China and India are among the ‘first choice’ countries that will benefit from solar energy developments under a $9bn financial aid initiated and supported by the Asian Development Bank (ADB), a senior official says.
Many countries in the Asia-Pacific region are geographically well-positioned to harness energy from the sun, but affordable financing mechanisms need to be made available to allow the area to tap into the energy resource.
Under ADB’s maiden Asia Solar Energy Initiative (ASEI), the bank has agreed to provide $2.25bn from now until 2013, on top of a $6.75bn it is seeking from private and public investors.
The ASEI aims to help developing member countries in Asia build up 3GW of solar power by 2013.
“We’re looking at countries which have large amount of land that has no alternate use – those countries which have deserts in them such as PRC (China), India, Pakistan and Central Asia. They are the first targets,” says Seethapathy Chander, chair of the energy community of practice at ADB.
The ASEI seeks to make available a range of projects, and finance and knowledge sharing mechanisms, to attract commercial banks and the private sector to invest in these projects.
New projects that will benefit from the ASEI are expected to be announced by the end of this year, according to Chander.
“When we have a good project, a sponsor and some commercial lending, which we will catalyse together with our money, it becomes a package,” Chander tells Recharge.
“(But) it’s all in progress now. We will know by the end of this year. It takes some amount of initial upfront work in committing to a project, but once we do that then the construction period is pretty short for solar.”
ADB has already pledged up to $70m to Thailand under the ASEI to build potentially the world’s biggest solar power plant in Lopburi Province.
The project is scheduled to start construction in the third-quarter of this year and expected to be completed in May 2012.
The $9bn aid over three years is not enough to help all the developing member countries, Chander admits.
“If you look at the level of business being generated (in the solar industry), it will be something in the order of $5-6bn every year. There’s no way ADB can be the sole financier of this business,” Chander says.
“Our job is to break down the barriers and start the first few projects in each country. After that the commercial banks and institutions should take over because they will be familiar by then.”
Developing nations such as Bangladesh and Cambodia, which have expressed an interest in the ADB initiative, may have to wait in the queue.
Last year, ADB provided nearly $1.3bn for projects with clean energy components, exceeding its $1bn target for the second year in a row. Starting in 2013, this target will increase to $2bn a year.
