When Softbank CEO Masayoshi Son announced he was planning to pursue his vision of creating a pan-Asian renewable energy grid, dubbed the Asia Super Grid (ASG), one could have accused him of over-optimism. The initiative, which would see the power networks of Japan, South Korea, China and Russia link up via Mongolia to tap that country’s vast solar and wind resources, is in stark contrast to the fragmented networks that exist within Asia today.

By encouraging countries to link up their grids, regions with untapped renewables capacity could attract much-needed investment, boost their own supplies and export their surplus. It will help Asia to wean itself off fossil fuels—a necessity in the face of rapidly rising electricity demand, growing resistance to coal and international pressures to meet the Paris Agreement and UN Sustainable Development Goals (SDGs).

While full integration across Asia is at best a long-term prospect, investments in regional connections have the potential to speed up decarbonization while cementing firmer ties across this vast and fragmented region.

Home to 60 percent of the world’s population, responsible for over 40 percent of global energy use and almost 50 percent of related emissions, and the world’s largest driver of energy demand —Asia will increasingly be the main front in the battle to keep the rise in global temperature below 1.5°C. Yet to achieve this while ensuring access to “affordable, reliable, sustainable and modern energy for all” will be a formidable feat in a region where almost half a million remain without power, outages are still common and coal is abundant and inexpensive.

Much progress has been made. As the cost of solar and wind installations has fallen, renewables in the region are booming. India has invested so much that solar now costs around half that of coal power from the grid. Last year, China became the world leader in non-hydro renewables, attracting almost half of global investments. Overall, Asia trebled its renewable capacity in the past decade.

Yet rising demand means annual investments are still only half of what is needed to meet a target to double renewable energy’s share in the energy mix by 2030, which would keep the region on track to meet the Paris Agreement and SDGs., As a source of power, energy-dense coal could yet remain the favored fuel, despite growing health concerns and even as cleaner—but less reliable—renewables overtake coal in terms of megawatts installed. This is leading Asian nations to seek new ways to secure supply— including turning to their neighbors for green power.

Compared with Europe’s long-established electricity market, where member states trade on average 11 percent of their electricity power structures within Asia are a disjointed affair. The vast distances and differences in terrain, infrastructure and demand mean that overall trade in electricity consumed is estimated at less than one percent, while some big users, like Japan and South Korea, are not connected to any neighboring grids.

Where links exist, they mainly involve bilateral agreements to export excess capacity, especially climate-dependent hydropower, on to neighbors. Bhutan, which has a 100-percent electrification rate, is the most active exporter, channeling about 70 percent of the electricity it produces via run-of-the-river hydropower onward to India (India, in turn, helped finance three major dams that generate most of the country’s power). Lao PDR, thanks to its favorable position on the Mekong River, has been exporting traditional hydropower to Thailand since the 1970s; it recently expanded its links such that around 60 percent of its electricity now flows beyond its borders.

Both the SAARC and APG projects aim to adopt a market-based trading system in the vein of Scandinavia’s Nord Pool, which was established to balance intermittent hydropower from Norway with thermal supplies from its neighbors, helping lower prices for consumers.

It is now the largest international power trading market, pooling diverse sources, including wind power from Denmark and Sweden. In India, electricity is already traded openly across states and if a similar system can be extended to other economies, it could boost intraregional trading of renewable power. A variety of other regional grids are at various stages of development (see Table 8).