SINGAPORE, December 15, 2025 – Asia’s electric utilities — the backbone of the region’s energy systems — are facing mounting physical climate risks that could significantly disrupt power supply, damage assets and undermine decarbonisation efforts, according to a new report by the Asia Investor Group on Climate Change (AIGCC) and MSCI Institute.
The report, Asia’s Powerhouses at Risk: Physical Climate Risk Exposure and Resilience Readiness Across Asia’s Electric Utilities, assesses 2,422 power generation assets operated by 11 major utilities across seven Asian markets, including China, India, Japan, Indonesia, Malaysia, South Korea and Hong Kong. It finds that annual climate-related losses could rise from US$6.3 billion today to more than US$8.4 billion by 2050, assuming no additional adaptation measures are taken
Extreme Heat and Flooding Emerge as Dominant Threats
The analysis identifies extreme heat and extreme precipitation as the most significant drivers of business interruption losses, accounting for more than 75% of projected losses by 2050. Nearly 70% of power assets assessed are already exposed to at least one of these hazards, with risks intensifying under a medium-high emissions scenario (SSP3-7.0)
South and Southeast Asian markets — including India, Indonesia and Malaysia — show particularly high exposure to heat stress and heavy rainfall, while Japan, South Korea and Hong Kong face elevated risks from tropical cyclones and flooding.
Flooding alone affects nearly one-third of all power assets, with coastal and fluvial flooding posing the greatest threat of prolonged outages and asset damage, especially for thermal plants located near rivers and coastlines.
Coal and Thermal Assets Most Vulnerable
Coal-fired power plants account for the largest share of projected losses, contributing over 60% of total climate-related impacts despite representing a smaller share of power output. These assets are especially sensitive to heat stress and water scarcity, which reduce cooling efficiency and force temporary shutdowns.
The report highlights India’s thermal fleet as a major risk hotspot, where prolonged low river flows could lead to extended outages. Several major plants could face hundreds of consecutive dry days by mid-century, threatening grid stability and increasing costs for consumers
Resilience Planning Still Lags Transition Efforts
While many Asian utilities have improved climate governance and decarbonisation disclosures, the report finds that physical climate risk management remains underdeveloped. None of the utilities assessed disclosed dedicated adaptation expenditure, and only a minority quantified forward-looking financial impacts from physical risks.
AIGCC warns that without coordinated action, asset-level disruptions could cascade across grids and supply chains, creating system-wide energy and economic risks.
Call for Coordinated Adaptation
The report urges utilities, investors and policymakers to integrate adaptation and resilience planning into energy transition strategies. Strengthening asset-level risk assessments, improving disclosure under global standards, and directing capital toward resilience measures will be essential to safeguarding Asia’s energy systems as climate impacts intensify.