IN SOUTHEAST ASIA, PRIVATE INVESTMENT IN CLEAN ENERGY IS HELPING TO FIGHT CLIMATE CHANGE

Solar, wind, and geothermal energy projects are promoting clean, sustainable growth

By Asian Development Bank

October 13^th, 2021

Southeast Asia’s vibrant development, growing population, and expanding economies have pushed up demand for electricity by 60% in the past 15 years.

Bangkok is one of Southeast Asia’s major cities, and Rama IV Road one of its busiest commercial and business hubs.

Viet Nam’s energy needs are growing. Ho Chi Minh City, Viet Nam, at night.

The countries of Southeast Asia are already a powerful economic force, and by 2030 their continued expansion could make them equivalent to the world’s fourth-largest economy. For that growth to be sustainable, future energy investments must limit harmful greenhouse gas emissions. It’s crucial that countries in Southeast Asia fulfill their climate commitments, so they can enjoy low-carbon growth.

Southeast Asia’s growing population is putting pressure on its cities and ramping up their energy needs.

As many of the region’s public sector investments are tied up in power transmission, private sector investment in renewable and clean energy sources like wind, solar, and geothermal can be a win for the environment, economies, and for companies.

The private sector can bring in innovative financing to bridge clean energy investment gaps

Innovative financing is key to stimulating private investment. ADB’s private sector operations department partners with the private sector to find new ways to fill investment gaps for clean energy generation and distribution.

Blended finance is a powerful and increasingly viable way of filling investment gaps. ADB works with development finance partners including the Clean Technology Fund, the Canadian Climate Fund for the Private Sector in Asia, and Leading Asia’s Private Sector Infrastructure Fund, to create commercially viable investments that appeal to private sector firms.

Workers on a turbine at the Hanuman wind farm in northeast Thailand, which was funded through a green bond.

Green bonds are another game-changer. This pioneering financing instrument can generate funding for clean energy projects by attracting low-cost capital from investors who value sustainability.

Farmer Serie Kakhaw and his wife Yupin Kakhaw benefit from the wind farm by renting out part of their land.

Around 10% of Thailand’s energy comes from renewable sources. In Chaiyaphum Province, northeastern Thailand, the long-term financing of the Hanuman Wind Farm was supported through a certified green bond. It is now one of the largest onshore wind farms in Thailand and is expected to reduce the country’s emissions by 200,000 tons of carbon dioxide equivalent (tCO2e) annually.

The Hanuman wind farm is one of the largest onshore wind farms in Thailand.

Scaling up clean energy infrastructure through private investments

The private sector’s openness to invest in new technology, coupled with its risk tolerance, makes it a natural partner in scaling up clean energy generation capacity in Southeast Asia.

Viet Nam aims to increase renewable energy capacity to 21% of its energy mix by 2030. It has already exceeded its baseline targets, with 16.5 gigawatts (GW) of solar and 11.8 GW of wind power integrated into its grid.

The floating solar energy project in Viet Nam avoids right-of-way bottlenecks due to its location on an existing reservoir.

ADB is helping Viet Nam reach its renewable energy goals even faster. It worked with the Da Nhim–Ham Thuan–Da Mi Hydro Power Joint Stock Company to attract blended financing for a 47.5 megawatt (MW) floating solar energy project located on the Da Mi hydropower plant reservoir. This inventive solution uses existing transmission infrastructure, and avoids typical right-of-way bottlenecks as it doesn’t require additional land acquisition or forest clearing.

ADB’s support for the innovative Da Mi solar plant is helping Viet Nam to reach its clean energy goals.

Maximizing the potential of natural energy

Some clean energy comes not from the sun or wind, but from deep underground. Geothermal energy can be hard to find, but when discovered is a powerful and continuous source of clean energy that can provide baseload power.

The Muara Laboh Geothermal Power Project is part of Indonesia's plan to tap its geothermal energy potential.

Geothermal energy is well suited to countries like Indonesia, which has 40% of the world’s total capacity.

Workers at the Muara Laboh project need to drill two kilometers underground to reach the geothermal source.

Geothermal energy is well suited to countries like Indonesia. The country has vast reserves of geothermal power—an estimated 40% of the world’s total—but by 2016, it had utilized only 5% of that capacity.

Spurred by $245 million of ADB assistance, private sector investment was mobilized for the construction of two new geothermal power plants, Muara Laboh and Rantau Dedap, in the volcanic mountains of Sumatra. Muara Laboh began operating in December 2019. Combined, the plants will have a total generation capacity of approximately 170 MW, making a significant contribution to Indonesia’s efforts to reduce harmful emissions by 29% before 2030.

Ayu Dwi Rahayu (second from left), an environmental engineer, and other workers at the Muara Laboh geothermal site.

As the world strives for global action on climate change, Southeast Asia can leverage its bountiful clean energy resources through private sector investment to grow economies while safeguarding livelihoods and the environment.

TO KNOW MORE ABOUT ADB’S PRIVATE SECTOR INVESTMENTS IN RENEWABLE ENERGY IN SOUTHEAST ASIA, VISIT:

IN SOUTHEAST ASIA, PRIVATE INVESTMENT IN CLEAN ENERGY IS HELPING TO FIGHT CLIMATE CHANGE

Footnotes

Photos taken by Al Benavente, Lester Ledesma, Eric Sales, and Gerhard Joren

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FootNotes

Photos taken by Al Benavente, Lester Ledesma, Eric Sales, and Gerhard Joren