Indonesia

Background

The Clean Energy Finance and Investment Review is one of the CEFIM Programme’s key outputs. It will provide an overview of the current policy environment and opportunities for renewable electricity and energy efficiency development in Indonesia, highlighting success stories and good practices as well as identifying areas where Indonesia could strengthen domestic enabling conditions for clean energy finance and investment. The Review endeavours to explore opportunities to accelerate clean energy development in Indonesia as well as consider socio-economic implications of the clean energy transition (e.g. gender equality, regional economy). It will contain an assessment of the current policy environment for clean energy finance and investment and provide  recommendations that are actionable as well as mindful of potential trade-offs or adverse impacts.

Overview

Achieving a clean energy transition in Indonesia’s more than 16,000 islands is a challenge. This is particularly true for Indonesia’s eastern islands (notably West & East Nusa Tenggara, Sulawesi, Maluku and Papua), which represent lower levels of economic and power network development and where access to electricity is less than in the western parts of the country.

The government of Indonesia and national power utility (PLN) have made significant efforts to widen electricity access and promote use of renewable energy in eastern islands. Yet, those islands still rely heavily on expensive and polluting diesel-fired generators, despite solar and wind sources already being cheaper.

Considerable investment is thus needed to increase renewables deployment and transition from fossil fuels in the eastern islands. In particular, innovative business models and project structures are needed to address issues such as high transaction costs of smaller scale renewable projects, fair and transparent tendering processes, revenue stability and off taker risks.

To support a scale-up of renewable energy finance and investment in Indonesia’s eastern islands, this FGD discussed various business models and policies that can enable renewables deployment in an island context. The FGD also highlighted major policy and financing challenges faced by project developers and highlighted international experiences in overcoming these challenges in similar geographical contexts. Discussions included financing structures best suited to small-/medium-sized island contexts and subnational-level measures that can help lower transaction costs and facilitate investments.

Presentations

Speakers

• Harris, Director of Various New and Renewable Energy, Ministry of Energy and Mineral Resources (MEMR); “Indonesia's RE Investment Promotion Strategy in Eastern Islands”
• Cita Dewi, Executive Vice President of Renewable Energy, PLN 
• Dong Joo Kim, Senior Researcher, Jeju Energy Corporation; “Carbon-Free Island Jeju by 2030: Local Energy Transition Project in Jeju Island, South Korea”
• Mylene Celestino Capongcol, Director of Renewable Energy Management Bureau, Department of Energy; “Philippine Experience in Furthering Renewable Energy Development in the Country”
• Arnaud Dubrac & Bertrand Poche, Energy Task Team, AFD; “Change of paradigm on power systems 2020-2030: Power systems on French non-interconnected zones”

Discussants

• Pak Muksin Mukhtar, Head of Division on Agro, Pharmacy, and Tourism SOE, Coordinating Ministry of Economic Affairs
• Laily Himayati, Collaboration and Networking Lead for MENTARI Programme, Hivos
• Matthieu Geze, VP Asia, HDF Energy; “Investment models for scaling up renewable energy deployment in Indonesia's eastern islands”