ADB launches new trust fund to accelerate progress on ASEAN power grid

MANILA: The Asian Development Bank (ADB) has launched a multi-partner fund to finance critical project preparation work for cross-border energy and transmission infrastructure within the Association of Southeast Asian Nations (ASEAN) — the first such fund in the region.

The Regional Connectivity Fund for Energy in Southeast Asia (RCF) will advance the development of the ASEAN Power Grid, the regional bloc’s flagship initiative to achieve fully integrated electricity grid operations by 2045.

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Energy security for 700 million people

“The ASEAN Power Grid is one of Southeast Asia’s greatest opportunities, with the potential to deliver energy security for nearly 700 million people and power the region’s growth,” said ADB President Masato Kanda.

“Thanks to the strong support of our partners, today’s launch of this project preparation fund is a decisive step toward accelerating high-quality ASEAN Power Grid investments and turning regional ambition into action.”

The RCF is a key initiative delivered under the ASEAN Infrastructure Fund (AIF) — Southeast Asia’s largest regionally owned infrastructure financing platform — and will help the AIF expand its scale and impact.

$25m Initial funding

Initial funding equivalent to about $25 million consists of contributions from the Government of Australia, the Government of Canada, the European Union, the Government of Germany, and the Government of the United Kingdom.

Managed by ADB in close collaboration with the AIF Board and ASEAN member states, the RCF will accelerate project preparation by providing technical assistance and project readiness financing grants to support energy infrastructure projects.

This includes feasibility studies, engineering design, financial structuring, and safeguards assessments.

It will also fund activities related to policy advice, regulatory improvements, capacity building, and knowledge sharing to improve the enabling environment for the ASEAN Power Grid.

The RCF will ensure projects are well-designed, bankable, and aligned with ASEAN members’ priorities.

Southeast Asia’s energy demand is expected to triple by 2050.

The ASEAN Power Grid will help to unlock access to reliable and affordable power supply, including renewable energy sources like solar, wind, and hydropower.

ADB has pledged up to $10 billion over the next 10 years toward the ASEAN Power Grid and related investments to expedite cross-border power connections, national grid projects, and renewable energy initiatives that will facilitate energy trading.

In October, ADB launched the ASEAN Power Grid Financing Initiative with the ASEAN Secretariat, the ASEAN Center for Energy, and the World Bank.