ASTAE grew out of the Financing Energy Services for Small-Scale Energy Users (FINESSE) project, initiated by ESMAP and bilateral donors in 1989. Following a joint request from Asian borrowers and donor partners, the Bank acted to implement the FINESSE recommendations by creating the Asia Alternative Energy Unit (ASTAE) as part of the Asia Technical Department in January 1992.

ASTAE was originally set up as a three-year pilot program with the objective of “mainstreaming” alternative energy in Asia, which was defined to include energy efficiency and renewable energy. Its original target was to increase the share of alternative energy in Bank power sector lending in Asia to 10 percent of the total.

In the initial years, the ASTAE strategy to achieve its objective was opportunistic. ASTAE actively had to market the idea of alternative energy to government agencies in client countries, as well as to Bank task team leaders, country directors, and management. Initially, ASTAE supported those task team leaders with a positive attitude toward alternative energy by carrying out small activities to support projects under preparation wherever there was demand. Activities slowly increased in size and importance, leading to alternative energy components and eventually to stand-alone projects. The energy efficiency activities supported by ASTAE were in general related to DSM and the establishment of EMCs. The renewable energy tasks were performed mainly on electricity projects for connection or reinforcement of grids and rural electrification mostly using PV.

The creation of ASTAE coincided with the establishment of the GEF in 1991. Most of the components or stand-alone projects supported by ASTAE received GEF financing. The synergy with the GEF has proved to be one of the success factors for ASTAE.

The original objective of ASTAE — to mainstream energy efficiency and renewable energy in World Bank operations — has been achieved. The initial target of a 10 percent share of alternative energy lending in the Asia energy sector was surpassed during FY97–FY2000. With the support of ASTAE, more than US$1 billion of alternative energy projects or project components have been developed, including about US$500 million in World Bank loan and GEF grant. Status Report #10 (April 2003) estimated that the projects supported by ASTAE and approved by the World Bank Board of Executive Directors between FY93 and FY02 provided access to 660,000 households, installed 570 MW of renewable electricity-generating capacity, and avoided 720MW of conventional electricity-generating capacity as a result of efficiency improvements. The current project portfolio is large and diverse, and 14 task team leaders are now managing energy efficiency and renewable energy projects or project components.²

Critical to the success of ASTAE was the true partnership between donors and the World Bank. ASTAE provided the resources through Trust Funds that were used to support important activities in a timely and flexible way. Although the ASTAE Trust Funds covered only a small part of project preparation costs, the strategic use of these funds enabled construction of a project pipeline far greater than would have been possible in their absence. Donors to ASTAE have included Canada, Finland, the Netherlands, Switzerland, the United Kingdom, and the United States, of which the Netherlands has been the biggest.

In response to the World Summit on Sustainable Development, ASTAE has extended its definition of alternative energy to include technologies addressing energy poverty, in addition to renewable energy and energy efficiency which are generically termed sustainable energy technologies. Including technologies to address energy poverty will enable ASTAE to reach a far greater number of energy-poor households than previously possible.

The First Decade of ASTAE (1992–2002)

In the first decade, ASTAE succeeded in main streaming alternative energy in the East and South Asia Regions in the World Bank, and developed a large portfolio of alternative energy projects and project components. This conclusion is supported by donor, Bank, and external reviews carried out during the last three years.

With support from ASTAE, the East and South Asia Regions of the Bank have developed 39 stand-alone alternative energy projects or components. Of these, 8 have been closed (4 in East Asia and 4 in South Asia), 15 are under implementation (10 in East Asia and 5 in South Asia), and 16 are under preparation (12 in East Asia and 4 in South Asia).³ The cost of the 23 alternative energy projects or project components under implementation or closed is US$1.4 billion. Alternative energy projects or components in the pipeline are valued at more than US$1 billion.

At US$55 million, GEF commitments for alternative energy projects completed and under implementation in the East Asia and Pacific and South Asia Regions are by far the largest for the World Bank and IFC together.⁴

ASTAE clearly contributed to increased alternative energy applications to an extent that would not have been possible with the Bank’s budget alone. It also contributed to tilting the Bank's lending agenda in Asia toward alternative energy more than might otherwise have occurred, to the point that it has evolved into one of the main lending themes.

New ASTAE Approach (2004–2006)

In 2000, ASTAE started to formulate a new strategy for 2000–05. The strategy shifted the focus from mainstreaming within the World Bank to mainstreaming in client countries with the aim of substantially scaling up the impact of alternative energy with respect to the environment and poverty reduction. The new strategy was presented at the ninth donor meeting in April 2000, but was not followed through into implementation. The ASTAE Management Review and the World Summit for Sustainable Development, both of which took place in 2002, reactivated the discussion on the strategic direction of ASTAE.

The management review was first proposed by the East Asia Energy and Mining Unit (EASEG) following the 2002 meeting of the Consultative Group on Energy Trust Funded Programs and initiated after a new Infrastructure Department was established in East Asia and Pacific Region. The objective of the management review was to develop a vision statement and medium-term strategy and business plan, consistent with the Bank’s corporate priorities and budgetary constraints. The main conclusions were that ASTAE still had an important role to play, but that the definition of alternative energy should be extended to include energy poverty. Additionally, the mandate of ASTAE to support only renewable energy had on occasion created an impression of technology push.

The World Summit on Sustainable Development, held in Johannesburg in August and September 2002, gave new impetus to global action to fight poverty and protect the environment. The agenda for sustainable development was broadened and strengthened to emphasize particularly the linkages between poverty, the environment, and the use of natural resources. Energy was central to the negotiations and outcomes, although in the end, no energy targets were adopted. The important commitments made at the summit related to energy focused on access to energy, renewable energy, energy efficiency, and energy markets.

The Consultative Group of the Energy Trust Funded Programs, which met in Berlin in April 2003, suggested that, based on these two developments, a new ASTAE strategy and business plan for the next three years was needed.

The new ASTAE strategy supports the implementation in Asia of the WBG commitment made at the International Conference for Renewable Energies in Bonn (June 2004) for at least 20percent average growth annually in both our energy efficiency and renewable energy investments between FY05 and FY09.The commitment applies to the WBG as a whole, including the World Bank (IBRD and IDA), IFC, and MIGA, together with GEF co financing in projects executed by the WBG.

2. Seven task managers in East Asia Energy (EASEG), six task managers in South Asia Energy (SASEI), and one task manager in South Asia Environment (SASES).
3. See ASTAE Status Report #10, April 2003.
4. The GEF commitment for alternative energy projects in FY2000–02 in the East Asia and Pacific Region alone was 51 percent of the total alternative energy commitments for the World Bank and IFC together.