Backed by Australia, Canada, the European Union, Germany, and the United Kingdom, the facility is designed to fast-track early stage cross-border interconnections, grid upgrades, and renewable energy projects that will boost power trading across Southeast Asia, reviving a three-decade-old grid integration plan – the Asean Power Grid (APG), which aims to link national electricity networks to enable cross-border electricity trade.
The fund will “de-risk project preparation for cross-border lines and grid infrastructure”, which are “building blocks of Asean’s long-term grid integration plan”, Scott Roberts, head of ADB’s Asean Power Grid and Special Funds Unit, told Eco-Business.
”The fund will focus on early- and late-stage project development, including pre-feasibility and feasibility studies, engineering design, environmental and social impact analyses, and transaction structuring, among other preparation works,” Roberts said. “We are in early discussions with governments, sponsors, and regional partners to select priority projects. All Asean developing member countries are eligible, with an emphasis on projects that unlock regional electricity trade.”
Called the Regional Connectivity Fund, the facility is a key initiative under the Asean Infrastructure Fund, a regionally owned financing vehicle, established by member states and ADB, to provide loans for infrastructure projects that support sustainable growth and stronger regional connectivity across Southeast Asia.
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The initial funding will de-risk project preparation for cross-border lines and grid infrastructure, [which are] building blocks of Asean’s long-term grid integration plan.
Scott Roberts, Head of Asean Power Grid and Special Funds Unit, Asian Development Bank
Last month, the multilateral announced that it was stepping up its support for Asean as its main bank, including its prioritisation of the APG, after pledging up to US$10 billion over the next 10 years toward the project last year.
In October, the Manila-based development bank launched the Asean Power Grid Financing Initiative with the Asean Secretariat, the Asean Center for Energy, and the World Bank, to develop a strong pipeline of APG-related projects and enable the bloc’s national utilities and project sponsors to seek project-specific support from a community of financiers.
The bloc has been pursuing power grid integration for nearly three decades but technical and financial barriers have kept progress uneven. ADB previously projected that a minimum of US$100 billion would be required to build transmission lines to integrate the power grids of Southeast Asian nations by 2045.
Southeast Asian countries also run different grid codes, operational rules, and sometimes fragmented national systems, making cross‑border synchronisation and power flows technically complex, researchers have said. There is also a need for major transmission upgrades, as renewable energy power plants usually operate in remote areas outside load centres, and need to be connected to new power lines, ADB added.
However, the initiative was finally made into a formal commitment at the Asean Informal Summit in Malaysia in 2020. Asean now has eight operational grid‑to‑grid interconnections out of 18 identified projects, with about 2.8 gigawatts (GW) of operational cross‑border capacity and 13.7 GW planned by 2040.
The Lao PDR-Thailand-Malaysia-Singapore Power Integration Project (LTMS-PIP) became operational in 2022, ushering the first multilateral cross-border electricity trade involving Asean countries. It showed that cross-border trade was technically and commercially feasible, with about 100 megawatts (MW) of renewable hydropower imported from Lao PDR to Singapore through Thailand and Malaysia using existing interconnections, according to a report released by energy think tank Ember.
Other upcoming interconnection projects include the Brunei Darussalam-Indonesia-Malaysia-Philippines Power Integration Project (BIMP PIP), the connection between Peninsular Malaysia, Sumatra, and Singapore, the grid between Sarawak and Brunei, and the lines connecting Lao PDR, Vietnam, Cambodia and Myanmar.
Among countries in the region, Singapore, Malaysia, and Vietnam have updated their power sector plans to prioritise grid modernisation, digitalisation, and enabling frameworks for cross‑border clean electricity trading.
