The World Bank, ADB and Association of Southeast Asian Nations (ASEAN) have announced a financing initiative to support the development of an ASEAN Power Grid (APG), a project aiming for regional interconnection between the Southeast Asian nations by 2045.
The newly-announced ASEAN Power Grid Financing Initiative (APGF) will mobilize large-scale financing for cross-border power interconnections across land and along the seabed, in order to develop a pipeline of APG-related projects. The APGF will also facilitate ASEAN’s national utilities and sponsors to request project-specific support.
ADB has committed up to $10 billion over the next ten years, supported by an initial $6 million of 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 Centre for Energy (ACE), which will go toward preparing bankable projects and defining the next phase of support for the initiative.
Over the duration of the financing mechanism, both banks have committed to offer technical assistance for project preparation and capacity building, alongside a full suite 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 and Southeast Asia and the Pacific Scott Morris said the APG presents an extraordinary opportunity to meet Southeast Asia’s growing energy needs.
“We’re 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.
An interconnection masterplan study has estimated $764 billion in investment is required to build the transmission and power generation, including high levels of variable renewable energy production, required for the APG.
According to ACE Executive Director Dato’ Ir. Ts. Razib Dawood, ASEAN currently has 7.7 GW of cross-border interconnections capacity. However, this figure will be required to more than double by 2040 to support regional growth ambitions.
During the most recent ASEAN Ministers on Energy Meeting, held in Laos in September, it was agreed the APG should not only focus on regional cross-border connectors but also address the need for domestic grid network upgrades and development of subsea power cables.
A recent report from the International Energy Agency said integration of solar and wind energy across Southeast Asia will be crucial to meet the region’s growing electricity demand.
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