For decades, Asean has recognised the strategic importance of strengthening its grid infrastructure while facilitating regional integration.
As renewable energy potential grows, power demand rises, and decarbonisation pressures intensify, this need has become more urgent. Yet investment has not kept pace. The problem is not simply a lack of capital, but a lack of bankability. Transmission projects- both domestic and cross-border- remain too politically contingent, structurally uncertain, and risk-laden to attract investment on viable terms.
The anatomy of bankability
A project is bankable when investors are confident it can generate predictable revenues, manage risks clearly, operate within a stable regulatory environment, and deliver reliable long-term returns. For transmission infrastructure, meeting these conditions is far harder than for generation assets.
Renewables generation, particularly solar and wind projects have become a mature asset class, supported by falling technology costs, established project finance models, and clearer offtake arrangements.
Transmission is different. Returns are long-term and depend on utilisation, while risks are largely political and regulatory rather than technical. Many of its benefits —grid resilience, renewable integration, avoided curtailment, energy security, and lower long-run power costs— are system-wide and diffuse, rather than directly captured by the project itself.
Three factors largely determine whether transmission projects become investable. First, revenue certainty: predictable utilisation, credible generation pipelines, and stable tariff recovery mechanisms.
Second, institutional and regulatory clarity: clear ownership, governance, operational responsibilities, and accountability over who builds, regulates, pays, and manages delays or disputes over land use permits. Third, risk allocation: political, regulatory, permitting, currency, and counterparty risks must be reduced, transferred, or strategically absorbed.
This is where blended finance matters. By combining public, concessional, and commercial capital, it can reduce risk rather than simply provide subsidy—absorbing enough uncertainty to attract private investment. Ultimately, bankability is about confidence, not just capital. Building that confidence remains the central challenge Asean’s transmission ambitions must overcome.
India’s Green Energy Corridor: A bankability architecture
India’s Green Energy Corridor (GEC) is one of the clearest examples of how an emerging economy can make transmission infrastructure bankable. Its significance lies not just in scale—over 13,000 circuit kilometres and around 44 GW of renewable evacuation capacity—but in how it systematically built investor confidence.
Set against the backdrop of India’s rapidly expanding renewable energy capacity, transmission infrastructure development struggled to keep pace.
The resulting mismatch created significant curtailment risks, threatening project revenues, investor confidence, and the broader credibility of the energy transition. In this context, transmission could no longer be treated merely as supporting infrastructure, but as a critical systemic constraint requiring strategic policy attention.
An important enabler of GEC is its distinct institutional arrangement. The Ministry of New and Renewable Energy aligned renewable deployment goals, the Ministry of Power and central regulators ensured system coordination, Power Grid Corporation of India (central power transmission utility) managed interstate transmission, and State Transmission Utilities handled intrastate systems.
This clear division of responsibilities reduced coordination friction, providing necessary confidence to investors who builds, regulates, pays, and resolves disputes. Investors assess not only project economics, but the institutions behind them. Clear accountability lowers risk premiums; whereas fragmented governance raises them.
Another reinforcing component was GEC’s financial structuring. Government grants in the form of Central Financial Assistance (CFA), concessional financing from institutions such as the Asian Development Bank and KfW, and public-sector equity participation together created a layered blended finance model. Public and concessional capital did not replace private investment—it reduced risk sufficiently to make commercial participation viable.
Finally, regulatory clarity and market design completed the model. Early cost-plus frameworks enabled rollout of high-risk, first-of-kind projects, while later competitive tariff-based bidding improved efficiency and attracted private participation from domestic market.
Policy-backed incentives, such as Renewable Purchase Obligations, Renewable Energy Certificates, and Green Energy Open Access reforms, generated demand. Securing commercial demand for renewable energy improved transmission utilisation and helped create commercially competitive tariffs, strengthening confidence in the long-term viability of transmission assets.
Implications for Asean
Applying lessons from India’s Green Energy Corridor (GEC) to Asean requires caution. India’s electricity sector operates within a shared federal structure where the central government sets national policy, planning, and interstate regulation, while states manage implementation and intrastate systems within a centrally coordinated regulatory framework. In contrast, Asean consists of ten sovereign member states with differing market structures, utility strengths, economic conditions, and national priorities. Cross-border transmission in Asean therefore involves far greater institutional and political complexity.
Despite the obvious differences, GEC offers useful lessons on how transmission can be made bankable. The central challenge is not just building more lines, but creating the institutional, financial, and market conditions that make both domestic grid expansion and cross-border interconnection investable.
Institutional arrangement and regulatory clarity. Domestic grid expansion is best led at the national level, where local institutions have the authority and operational capacity to manage implementation. Cross-border infrastructure, however, requires stronger supranational coordination. A credible regional coordinating body is necessary, authorised to coordinate planning, allocate responsibilities, and resolve cross-border disputes. Clearer division of roles across domestic and regional levels would reduce accountability gaps while strengthening investor confidence.
Financial incentives and funding structure. A key enabler in GEC was the government grant in form of Central Financial Assistance, incentivising states to align local priorities with national renewable energy goals. A similar approach could be adopted in Asean, by linking concessional finance, grants, or viability gap funding for domestic transmission projects that enhances cross-border integration prospects. Development finance institutions can support this through concessional lending, guarantees and blended finance structuring models. For higher-risk projects, greater public equity participation and larger grant components may be needed to absorb uncertainty and crowd in private capital.
Market design and demand assurance. Transmission assets become investable only when future utilisation is credible. Competitive procurement processes, transparent tariff structures, and policy-backed demand signals are essential to strengthen revenue certainty. Government incentives, renewable purchase obligations, and credible off takers—such as large industrial users, data centres, or financially stronger state utilities—can provide the demand assurance needed to support long-term investment.
To sum up, the lesson from GEC is not institutional replication, but strategic adaptation. Domestic grid strengthening and cross-border integration must be treated as one shared bankability challenge, where policy, regulation, finance, and market design are aligned before infrastructure is built.
This article was authored by Dr. Maitreyee Mukherjee (Research Fellow) and Ms Anmol Nayak (Research Associate) at the Institute for Environment and Sustainability, Lee Kuan Yew School of Public Policy, NUS.
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