Opening Remarks by ADB President Takehiko Nakao at the 9th Asia Solar Energy Forum, Ritz Carlton Hotel in Beijing, People’s Republic of China on 21 March 2016
Honorable Minister Nur of the National Energy Administration, distinguished guests, ladies and gentlemen:
A warm welcome and very good morning to all of you. I wish to express my sincere appreciation to the National Energy Administration for jointly organizing this 9th Asia Solar Energy Forum with ADB.
During the China Development Forum yesterday, Vice-Premier Zhang Gaoli stressed the importance of ecological development. China’s 13th Five-Year Plan covering 2016 to 2020 supports a vision of economic growth balanced with environmental well-being. China made a clear commitment to reduce its greenhouse gas emissions at COP21 in Paris last year. Other countries in Asia, too, made very strong commitments to join the mitigation and adaptation efforts declared in Paris. Renewable energy and energy efficiency are important not only for environmental protection. They also play a part in combating climate change.
I wish to reiterate the importance of strengthening green finance, which I emphasized at the China Development Forum yesterday. Green finance involves mobilizing financial investments in such areas as clean energy and energy efficiency. There are several ways to support green financing.
First, it is important to have strong policies and regulations that catalyze greater investments in those areas most in need of green financing.
Second, we need to reduce energy subsidies and introduce “green taxes” to achieve pricing that includes cost externalities like environmental degradation resulting from pollution and other emissions.
Third, we must make full efforts to create an enabling environment for public–private partnerships (PPPs). In order for PPPs to be successful, appropriate tariffs and regulations should be put in place.
Fourth, the emissions trading scheme that China has already launched is another positive step towards helping green finance. As I understand, China is planning to develop a national emissions trading scheme.
Fifth, green bonds and eco-compensation schemes are another way to finance clean energy investments. We should not forget government investments in the form of tax rebates on green bonds as these are an important part of green investments. It is noteworthy that China’s new budget includes large public investments in green infrastructure areas like metros and high voltage grids which help reduce environmental emissions.
These are relevant to today’s focus of the Forum, which is solar power development, and I would like to mention about it more concretely.
II. Current status of solar energy development in Asia
In the past 5 years, we have witnessed exponential growth in solar energy deployment across Asia and the Pacific. At the end of 2015, solar energy capacity exceeded 75 gigawatt (GW), up from 1 GW in 2010 in the Asia and Pacific region including Australia, Japan, and New Zealand. And for the PRC, it held more than half of the region’s capacity at the end of last year.
The cost of solar energy globally has fallen by about 70% since 2010. This enormous achievement is due to efficiency gains in energy conversion, economies of scale driven by government policies and subsidies, and financing from commercial banks and international financial institutions including ADB.
ADB has contributed significantly to the region’s rapid solar energy growth. ADB’s Asia Solar Energy Initiative was launched in May 2010 to strengthen our support to developing member countries.
For example, ADB has supported a large-scale solar park in Gujarat and Rajasthan in India and grid-connected solar Photovoltaic (PV) in Uzbekistan, Thailand, and the Solomon Islands. ADB has helped to pilot off-grid hybrid solar-wind systems in Nepal and solar PV in small island nations such as Tonga and Maldives. In addition, ADB has supported the PRC’s first major concentrated solar energy plant.
III. Overcoming challenges to further expand solar energy
Despite these achievements, we must not become complacent. In my view, there are three key challenges to expanding solar energy further and reaping its potential in Asia and the Pacific.
First, money matters. In Asia, more than 400 million people do not have access to any form of electricity. Bringing clean energy to them, including solar energy, will require substantial investments. Second, although the cost of solar energy has fallen significantly, it is still too expensive for many developing countries in Asia. Third, given that solar energy is intermittent, electricity grid systems will need to be upgraded with new technologies to absorb the solar energy. This is particularly important in small power systems.
ADB is working with our developing member countries to address these challenges.
First, ADB is scaling up its financial support for clean energy. Last September, I announced a doubling of ADB’s climate financing from the current $3 billion to $6 billion per year by 2020. Out of this $6 billion total, $4 billion is for mitigation including renewable energy and energy efficiency. Clean energy investments including solar will be increased from the current $2 billion to $3 billion a year by 2020.
Second, ADB expects the cost of solar energy to fall further as solar energy installations are scaled up and local manufacturing capacity is increased. It is also important to pursue innovative business solutions to bring affordable solar energy to the poor. In India, ADB has supported a private sector company to install solar panels at low-income households in rural areas. Energy from the solar panels will be delivered to households initially without any payment via the system of electricity credits. In this system household’s will pay monthly to repay the cost of solar panels. Once fully paid for, the household will own the solar panel and receive its energy for free.
Third, ADB supports the development of smart electricity grids and microgrids with storage that ensures a smooth integration of solar energy to the power grid. ADB has provided support to Maldives to test pilot advanced storage and energy management systems. These technologies can be replicated in many Pacific countries to replace expensive and less clean diesel-based power generation.
IV. Contributions to COP21
Let me now turn to a broader discussion on how we will achieve COP21 commitments through solar.
This Forum is a timely event so soon after COP21, where countries from across the world demonstrated tremendous resolve in committing to combat climate change. The crucial role of renewable energy, including solar, in this task cannot be emphasized enough. We must focus our attention on three important areas.
First, it is essential that we put in place the appropriate policy and regulatory environment to develop solar energy.
Second, we need to enhance the region’s overall capability, knowledge, and readiness to deploy affordable solar energy. The Asia Solar Energy Forum is a good venue to foster cooperation among countries with differing levels of solar potential and capacity.
Third, we need to pursue partnerships. We must work not only among ourselves, but with governments of countries, development partners like ADB, World Bank and bilateral donors, industries, private financiers, and power users if we are to succeed in reaping solar energy potential in the long term. Especially we must pay greater attention to advancement of technologies. Without technologies it is almost impossible to achieve COP21 goal to reduce emissions.
We are very pleased that the 9th Asia Solar Energy Forum is being held in Beijing. The PRC is the world’s largest solar market, not only in the manufacture of solar PV systems but also in the deployment of solar energy generation. There is much we can learn from the PRC’s experiences in solar energy development.
I have every confidence that this Forum will contribute to our greater understanding of solar energy in Asia and the Pacific and of ways we can further expand its deployment.
I wish you successful discussions over the next two days.