Innovation at a Crossroads: Energy's Paradox and What It Means for Southeast Asia

Our Regional Co-Director Dean Rizzetti was fortunate to attend the International Energy Agency's annual Innovation Forum in Paris — an event bringing together entrepreneurs, market operators and governments to discuss how we can unlock energy innovation for real-world impact.

For the last three years, the IEA has released a landmark Energy Innovation Report tracking global progress in bringing new energy solutions to life. This year's report captures one of the most important dynamics facing the modern energy landscape. Over the past several years, a focus on decarbonisation has receded, replaced by stark anxieties about energy security and affordability. Today, 'grids are a target of war', while many governments remain rattled by unmanageable fossil fuel price fluctuations following Russia's invasion of Ukraine. Energy prices are also rising rapidly — driven by exploding data centre demand and global uncertainty — while voters fatigued by high inflation have become deeply intolerant of price rises.

Addressing these challenges depends on innovation, as the hundreds of young entrepreneurs in attendance demonstrated. For decades, energy was a lumbering, cautious beast — but today, companies are clambering to bring new ideas to the system, promising lower costs, greater reliability and lower emissions. Yet at the very moment we most need it, innovation is slowing. Public R&D fell in 2024 and is estimated to fall a further 2% in 2025. Corporate R&D growth slowed to its lowest level since 2015, and venture capital investment in energy startups shrank for the third consecutive year. This creates a stark paradox: energy security has never mattered more, yet governments and businesses are pulling back from the very thing that can fix it.

Company after company at the Forum showcased the incredible scope of their solutions — from stable wind and solar systems using power electronics and software, to AI accelerating new discoveries, transformational drops in space cooling costs, modular nuclear startups, and superconducting transmission cables claimed to carry ten times more power than copper in the same space.

This raises an important question for our region: how do countries like Cambodia and Laos actually get access to any of this? Three things stand out. First, governments need strong modelling and analysis capacity to articulate exactly what problems they're trying to solve — you simply can't buy a grid solution if you don't know how much you need. Second, establishing a startup needs to be genuinely easy, supported at every level of the public service, not just with a 'welcoming high five' from a senior politician. Finally, energy innovation needs to be seen as a solution to problems beyond the energy sector — reducing import dependency, maximising domestic solar, wind and hydro — which means support and funding flowing across government ministries, not just energy departments.

But as UK Energy Secretary Ed Miliband reminded the audience, there's too much gloom. Less than ten years ago, the failure of the Copenhagen Climate Summit pointed toward a four-degree world. Today, thanks to multilateralism and private and public sector action, we're facing 2°C — with a pathway to go lower. That's remarkable progress, and supercharging innovation will only help us continue bending the curve.