The Asian Development Bank (ADB) and the World Bank have launched a $12.5 billion initiative to finance regional electricity interconnection in Southeast Asia under the ASEAN Power Grid program.
The World Bank, ADB and the Association of Southeast Asian Nations (ASEAN) have announced a financing initiative to support the development of an ASEAN Power Grid (APG), a project aim for regional interconnection among Southeast Asian countries by 2045.
The recently announced ASEAN Power Grid Financing Initiative (APGF) will mobilize large-scale financing for cross-border electricity interconnections over land and along the seabed, to develop a pipeline of APG-related projects. The APGF will also facilitate ASEAN national utilities and sponsors in applying for project-specific support.
ADB has committed up to $10 billion over the next decade, supported by an initial $6 million in technical assistance funded by itself, the United Kingdom, the European Union and other partners. Meanwhile, the World Bank is providing an initial $2.5 billion, including a $12.7 million seed grant to the ASEAN Center for Energy (ACE), which will be earmarked for preparing bankable projects and defining the next phase of support for the initiative.
During the term of the financing mechanism, both banks committed to providing technical assistance for project preparation and capacity building, in addition to a full range of financial instruments, including grants, concessional and regular loans, guarantees, political risk coverage, advisory services on public-private partnerships and equity.
ADB Vice President for East, Southeast Asia and the Pacific Scott Morris said the APG represents an extraordinary opportunity to meet Southeast Asia’s growing energy needs.
“We are committed to building a coalition of governments, utilities, investors and innovators – united by a shared commitment to regional energy integration – to deliver lasting benefits for generations to come,” Morris added.
A study of the Interconnection Master Plan shows that an estimated $764 billion in investments are needed to build the transmission and power generation, including high levels of variable renewable energy production, required for the APG.
According to ACE director Dato’ Ir. Ts. Razib Dawood, ASEAN currently has 7.7 GW of cross-border interconnection capacity. However, this figure will need to more than double by 2040 to support regional growth ambitions.
At the most recent ASEAN Ministers on Energy Meeting, held in Laos in September, it was agreed that the APG should not only focus on regional cross-border connectors, but also address the need for domestic power grid upgrades and the development of submarine power cables.
A recent report of the International Energy Agency said the integration of solar and wind energy in Southeast Asia will be crucial to meet the growing demand for electricity in the region.
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