The Asia Solar Energy Initiative (ASEI) will identify and develop large-capacity solar projects that will generate 3 GW of solar power by 2012. ADB will provide US$2.25 billion to finance the initiative, which is expected to leverage an additional US$6.75bn in solar power investments over the period.
“With energy demand projected to almost double in the Asia and Pacific region by 2030, there is an urgent need for innovative ways to generate power while at the same time reducing greenhouse gas emissions,” explains ADB’s Director General Rajat Nag.
“Sustainable solar energy can be the clean power of the future if there are appropriate incentive and financing mechanisms in place.”
The announcement was made at ADB's 43rd annual meeting in Tashkent, Uzbekistan.
ASEI will make available a range of projects, and finance and knowledge sharing mechanisms, to attract commercial banks and the private sector to invest in solar energy projects.
In addition to direct financing, ASEI will set a target of raising US$500 million from donor countries to ‘buy down’ the up-front capital costs of investing in solar energy, as well as design other innovative ways to attract private-sector investment.
Central Asia is excellent location for solar energy
“Given Central Asia’s growing demand for electricity, the availability of desert land for large- scale solar energy development, and their stated commitment to offset high carbon emissions, several countries in the region are excellent candidates for ADB support through this initiative,” explains Nag.
ASEI will establish and host the Solar Energy Forum, an international knowledge-sharing platform that will track solar development projects, discuss solar power proposals and incentive mechanisms, and organise conferences. The first conference of the Solar Energy Forum is scheduled for 5-6 July in Manila, Philippines.
Last year, ADB provided US$1.3bn for projects with clean energy components, exceeding its US$1bn target for the second year in a row. Starting in 2013, this target will increase to US$2bn a year.
Bank funds 73 MW solar facility
Meanwhile, ADB has approved investment in a 73 MW solar power plant in central Thailand. The facility could be one of the largest solar projects in the world and will be central to Thailand's efforts to generate more of its energy from domestic, renewable sources.
ADB will lend US$70m to Natural Energy Development Company, a Thai firm owned jointly by CLP Holdings, Japan's Mitsubishi and the Electricity Generating Public Company, to build the plant. The plant will be located in Lopburi province in central Thailand.
Currently, 90% of Thailand's electricity is generated from natural gas, coal and lignite. In an effort to diversify the energy mix and to promote renewable energy, the government has prepared an Alternative Energy Development Plan that will generate 20% of primary commercial energy from renewable sources by 2022.
Thailand must increase renewables by almost four-fold
The goal implies an increase in renewable energy capacity to 5608 MW from the current 1750 MW.
“Solar energy is an abundant resource throughout Thailand and has huge potential to fill the rising demand from Thai businesses, communities and households,” explains Joe Yamagata of ADB.
“This private sector undertaking should demonstrate clearly to other investors the viability of investing in solar projects if the right financing structure including carbon credits is in place.”
The Electricity Generating Authority of Thailand, the country's largest power generator and sole distributor, will buy all of the 55 MW (net) output. Natural Energy Development Company is working with ADB to prefinance certified emission reductions under ADB's Carbon Market Initiative.
“Long-term financing (beyond the 10-year tariff subsidy period) greatly improves the financial viability of renewable energy projects such as solar and wind, because they have high upfront investment costs and intermittent revenue generation,” explains Daniel Wiedmer of the bank.
In addition to the loan, ADB will provide a US$2m grant from its Clean Energy Financing Partnership Facility to cover any contingency costs arising from the use of innovative thin-film solar PV technology on a large scale.
Thin-film PV uses thin-film semiconductors which are cheaper to produce than other types of solar cells, and work better in countries such as Thailand that have higher average temperatures but where clouds create diffuse rather than concentrated light.