New ADB partnership prioritizes Vietnam energy storage efforts, Indonesia coal phase-out

Vietnam’s energy storage initiatives will benefit from a new $35 million capital fund from the Asian Development Bank (ADB) and non-profit Global Energy Alliance for People and Planet (GEAPP).

The two international organizations announced this new partnership during the World Bank Spring meetings in Washington, D.C. late last week, saying the new fund aims to accelerate clean energy access and transition away from fossil fuels in Indonesia, Vietnam, India, Pakistan, and Bangladesh.

GEAPP will provide an initial $35 million of catalytic capital towards the fund, which will be established and administered by ADB.

Priority programs will include supporting battery energy storage system (BESS) in Vietnam, and the early retirement of coal-fired power plant initiatives in Indonesia, GEAPP said. Opportunities will be supported through technical assistance, grant components for investment projects, and blended concessional instruments to crowd-in additional capital.

ADB managing director general Woochong Um said when the partnership was announced that two of his bank’s most important priorities are “expanding clean energy for the 350 million people in our region who have either limited or no access to electricity,” and “the transition from coal and other fossil fuels toward clean, affordable, and reliable energy sources”.

Simon Harford, CEO of GEAPP, said that while there is a big opportunity to address those major challenges and decarbonize the region’s energy sector, low and middle-income countries only accounted for 8% of the world’s total energy transition investments in 2021.

That was the lowest share seen in 10 years, and while 2022 was slightly better, with 15% of investments made worldwide seen in low and middle-income nations, it is still not enough, according to him.

“We need to do better and act bolder, knowing we will only meet critical climate goals through collaboration and meaningful capital commitments,” Harford said.

GEAPP was launched by the Rockefeller Foundation at COP26 in 2021 with the aim of promoting universal energy access and meeting critical climate goals. Its other initial funders are the IKEA Foundation and the Bezos Earth Fund. At COP26, ADB and the Rockefeller Foundation signed a memorandum of understanding for up to $100 million to support the bank's work to combat climate change, accelerate the transition to clean energy, and end energy poverty.

Vietnam is seeking to reach its carbon neutrality target by 2050. It has seen major growth in its installed solar and wind capacity over the past few years, but energy storage is still in the early development period.

Li-Cycle, the largest lithium-ion battery recycler in North America, signed a definitive agreement earlier this month with Vietnam’s VinES Energy Solutions for a long-term battery recycling relationship. The Vietnamese firm is a leading battery and energy storage system manufacturer in the country.

VinES is currently building the nation’s first lithium iron phosphate (LFP) battery cell ‘gigafactory’ in a joint venture with Chinese manufacturer Gotion. The $275-million factory, on a 14-hectare site in the central province of Ha Tinh, is designed to annually produce 30 LFP battery cells. The battery products will be sold into both electric vehicle (EV) and stationary battery storage markets.

Canada-based Li-Cycle said its agreement with VinES will takes effect next year. Li-Cycle is likely to build a facility in Vietnam but a final decision on this has not been made.

To build on their partnership first announced in October 2022, VinES and Li-Cycle will also continue to explore global recycling solutions for VinFast, Vietnam's first electric vehicle (EV) manufacturer. Both VinES and VinFast are part of Vingroup, the largest private conglomerate in Vietnam.

ADB announced last October that it had mobilized a $135 million climate financing package for VinFast to manufacture the country’s first fully-electric public transport bus fleet and first national electric vehicle charging network. The assistance aims to support Vietnam’s efforts to achieve its net-zero greenhouse gas emissions by 2050 and expand high-tech manufacturing industries.