FINANCING CLEAN ENERGY IN DEVELOPING ASIA VOLUME 1 Edited by Bambang Susantono, Yongping Zhai, Ram M. Shrestha, and Lingshui Mo JULY 2021 ASIAN DEVELOPMENT BANK FINANCING CLEAN ENERGY IN DEVELOPING ASIA VOLUME 1 Edited by Bambang Susantono, Yongping Zhai, Ram M. Shrestha, and Lingshui Mo JULY 2021 ASIAN DEVELOPMENT BANK Creative Commons Attribution 3.0 IGO license (CC BY 3.0 IGO) © 2021 Asian Development Bank 6 ADB Avenue, Mandaluyong City, 1550 Metro Manila, Philippines Tel +63 2 8632 4444; Fax +63 2 8636 2444 www.adb.org Some rights reserved. Published in 2021. ISBN 978-92-9262-986-1 (print); 978-92-9262-987-8 (electronic); 978-92-9262-988-5 (ebook) Publication Stock No. TCS210206-2 DOI http://dx.doi.org/10.22617/TCS210206-2 The views expressed in this publication are those of the authors and do not necessarily reflect the views and policies of the Asian Development Bank (ADB) or its Board of Governors or the governments they represent. 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Contents VOLUME I Tables, Figures, Boxes, and Maps v Acknowledgments xii Abbreviations xiii Weights and Measures xvii About the Editors xviii Authors xx 1 Introduction 1 Part 1 Role of Clean Energy in Asia and the Pacific 8 2 Clean Energy Resources, Utilization, Investments, 9 and Prospects in Asia Part 2 Leveraging for Clean Energy Finance 54 3 ADB’s Experience in Clean Energy Finance 55 4 Enabling Private Sector Investments in Renewable Energy 78 Development in the Pacific 5 Financing Plus: Experience from the Green Financing 112 Platform in the People’s Republic of China Part 3 Clean Energy Development: Financing Approaches, 135 Business Models, and Policies 6 Clean Energy Finance in the Countries of the Association 136 of Southeast Asian Nations 7 Crowding in Private Capital to Enable Cambodia’s 176 Clean Energy Evolution iv Contents 8 Distributed Renewable Energy Systems for Energy Access 201 in Asia and the Pacific 9 Clean Energy Investment Policies in the People’s Republic 233 of China Part 4 Financing Tomorrow’s Clean Energy 290 10 Mobilizing Private Finance for Low-Carbon Energy Transition 291 11 Role of Carbon Markets in Clean Energy Finance 339 Tables, Figures, Boxes, and Maps Part 1 Role of Clean Energy in Asia and the Pacific 2 Clean Energy Resources, Utilization, Investments, and Prospects in Asia Tables 1 Sectoral Final Energy Consumption: Shares of Different 14 Fuels in Asia and the Pacific, 2000 and 2018 2 Solar Energy Potential and Utilization in Selected Countries 17 3 Wind Energy Potential and Utilization in Selected Countries 19 4 Hydropower Potential and Utilization in Selected Countries 21 5 Potential and Utilization of Solid Biomass Energy in 23 Selected Countries 6 Waste to energy Potential and Utilization in Selected Countries 25 7 Geothermal Energy Potential and Utilization 27 in Selected Countries 8 Transport Sector Energy Efficiency Indicators of 30 Selected Countries in 2018 in Index Form 9 Industry Sector Energy Efficiency Indicators of 31 Selected Countries in 2018 in Index Form 10 Residential Sector Dwelling Energy Intensity of Selected 32 End Uses in 2018 in Index Form 11 Investment in Energy Systems in Subregions of Asia 35 and the Pacific (Average Annual, 2016–2050) 12 Countries in the Asia and Pacific Region Implementing 37 Renewable Energy Promotion Policies 13 Demand for Electricity and Renewables in the Different 44 Sectors of the Asia and Pacific Region in 2019, 2030, and 2040 14 Renewable Power Generation Capacity in Selected Countries 45 and Subregions in 2019, 2030, and 2040 15 Solar Photovoltaic Capacity in Selected Countries 46 and Subregions in 2019, 2030, and 2040 under IEA Sustainable Development Scenario 16 Wind Power Capacity in Selected Countries and Subregions 47 in 2019, 2030, and 2040 under IEA Sustainable Development Scenario vi Tables, Figures, Boxes, and Maps Figures 