Kuala Lumpur, October 15 (AseanAll) — The Asian Development Bank (ADB), the World Bank Group, and the Association of Southeast Asian Nations (ASEAN) have launched a new financing initiative to support the ASEAN Power Grid (APG) – ASEAN’s collective effort to connect the region’s electricity networks and strengthen energy cooperation by 2045.
At the 42nd ASEAN Ministers on Energy Meeting (AMEM), the meeting agreed that the APG should not only focus on regional cross-border connectors but also address the critical need for domestic grid network upgrades and the development of subsea power cables.
The scale of investment required to realise the APG is significant. The ASEAN Interconnection Masterplan Study (AIMS) III, published by the Heads of ASEAN Power Utilities/Authorities (HAPUA) and the ASEAN Centre for Energy (ACE), estimated a requirement of US$ 764 billion in investment to build the transmission and power generation with high levels of variable renewable energy adoption.
“The benefits of the ASEAN Power Grid are clear: more affordable and reliable electricity for people and communities, stronger regional resilience, and greater opportunities for shared and inclusive growth. A fully connected ASEAN Power Grid by 2045 is not just about power exchange — it is about enhancing regional competitiveness and improving the quality of life across our region. Strong partnerships are already in place; what is needed now is a new generation of financing solutions — well designed and implemented with urgency,” said Secretary-General of ASEAN, Dr. Kao Kim Hourn.
“ASEAN’s current 7.7 GW of cross-border interconnections capacity will need to be more than doubled by 2040 to allow for more energy cooperation supporting a regional growth and welfare. The ASEAN Centre for Energy (ACE) welcome the initiative from the Asian Development Bank (ADB) and the World Bank to support us in the financing journey of the ASEAN Power Grid (APG). ACE, as the Secretariat of the APG Financing (APFG) Working Group consisting of the Centre, the ASEAN Secretariat, and the two multilateral development banks, is committed to advancing the APG initiative for the energy future of our region,” highlighted the Executive Director of the ASEAN Centre for Energy (ACE), Dato’ Ir. Ts. Razib Dawood.
Led by the two multilateral development banks in cooperation with the ASEAN Secretariat and the ASEAN Centre for Energy (ACE), the ASEAN Power Grid Financing Initiative (APGF) will mobilise large-scale financing for cross-border power interconnections across land and on the seabed.
ADB and the World Bank Group will 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 will offer financing from their own balance sheets while catalysing funds from other financiers, including the private sector, for projects relevant to the APG.
ADB has committed up to $10 billion for the APG over the next 10 years, supported by an initial $6 million of technical assistance funded by ADB, the United Kingdom, the European Union and other partners. The World Bank is providing an initial contribution of $2.5 billion under the Accelerating Sustainable Energy Transition Program (ASET), including a $ 12.7 million seed grant to the ASEAN Centre for Energy (ACE) to prepare bankable projects and define the next phase of support to the APG initiative.
The joint initiative will develop a strong pipeline of APG-related projects and facilitate ASEAN’s national utilities and sponsors to request project-specific support from the community of financiers. The APGF will be supported by the Partnership for ASEAN Connectivity on Energy (PACE), a new platform to strengthen collaboration between international financial institutions, donors, commercial banks, and philanthropies – convened under APGF.
“The ASEAN Power Grid presents an extraordinary opportunity to meet Southeast Asia’s growing energy needs,” said ADB Vice-President for East and Southeast Asia, and the Pacific Scott Morris. “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.”
Regional power interconnections would create thousands of jobs and generate significant economic benefits for Southeast Asia. By enabling cross-border power trading, the APG would enhance energy security, reliability, and resilience. This would foster economies of scale and can lower electricity costs for consumers and businesses.
A fully interconnected grid would also unlock potential renewable energy investment in Southeast Asia, promote decarbonisation, and improve the region’s industrial competitiveness.
But achieving fully integrated grid by 2045 will require unprecedented financing and cooperation. Beyond the large sums, ASEAN nations would need to harmonise policies and regulatory frameworks, create a region-wide market for energy trading, and maintain strong political will for decades.
“We at the World Bank are committed to supporting ASEAN countries in funding and implementing an energy mix that works best for them,” said World Bank Vice-President for the East Asia and Pacific Region Carlos Felipe Jaramillo. “Their initiative to scale up renewables is key to generating more affordable and reliable power, boosting competitiveness and creating jobs. We are deeply committed to supporting the ASEAN countries in realizing the vision of the ASEAN Power Grid backed by technical assistance and the full choice of financing instruments of the World Bank Group.”
While the idea of a fully interconnected grid across Southeast Asia has been around since the 1990s, strong momentum has been building in recent years. This progress is underscored by the political commitments of ASEAN leaders, with the APG Enhanced Memorandum of Understanding set to be signed this year, representing a renewed commitment by ASEAN Member States.
The APGF marks a historic step toward realising ASEAN’s long-standing vision of regional power connectivity. By combining political will, technical expertise, and innovative financing, ASEAN and its partners are laying the foundation for an interconnected, secure, and sustainable energy future for the region.
