Stronger collaborative efforts required to achieve energy access in the Asia Pacific region

Although remarkable progress has been made to improve energy access in recent years, close to half a billion people living in the Asia Pacific region still lack access to electricity. An estimated 350 million are concentrated in South Asia alone, she said. This further entrenches the poverty cycle.

“New ideas, technological advancements and innovative market-driven financing solutions are fast instilling confidence that universal energy access is achievable within this generation”, Dr Shamshad Akhtar, Executive Secretary of the United Nations (UN) Economic and Social Commission for Asia and the Pacific, (ESCAP) said on Tuesday during her keynote address at the Energy Access Forum at the Singapore International Energy Week (SIEW) 2016.

There are a range of approaches that could help the region broaden energy access. “Renewable energy offers a major solution to energy access. Asia Pacific is riding the global shift to renewable energy”, Dr Akhtar said. The region, which accounts for close to US$160 billion in global investments in renewables, is a key manufacturer of the world’s renewable energy technology and is the global centre for the deployment of renewables, she shared.

The increasing cost competitiveness of solar compared to coal and gas, and its widespread applicability have introduced new applications such as solar lanterns, solar home systems and solar-powered micro grids. This year, three large scale solar projects in the Middle East and South America have contracted their solar generated output for US$0.03 per kWh, cheaper than other sources of electricity. Other technologies that are developed include energy storage, mini grids, bio-gas, hybrid systems and micro hydro power, she shared.

“Technological shifts have increased the viability of decentralised powered options” and in many cases these solutions are cheaper compared to grid extensions to remote locations, Dr Akhtar said. However, this requires a change in mindset for long term infrastructure planning and developing countries would need to leapfrog to more efficient models of providing energy access. It is hence important to establish partnerships to take advantage of these trends and to scale up efforts, she said.

In implementing these solutions, attracting and diverting finance to areas which are needed the most need to be tackled, Dr Akhtar said. The International Energy Agency (IEA) had estimated that additional investments for achieving universal energy access by 2030 would reach US$640 billion globally and more than US$240 billion would need to be spent in Asia. She highlighted that the diversion of fossil fuel subsidies to energy access initiatives could play a transformative role. Besides domestic resource mobilisation, other important channels to harness finance include climate finance, official development assistance, impact investing and green bonds.

The potential of private investment in the promoting energy access should not be underestimated. However, such efforts have been limited to date and the private sector accounts for only 18% of total investment. Developing countries hence need to find ways to realise private sector investment in energy access and enable scalable business models to emerge, Dr Akhtar said. This is possible only with the right enabling policy environment and supportive public policy to reduce the associated risks of investing in these countries. In this aspect, many pioneering private sector firms have developed low-cost energy systems such as solar lanterns, biogas or micro-hydro systems and are rolling out business models with product, process and distribution innovations.

Dr Akhtar summed up her keynote by highlighting that governments can accelerate progress in energy access through a comprehensive approach to mainstream energy access objectives into national development plans, dedicating financial resources, and providing supportive policy framework for the private investor and local communities. This include tax incentives, encouraging financial institutions to play a greater role in financing energy access, direct provision of finance at preferential rates, developing innovative private-public partnerships, enhancing technical and entrepreneurial skill sets, and encouraging productivity energy uses that can generate local incomes.

The recent adoption by G20 Ministers of the Action Plan for Enhancing Energy Access in Asia and the Pacific is a step in the right direction to assist the region to adopt the appropriate policy framework to scale-up the private sector’s role in enhancement of energy access.

By Rachel Su