The Asian Development Bank (ADB) and the World Bank formally launched a financing platform during the 43rd Association of Southeast Asian Nations (Asean) Ministers on Energy Meeting taking place in Malaysia this week, to support the development of an interconnected power grid in the region.
The announcement on Wednesday formalises previous commitments, with the ADB saying earlier this year it would allocate up to $10bn in investments for the Asean power grid over the next 10 years, and the World Bank approving a $2.5bn financing programme in September 2024.
"The Asean Centre for Energy welcomes the initiative," said its executive director Abdul Razib Dawood, adding that "Asean's current 7.7 GW of cross-border interconnections capacity will need to be more than doubled by 2040 to allow for more energy cooperation supporting a regional growth and welfare".
The Asean power grid is a cross-border initiative aimed at helping the region source and share low-carbon electricity, especially against the backdrop of rising energy demand because of economic growth. It aims to establish an interconnected grid by 2045.
Southeast Asia could harness significant renewable energy potential to meet its booming electricity demand, Paris-based watchdog the International Energy Agency (IEA) said in September.
But the region is still hampered by financing gaps, a lack of standardisation and limited co-ordination. For instance, smart grids can help southeast Asian countries reach their clean energy goals, according to a report by think-tank Ember released earlier this week, but they require significant upfront investments. For utilities in the region that do not have these financial capabilities, regional strategies will likely have to combine blended finance from multilateral development banks, green bonds and public-private partnerships, the report said.
