The Asia Sustainable and Alternative Energy Program (ASTAE) grew out of the Financing Energy Services for Small-Scale Energy Users (FINESSE) project initiated by the World Bank’s Energy Sector Management Assistance Program (ESMAP) and bilateral donors in 1989.  Following a joint request from East Asian and Pacific Island borrowers and donor partners, the World Bank acted to implement the FINESSE recommendations by creating ASTAE in January 1992.

During the past sixteen years, ASTAE has played a key role in supporting sustainable energy use in Asian and Pacific Island developing countries by increasing World Bank lending for energy efficiency and renewable energy projects. The program has surpassed its initial target of a 10 percent share of renewable energy and energy efficiency lending in Asia’s energy sector during FY1997 to FY2000. Since then renewable energy and energy efficiency projects have been mainstreamed in World Bank operations, and ASTAE’s mandate has evolved to cover a broader agenda of scaling-up the use of sustainable energy options in the East Asia and Pacific region to reduce energy poverty and protect the environment.

 

ASTAE’s current mandate rests on four pillars, improving energy efficiency, scaling-up the use of renewable energy, increasing access to energy to reduce poverty, and promoting adaptation to potential impact of climate change. In all four pillars ASTAE has developed a strong portfolio of activities in East Asian and Pacific countries, facilitating the development and supporting the implementation and effectiveness of large World Bank investment projects and Global Environment Facility (GEF) grants. These combined operations have had very significant impacts in quantitative terms – over the past 16 years, close to 2 million households have gained access to electricity, over 1GW of renewable energy generation capacity has been installed in the region, energy efficiency gains have replaced 1GW of generating capacity equivalent, and total carbon dioxide emissions were reduced by over 200 million tons.

 

The ASTAE contributions alone did not achieve these big gains, but they constituted an essential catalyst for the effective scaling-up of World Bank lending operations. ASTAE provides the knowledge base and flexible, just-in-time financing to successfully implement large projects; and in the past, the program has been extremely valuable in shaping the concept of projects or adapting projects to shifting conditions. ASTAE’s presence in several countries has helped cross fertilize from different operations to develop a strategic, programmatic approach to scaling up the impacts of investment projects. This in turn helped create enabling environments in which ASTAE shares best practices to improve recipient countries’ institutional, policy, financial, and regulatory frameworks.

 

Experience from all four pillars of ASTAE support - renewable energy, energy efficiency, access to energy, and adaptation to climate change impact - show the consolidation of three essential functions of ASTAE:

• ASTAE helps introduce innovative investment delivery mechanisms as illustrated in China with ASTAE’s support to developing on-lending guidelines for energy efficiency project financing by Chinese commercial banks, or by the structuring of on-lending funds for renewable energy development in Vietnam. In the Pacific Islands ASTAE is supporting the introduction of an original financing mechanism providing risk guarantees and expected to leverage substantial private sector financing.

• ASTAE has over the years demonstrated its role in supporting the development of institutional and regulatory frameworks that provide the enabling environment for the successful scaling up of investment projects. ASTAE’s early support to the development of the Chinese Renewable Energy Law, ASTAE’s work in Thailand on the development of energy policies, on heat pricing policies in Northern China or on electricity distribution regulations in Mongolia provide further illustrations of this role. Innovative governing and management structures provided support to successful organization of the Philippines energy cooperatives and the Rural Energy Services project in Vietnam. Improved policy, financial, and regulatory frameworks help attract capital from international financial institutions, export credit agencies, and from the private sector.

• The third emerging, cross country and cross sector role of ASTAE is in training and knowledge sharing. ASTAE has consolidated experiences gained in projects in Asia since 1992 and is able to draw from a pool of expertise to provide just in time advice on the design and implementation of projects across the region. ASTAE has organized training seminars for officials and policy makers notably in China, Indonesia, Vietnam and Thailand, and it has conducted workshops to share knowledge between countries of the region as in the case of exchanges between Chinese and Vietnamese energy service companies. Over the years ASTAE has developed a number of knowledge products, technical guides and atlases made available to a wide audience.

Using this programmatic approach ASTAE has continued to support new project development in recent years for both grid-connected and off-grid renewable energy applications, as well as market based energy efficiency projects. In 2007 Vietnam became the biggest recipient of ASTAE support with activities supporting a large renewable energy investment project, energy efficiency demand-side management, and rural electrification. A China Renewable Energy Scale-Up Programme has continued to receive significant ASTAE support, in addition to innovative activities in the financing of industrial energy efficiency projects. The Pacific Islands developed a large ASTAE project pipeline in 2008, supporting innovative financing mechanisms for alternative energy projects and renewable energy resource assessments.

 

ASTAE has also extended its activities to the South Asia region with a project approved in India to support energy efficiency in small and medium enterprises. This restores ASTAE’s initial mandate to operate as an Asia wide programme, while it had focused on the East Asia and Pacific region only in recent years. More projects are in the pipeline for the 2009 in the South Asia region, covering the same four thematic areas of renewable energy, energy efficiency, access to energy, and adaptation to climate change impact.

 

The ASTAE work is currently supported by the World Bank, the Government of the Netherlands, and the Swedish International Development Agency (SIDA).

Other sponsors have included the U.S. Department of Energy, U.S. Agency for International Development, Government of Finland, Government of the Swiss Confederation, European Community, U.S. Export Council for Renewable Energy (US/ECRE), German Federal Ministry for Economic Cooperation, the Royal Danish Ministry of Foreign Affairs, Canadian International Development Agency, United Nations Development Programme, and the U.K. Department for International Development.

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