October 30, 2025
SINGAPORE – For the Asean power grid to take off, countries need to have a clearer picture of the benefits of being connected, said sustainable finance expert Lisa Sachs on Oct 28.
The director of the Columbia Centre on Sustainable Investment, which is part of Columbia University, said that a challenge with the implementation of the regional grid is that benefits have mainly accrued to countries where new renewable energy projects are being developed.
From the sidelines of the Singapore International Energy Week, where financing the energy transition is a major focus of discussions, she told The Straits Times: “For the success of a regional system, it’s important that the other countries see the benefits that they will derive from being a part of it.”
Ms Sachs, whose team is collaborating with the Asean Centre for Energy to model the regional grid as an investable, integrated energy system, added that such a grid is compelling as it can support the growth of different sectors.
The Asean power grid is an interconnected grid that will allow countries in the region, where renewable resources are unevenly distributed, to trade electricity freely with one another.
This will provide a buffer against the intermittencies of renewable energy, which refers to the fluctuation of resources. For example, there could be little to no energy generated when the wind does not blow or the sun does not shine.
A US-Singapore study on energy connectivity in South-east Asia released in 2024 had assessed that the grid can generate US$2 billion (S$2.6 billion) annually in research and development, and create as many as 9,000 jobs a year. Such roles would be in the renewables manufacturing sector, which includes cables and other related equipment.
Ms Sachs said that to reap the economic benefits, it is pivotal to have a framework that will address questions from member states on the opportunities that a regional grid presents, as well as how it could be funded.
For a large regional project to work, it is critical to first create an overall financing plan – underpinned by clarity around institutional and regulatory arrangements – before funding the individual projects, she said.
She cited the example of an interconnection, or electricity transmission cable, going through multiple countries.
Having a framework to understand how countries can benefit from it, even if they do not host the project or receive the electricity from it, will assure them, Ms Sachs said.
Asked about the Asean Centre for Energy’s collaboration with Columbia University, executive director for the centre Abdul Razib Dawood said it is working with multiple partners, including the Columbia Centre on Sustainable Investment, for its ninth Asean Energy Outlook.
The outlook, which will provide insights into how Asean can accelerate its energy transition, is slated to be published in 2026.
Ms Sachs said that one of the biggest financing barriers to scaling up clean energy projects in the region is the high cost of capital, as large upfront investment is needed for renewable projects such as solar and wind.
“Clean energy, in particular, has high upfront capital costs and then very low operational costs going forward,” she said.
There are also risks when it comes to financing cross-border projects due to the differences between the countries, such as their market structures, she added.
“The cost of capital is a reflection of perceived and real risks,” said Ms Sachs. “When the risks are high, financing doesn’t flow. When the risks can be managed, then an energy system like this is incredibly financeable,” she said.
This is where countries like Singapore can lend their financial expertise to support the creation of a holistic financing framework for the regional grid, she said.
Singapore can also help to de-risk investments through catalytic funding, such as through blended finance, she added.
Blended finance initiatives that involve concessional capital with higher risk tolerance or even the willingness to accept losses, such as philanthropic funds, could lower the barrier to entry for investors to get involved in such projects.
Risks for projects can also be lowered with more regulatory certainty, said Ms Sachs.
Singapore is also working on this front.
On Oct 28, Singapore said it is developing a framework for renewable energy certificates (RECs) with an internationally recognised standards body, the International Tracking Standard Foundation. The framework is being developed by the Ministry of Trade and Industry and the Energy Market Authority.
RECs serve as proof of electricity generated by renewable sources. Companies that are unable to invest in their own solar panels or renewable sources buy these certificates so they can claim they are powered by renewable electricity.
Each certificate is equivalent to one megawatt-hour of “green” electricity.
Minister of State for Trade and Industry Gan Siow Huang said on Oct 28 at the energy conference that many firms have shared that they need RECs so they can credibly fulfil their sustainability commitments.
However, the use of RECs to track renewable energy and their environmental benefits across borders can be complex, due to differences in government regulations in South-east Asia.
While there are systems in place for RECs generated and claimed within the same country, she said that a framework for RECs traded across borders is needed.
The framework will give companies that purchase cross-border RECs greater confidence to make exclusive claims for their sustainability reporting, without concerns that the same unit of renewable electricity is being claimed by some other entity.
Such a framework could help in drawing in financing for renewable energy projects across the region, said experts.
Dr Sanjay Chittarajan Kuttan, chief executive for consultancy Kai Gaia International Advisory, said this framework will help to remove policy uncertainty across the region. It will facilitate the trade of RECs while assuring buyers that there is no greenwashing, as the projects will be well-monitored.
Dr David Broadstock, a partner at economic consultancy The Lantau Group, said that while this alone will not fill the financing gap needed to tap the renewable energy potential in the region, the framework could make renewable projects more attractive to investors.
This could be crucial in unlocking investment and realising more of the region’s renewable energy potential in the near future.