Achieving the ASEAN Power Grid vision by 2045 is estimated to require $764 billion in generation and transmission investments. Photo credit: ADB.
A dedicated coordination mechanism will mobilize financing and provide technical support.
The Asian Development Bank (ADB) and the World Bank are providing technical assistance and financing to help advance regional energy interconnectivity and security in Southeast Asia.
ASEAN ministers from the energy, economic, and finance sectors welcomed last month the proposal of ADB, World Bank, ASEAN Secretariat, and ASEAN Centre for Energy to lead the ASEAN Power Grid Financing Initiative (APGF). They will establish an APGF Working Group, which will serve as “the main platform for connecting utilities and project sponsors with financing partners.”
The APGF was developed at the request of ASEAN. Its goal is to mobilize financing and provide technical support through a dedicated coordination mechanism. The ASEAN Power Grid is a complex, long-term project that requires collaboration between countries, the private sector, financiers, and development partners.
The cost of interconnection
Achieving the ASEAN Power Grid vision by 2045 is estimated to require $764 billion in generation and transmission investments. Based on the ASEAN Interconnection Masterplan Study (AIMS III), the region needs more than $16 billion alone to connect the electricity networks of ASEAN’s 10 member countries.
At a virtual meeting on 14 August, the ASEAN ministers discussed financial mechanisms to accelerate power interconnections and multilateral energy trading. In a joint statement, the ministers said they envision the APGF as “a coordinating platform to support project and financing preparation, as well as blended capital mobilization to accelerate bankable cross-border land and subsea interconnection projects.”
They said ADB and the World Bank will support project preparation, capacity building, and “offer a range of financial instruments, including equity, grants, concessional and regular loans, guarantees, and political risk cover, along with advisory services on public–private partnerships.”
ADB announced earlier that it is ready to commit up to $10 billion of its own resources toward the ASEAN Power Grid to expedite cross-border connections, domestic grid strengthening and modernization, and renewable energy initiatives that will facilitate power trade.
Meanwhile, the World Bank will help scale up renewable energy in ASEAN countries, including through regional power trade, through its $2.5-billion Accelerating Sustainable Energy Transition Multi-Phase Programmatic Approach (ASET-MPA) program, which was approved in 2024.
Key to a resilient future
The meeting served as a strategic policy dialogue to harmonize sectoral priorities to ensure energy security in the region.
ASEAN is the world’s fourth largest energy consumer. Energy demand in the region is projected to triple by 2050. The ASEAN Power Grid is expected to enhance energy security and access to affordable electricity for the region’s 670 million people, narrow development gaps, drive and sustain economic growth, and strengthen resilience. It will enable ASEAN to accelerate its transition to a low-carbon economy through increased investments in renewable energy generation and integration.
ASEAN is pursuing grid interconnection and cross-border power trade by starting with bilateral and subregional initiatives. These include the Lao People’s Democratic Republic–Thailand–Malaysia–Singapore Power Integration Project (LTMS-PIP) and the Brunei–Indonesia–Malaysia–Philippines Power Integration Project (BIMP-PIP). The ministers said priority interconnection projects should be guided by the needs and development priorities of ASEAN member states and the interconnection masterplan study to “ensure that support provided through the APGF delivers tangible and inclusive benefits across the region.”
ASEAN member states are expected to sign an enhanced memorandum of understanding (MOU) to implement the ASEAN Power Grid during the energy ministers’ meeting in October. The current MOU ends in December. The terms of reference document for the Subsea Power Cable Development Framework is also slated for signing this year. Grid interconnection projects involving subsea cables, which are new to the region, require a specialized governance and operational framework.
BIMP-EAGA
The Brunei Darussalam–Indonesia–Malaysia–Philippines East ASEAN Growth Area, or BIMP-EAGA, is a cooperation initiative established in 1994 to spur development in remote and less developed areas in the four participating Southeast Asian countries.
