Monday, October 2, 2023

Strengthening Regional and International Cooperation in Financing Clean Energy in Asean Post-Crisis

Rika Safrina
May 4, 2023 | 1:16 pm
A worker inspects solar panels installed on the roof of Santika Premiere Hotel in Palembang, South Sumatra, on July 7, 2021. (Antara Photo/Nova Wahyudi)
A worker inspects solar panels installed on the roof of Santika Premiere Hotel in Palembang, South Sumatra, on July 7, 2021. (Antara Photo/Nova Wahyudi)

Asean outlined ambitious targets of a 23 percent share of renewable energy (RE) in the Total Primary Energy Supply (TPES) and a 35 percent share of RE in the region’s installed power capacity.

Although the latter goal seems to be on track – the current record was 33.3 percent in 2020, the former needs to be realized with broader commitments (14.2 percent in 2020).

Not only regional energy ambitions, but Asean member states have also set their respective clean energy targets. Each country’s capacity, capability, and performance differ, and the national targets are decided with these in mind.

Some targets are close to the regional goals, while the rest are either above or below the targets or have different indicators. For example, Indonesia aims for 23 percent RE in TPES, while Malaysia aims to reach 31 percent RE in the power capacity mix by 2025.


In principle, regional targets are achievable when all member states set and reach almost similar targets at the national level, considering their potential resources. Hence, Asean countries should incorporate aspirational targets into their energy targets, such as having similar numbers, years, and indicators.

Vice versa, the regional targets should be updated in the next cycle of the Asean Plan of Action for Energy Cooperation (2026-2035) to reflect each member’s targets and global crises.

As regular check-ups, targets may need to be enhanced or revised to consider the achievements thus far. AMS must work closely through coordinated actions so that the collective country-level achievements can drive the regional targets’ realization.

States that have already surpassed the targets and are more advanced in terms of clean energy technologies will be able to lead or serve as an example for other countries to emulate through joint action plans and funding.

As Asean races against time to catch up with the clean energy targets, now with the impacts and consequences of the Covid-19 pandemic, geopolitical war, and economic recessions in tow, there is an urgent need to relook at the current performance against the original plan and to accelerate the transition.

Due to the limited fiscal public capacity held by the member states, priority was given to combatting the pandemic and the recovery efforts that it entails. Given the importance of external and private financing in clean energy projects under this circumstance, improving the enabling conditions to boost investment and funding opportunities to meet the targets is essential.

Asean countries have developed enabling conditions through policies, regulatory frameworks, and financial assistance. This is to devise appropriate and aggressive mechanisms to attract and encourage more private investments in clean energy, especially large-scale RE systems.

It can be achieved by having attractive business models, such as the build, own, operate, transfer (BOOT), public-private partnerships (PPP), and Feed-in-Tariff (FiT). These mechanisms present advantages in risk mitigation and have been successfully applied in other regions to crowd investments into renewable projects.

Strategies can also include strengthening regional cooperation. An example is the Lao PDR-Thailand-Malaysia-Singapore Power Integration Project (LTMS-PIP), which imports up to 100 megawatts (MW) of hydropower from Lao PDR to Singapore via Thailand and Malaysia using existing interconnections.

Asean has long been talking about the regional power grid. Such collaboration will help increase the renewable energy share in Asean while funding more clean energy projects.

Sustainable finance is critical to realizing national and regional energy targets. Potential funding and investments should not be limited to private, local, and regional resources. A more aggressive effort needs to be put into securing funding and attracting investments from the international governments of developed countries.

In addition, international organizations have huge allocations for financing related to inclusivity, resilience, and sustainability. The World Bank, for example, has established a planned $500 million in clean cooking funds to accelerate progress toward universal access to clean cooking by 2030.

A coordinated effort is required to improve the opportunities for securing and optimally utilizing international funding to benefit Asean. Understandably, the requirements for financing vary and are somewhat restrictive, resulting in some countries having better access to specific funds than others.

Cambodia, for example, benefits from the Asian Development Bank’s support to set up its first solar power plant connecting to the national grid. Also, The World Bank’s clean cooking and more efficient heating projects only included Lao PDR and Indonesia.

Segregated funding of projects is partly the reason for varying progress and achievements across the Asean member states. It is recommended that the impact of these country-specific funds can be leveraged to other neighboring countries, directly or indirectly.

As the regional targets deadline is fast approaching, AMS will need to explore unusual business strategies and make every single dollar of funding and investments worth more for Asean as a whole, not only at the national level.

Rika Safrina is a modeling and policy planning (MPP) officer at the Asean Centre for Energy.  Hazleen Aris is the director of the Institute of Informatics and Computing in Energy (IICE), Universiti Tenaga Nasional (UNITEN). 

Tags: Keywords:


News 3 hours ago

Government Grants Operational License to Bullet Train

The train operates along a dedicated railway spanning 142.3 kilometers and is integrated into the commuter system in Bandung and Jakarta.
Special Updates 3 hours ago

Pertamina Recovers Rp 850b Land Assets in East Java

The assets which Pertamina has just recovered lie in the East Javan ward of Gunungsari, and span about 583,131 square meters. 
Special Updates 4 hours ago

Pertamina, LKPP Ink Agreement on E-Catalog

Pertamina says it is the first state-owned enterprise to implement LKPP's e-catalog app.
Special Updates 4 hours ago

Pertamina Installs Solar Power for Merbabu Asih

This project is part of the so-called Energy Self-Sufficient Village (Desa Energi Berdikari) program.
News 6 hours ago

Megawati Dismisses Speculations of Prabowo-Ganjar Pairing for 2024 Election

The PDI-P has consistently asserted that Ganjar will not contest as a running mate.