles of generation, transmission, and retail to build investor confidence and create space for renewable developers outside the state utility. Vietnam is considering similar steps, the Bangkok Post reported in April (2026-04-02). Where those structures are absent, long-term bilateral contracts fill the role of wholesale market infrastructure that doesn't yet exist.5
Geopolitical uncertainty has sharpened the contracting question. Analysts at CFGI Singapore told the Business Times in August (2026-08-19) that conflict had added urgency to government-level energy security planning: "What the conflict has added is urgency; once governments see the effect it has on domestic energy supply, energy security moves up the agenda." For corporate buyers, that urgency can push in either direction: toward securing supply through long-term contracts, or toward maintaining market flexibility if policy intervention could reset contract terms mid-agreement.6
Power availability is reshaping where demand lands. The Asia Pacific data centre market was facing a "significant reordering" as of late May (2026-05-26), with power constraints driving expansion into markets with lower development costs, Yahoo Finance Asia reported. That shift of power-intensive load into emerging Southeast Asian markets increases competition for renewable capacity, making the cost of being uncontracted more severe when large bilateral deals absorb available development pipelines.2,4
The Asian Development Bank's $70 billion programme, announced in May (2026-05-06), includes a pan-Asia power grid initiative to connect national and subregional power systems. If grid interconnection progresses, it widens the available supply pool and makes spot market exposure more viable, potentially reducing the case for bilateral contracts as a substitute for functioning wholesale markets.1
Indonesia has moved in that direction, reserving new capacity for independent power producers and issuing clearer PPA guidelines through Energy and Mineral Resources Minister Regulation No. 5/2025, the Jakarta Post reported. A 2025 memorandum of understanding addressed regional grid coordination. How fast Vietnam and Malaysia push through comparable reforms will set the pace at which spot market strategies become a credible alternative to bilateral contracting in either country.3
For now, the split Thomas described looks durable. Buyers with stable load, deep balance sheets, and long investment horizons will keep locking in capacity, as Brookfield and Foxconn have done in Vietnam. Those with more flexible demand or tighter capital constraints are concluding that market exposure better preserves cost competitiveness. Vietnam's PPA framework revision, still in process, is the concrete event to watch: its terms will shape whether the country's surging industrial power demand gets channelled through long-term bilateral deals or a nascent merchant market.4,7