ADB's Work in the Energy Sector
ADB has been supporting its developing member countries (DMCs) in the energy sector for more than 40 years to increase access to electricity, this has played a critical role in poverty reduction and economic growth. This includes improving generation, transmission, and distribution. Promoting demand side energy efficiency has also been central to the bank’s work, along with policy and governance reform to make the sector more responsive and lower costs. ADB´s energy sector financing from 2009 to 2020 stands at more than $42 billion, yet huge challenges remain.
Equitable Energy Access
Central to ADB’s energy work is boosting access for the region’s poorest. The majority of the world’s energy poor are living in Asia and the Pacific. More than 350 million people in the region have only limited access to electricity and 150 million people still have no access at all. They are often forced to live with malnutrition, unhealthy living conditions and limited access to education and employment. Insufficient energy access limits the development of agriculture and manufacturing, severely stunting economic growth and social development.
In addition, continuing economic growth and urbanization means energy demand is projected to almost double in the region by 2030. The urgent growth in capacity needed to meet these needs has to take place as the region transitions to clean, renewable energy sources that minimise their impact on the climate and environment. Equitable access to energy is central to the UN’s Sustainable Development Goals. SDG 7 sets a target of universal access to affordable, reliable, and modern energy services by 2030.
ADB invested $8.5 billion in clean energy from 2016-2020. While a large part of ADB’s energy portfolio is still allocated to transmission and distribution projects, it has been increasingly focusing on renewable energy generation and energy efficiency through its Clean Energy Program since 2008. The program was developed to help DMCs meet their energy security needs, provide reliable and affordable access, and aid the transition to low-carbon growth. The program prioritizes improving access to energy for the poor, especially those in remote, rural areas.
Countries in the region working together can play a vital role in ensuring energy security in a sustainable manner. Subregional power trade can help meet growing energy demand and promote economic growth. ADB is playing an important role in bringing the region together though regional and subregional networks to promote effective cooperation on energy. An example is a project to promote clean energy development in Central Asia.
Governance and Reform
Boosting access and helping the region to transition to cleaner energy is only part of ADB’s commitment. Central to sustainable energy development is improved policies, laws, capacity, and institutions to efficiently manage and regulate the sector. ADB has helped many countries in Asia and the Pacific to establish competitive electricity markets.
The huge demand for power in developing Asia cannot be met by limited national resources, so ADB has been encouraging private sector participation in the sector, particularly in public-private partnerships.
In addition, the bank supports energy research, legislation, technical development, and regulation. Other key governance priorities for the bank in the sector include the adoption of tariff structures to promote energy conservation. ADB also acknowledges the importance of training in energy planning, demand forecast, financial management, operations, and the maintenance of assets.
2021 Energy Policy
ADB is responding to rapidly changing energy needs in Asia and the Pacific with its 2021 Energy Policy to guide its operations. Consolidating achievements, addressing emerging challenges, and ensuring a fair transition to a low-carbon future will require ADB’s continued sectoral support for its DMCs. The policy is based on the following principles:
- Securing energy for a prosperous and inclusive Asia and the Pacific.
- Building a sustainable and resilient energy future.
- Supporting institutions, private sector participation, and good governance.
- Promoting regional energy cooperation and integration.
- Integrating finance, knowledge, and partnerships to maximize development impact.
- Leveraging commercial financing to tackle the most difficult energy challenges.
- Energy Transition Mechanism (ETM)
- Review of the ADB Clean Energy Program
- Clean Energy Financing Partnership Facility (CEFPF)
- Climate Change Fund (CCF)
- Renewable Energy, Energy Efficiency, and Climate Change (REACH)
- Handbook on Battery Energy Storage System
- Handbook on Microgrids for Power Quality and Connectivity
Strategy 2030 sets seven operational priorities, each having its own operational plan. The operational plans contribute to ADB’s vision to achieve prosperity, inclusion, resilience, and sustainability, and are closely aligned with Strategy 2030 principles and approaches.