1 Total Primary Energy Supply of the Asia and Pacific Region, 10 2000 and 2018 2 Renewable Energy Supply Mix in Countries and Subregions 11 of the Asia and Pacific Region, 2000 and 2018 3 Total Electricity Generated by Different Fuels in Asia 12 and the Pacific, 2000 and 2018 4 Energy Intensity of Selected Countries in Asia and the Pacific, 28 2000–2018 5 Investment Trend in Renewable Energy for Selected Countries 33 and Subregions, 2010–2019 6 Renewable Power Generation Capacity Mix in Asia 46 and the Pacific in 2019, 2030, and 2040 Part 2 Leveraging for Clean Energy Finance 3 ADB’s Experience in Clean Energy Finance Tables A1 Accounting of Clean Energy Investments and Climate Finance, 74 Comparison of Previous (until 2015) and Current (from 2016) Scope and Methodology A2 The ADB Financing Modalities 75 Figures 1 ADB Investments in Clean Energy, 2005–2019 59 2 Cumulative Clean Energy Investments by Fund Type, 2005–2019 61 3 ADB Green Bond Commitment by Sector 62 (as of 31 December 2019) 4 Clean Energy Investments by Modality, 2005–2019 63 5 Clean Energy and Climate Mitigation Investments by Sector, 67 2005–2019 6 Clean Energy and Climate Mitigation Investments 68 by Subregion and Country, 2005–2019 Box 1 Result-Based Lending for the Transition to Sustainable Energy 65 4 Enabling Private Sector Investments in Renewable Energy Development in the Pacific Tables 1 Profile of Pacific Developing Member Countries 80 Tables, Figures, Boxes, and Maps vii 2 Energy Profiles of Pacific Developing Member Countries 82 3 Energy Intensity, 2000, 2010, and 2017 85 4 ADB Products and their Suitability to Pacific Developing 97 Member Countries 5 Program Financing Plan 101 Figures 1 Gross Domestic Product Growth Rate by Subregion, 2019 81 2 Renewable Energy and Fossil Fuels Contribution to the Grid 83 3 Renewable Energy Targets vs. Actual Renewable Energy 87 Installed Capacity 4 Total Renewable Energy Installed Capacity by Technology 88 5 Total Energy Financing by Source, 2007–2020 94 6 Total Installed Capacity in P-DMCs by Technology 95 7 Program Overview and Key Features 103 5 Financing Plus: Experience from the Green Financing Platform in the People’s Republic of China Tables 1 Summary of Beijing–Tianjin–Hebei Program Investments 114 2 Annual Average PM2.5 Concentrations in the Greater 124 Beijing–Tianjin–Hebei Region 3 Number of Days per Year with Air Quality Index≤100 125 in the Greater Beijing–Tianjin–Hebei Region Part 3 Clean Energy Development: Financing Approaches, Business Models, and Policies 6 Clean Energy Finance in the Countries of the Association of Southeast Asian Nations Tables 1 ASEAN Member State Renewable Energy and Energy 139 Efficiency Targets, based on National Energy Targets/ Road Map 2 Clean Energy Financing Provided by International 147 Development 3 Examples of Current Domestic Financial Institutions 148 by Country that Dedicate to Clean Energy Financing or Green Finance/Climate Finance 4 Feed-in Tariff in the ASEAN Region as of 2018 156 viii Tables, Figures, Boxes, and Maps Figures 1 Prevailing Sources and Flows of Clean Energy Financing 145 2 Development Banks’ Investments in Renewable Energy 147 by Technology, 2009–2016 Boxes 1 Green Climate Fund and Clean Energy Financing in ASEAN 146 2 The Role of the Asian Development Bank in Clean Energy 152 Financing in ASEAN 3 The ASEAN Catalytic Green Finance Facility 165 7 Crowding in Private Capital to Enable Cambodia’s Clean Energy Evolution Figures 1 Cambodia Power Generation Capacity in 2019 178 2 Solar PV Road Map, 2018 and Solar PV Project Pipeline, 2020 182 3 Solar Park Overview 185 4 ADB’s End-to-End Support for Renewables in Southeast Asia 187 5 Financing Sources and Structure 188 6 Contract Structure and Risk Allocation Framework 190 7 Solar PV Plant Tender Process 191 8 Price Comparison 193 9 Approved Coal, Solar PV, and Wind Capacity Additions