The Association of Southeast Asian Nations (Asean), the World Bank Group and the Asian Development Bank have launched a new financing initiative to accelerate the Asean Power Grid (APG) – a three-decades old initiative aimed at integrating the region’s electricity networks and strengthen energy coooperation.
Southeast Asia’s energy consumption is expected to almost double by 2040, driven by rapid industrialisation and population growth. The bloc has been pursuing power grid integration since 1997 but technical and financial barriers have kept progress uneven.
Under Malaysia’s chairmanship of Asean this year, momentum on the APG picked up pace earlier in August, when Asean energy ministers and partners, including the ADB and the World Bank, agreed to establish a dedicated financing platform, paving the way for the initiative’s official launch.
The joint initiative, launched on 15 October in Kuala Lumpur on the sidelines of the 42nd Asean Ministers on Energy Meeting (AMEM), aims to develop a strong pipeline of APG-related projects and enable Asean’s national utilities and project sponsors to seek project-specific support from a community of financiers, according to a statement published on the official Asean website.
The ADB has committed up to US$10 billion over the next decade, while the World Bank will provide an initial US$2.5 billion to prepare bankable projects and define the next phase of support for the APG initiative, the statement added.
“The APG presents an extraordinary opportunity to meet Southeast Asia’s growing energy needs,” said Scott Morris, vice president for East and Southeast Asia at the ADB.
“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.”
The ADB and the World Bank will also offer technical assistance for project preparation and capacity building, alongside a full suite of financial instruments.
These include grants, concessional and regular loans, guarantees, political risk coverage, advisory services on public–private partnerships (PPP) and equity.
Both institutions said it will offer financing from their own balance sheets while catalysing funds from other financiers, including the private sector, for projects relevant to the APG.
Asean welcomed the move by saying the initiative would create “thousands of jobs and generate significant economic benefits” for its members, while “enhancing energy security, reliability and resilience.”
“A fully interconnected grid would also unlock potential renewable energy investment in Southeast Asia, promote decarbonisation and improve the region’s industrial competitiveness,” the block said in the statement.
“[The member nations] would need to harmonise policies and regulatory frameworks, create a region-wide market for energy trading and maintain strong political will for decades.”
At the EU-Asean Business Summit last month, Malaysia’s Deputy Prime Minister Fadillah Yusof said that a top priority was for Asean members to align on shared technical standards and grid codes to enable smooth cross-border connectivity.
He added that the next priority would be to introduce transparent rules governing tariffs and wheeling charges – fees paid by third-party energy producers and consumers to grid operators for using existing transmission networks to trade electricity – as well as to establish a clear mechanism for resolving disputes.
‘No financing for any nuclear power projects’
At the launch, ADB reaffirmed that it will not finance any nuclear power generation projects under its current energy policy, Winfried F. Wicklein, ADB’s South Asia Director General told reporters after the 25th Asean Energy Business Forum on 15 October.
“At the moment, our energy policy does not allow our financing of nuclear energy,” he said, as cited by the Malaysian National News Agency Bernama.
“We recognise increasing demand and exploration of nuclear options in the region, and we are following those developments with interest, but we are not directly involved at this stage,” he added.
His remarks came amid renewed debate over ADB’s 2021 Energy Policy, which explicitly bars investments in nuclear power due to safety, waste management, and governance concerns.
The policy is now under review, and some member states and industry groups have urged the bank to reconsider its blanket exclusion, citing the potential of small modular reactors as low-carbon baseload options.
Civil society groups, however, have strongly opposed any softening of the ban. In August, the Forum Network and Friends of the Earth Japan submitted letters warning that reversing the prohibition would undermine climate goals and expose the bank to high-cost and high-risk projects.
