Author: Dr. Jiangyuan Fu, Assistant Professor in Law at the School of Law and Criminology, Maynooth University
The ongoing instability in the Middle East and repeated attacks on energy infrastructure have shaken global fuel markets, driving up prices for gas, coal and oil in recent years, and notably in the very recent weeks. These shocks translated into higher electricity tariffs, mounting subsidy burdens and growing concerns about security of supply. As policymakers scramble to shield households and industry from price spikes, cross‑border electricity trade and regional grid interconnections have re-emerged as attractive options to diversify away from volatile imported fuels. This is particularly the case for fast-growing Asian regions such as the Greater Mekong Subregion (GMS) to better harness its diverse resource base.
The current moment of high energy prices and geopolitical uncertainty is not only a crisis but also an opportunity. As governments revisit their energy strategies, regional electricity connectivity can either entrench dependence on a narrow set of large‑scale projects or become a vehicle for a more resilient, renewables‑based system across borders.
However, there is an absence of comprehensive multilateral rules for cross‑border energy trade at both the global and regional level (the European Union (EU) internal market stands out as a rare exception). Electricity has inherent real-time balancing, grid stability and energy security concerns, and the current multilateral trade regime does not address the unique operational and regulatory features of electricity trade. The legal classification of electricity (good vs service) and the legal application of core disciplines such as most-favoured-nation and national treatment are ambiguous: structural features of system operation – for instance, when Transmission System Operators allocate capacity and curtail cross‑border flows in a way that favours domestic generators with better information and closer location to load centres – can amount to de facto discrimination against foreign suppliers, yet the multilateral trade rule offers limited guidance on how to assess the practices. Similar uncertainty surrounds “freedom of transit” obligations, which was drafted for traditional goods and sits uneasily with electricity flows over fixed regional grids.
In practice, cross-border electricity trade has been driven primarily by national security and industrialisation agendas. In the GMS, as in many other regions, power trade relies on bilateral contracts and soft‑law coordination, rather than on a fully fledged regional market. Many existing cross‑border deals are long‑term, project‑specific contracts designed to monetise large existing projects, often with limited attention to downstream ecological impacts, social safeguards or cumulative emissions. This “infrastructure‑first” model risks future flexibility to integrate more variable renewables and grid-to-grid trading.
Several legal and institutional obstacles further complicate efforts to regional power trade for a green transition. In many regions in the world with huge potentials and complimentary renewable energy mix – the GMS being a prime example, there is no binding region-wide legal framework for electricity trade, instead cooperation relies on a mix of political declarations, regional strategies and a web of bilateral agreements. This fragmentation makes it difficult to adopt common standards on grid codes, environmental assessment, data sharing and renewable energy prioritisation, all of which are essential for moving from scattered unidirectional lines to integrated grid-to-grid interconnection. Moreover, significant differences in market size, creditworthiness and supply options shape negotiations between “power exporting” and “power importing” countries. Existing long‑term power purchase agreements and investment treaties can create rigid obligations for states, exposing them to claims if they later seek to curtail generation from high‑impact projects or to re-orient their energy mix toward domestic renewables.
Overcoming these obstacles requires moving beyond ad hoc bilateralism towards a more coherent regional framework built on clear rules, empowered regulators and credible dispute‑resolution mechanisms. For the GMS, this would mean gradually evolving from static, project‑tied interconnections and negotiated prices toward harmonised grid codes, model regional Power Purchasing Agreements (PPAs) with third‑party access, and institutions capable of coordinating system operation. In a world of volatile fuel prices and tightening climate constraints, the choices that countries now make about how and under what rules electricity flows across their borders will determine whether regional connectivity becomes a lifeline for a just green transition, or another source of lock‑in and vulnerability. The full article on a regional power trade for green transition is available at: https://www.tandfonline.com/doi/full/10.1080/02646811.2026.2616172
