financing renewable energy in indonesia 2 - raymond bona tua_usaid.pdfgeothermal $0.6b...
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Financing Renewable Energy in Indonesia
RAYMOND BONA – Deputy Chief of Party USAID ICED II
ICC Indonesia: Mekanisme Pendanaan Inovatif Menuju Pembangunan BerkelanjutanUntuk Lembaga Jasa Keuangan
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OJK Work Program Vs USAID Support 2018 - 2020
OJK Regulation & Guidelines in SF (POJK)
Formalized SF in OJK structure
Baseline survey, Monitoring & Reporting
Capacity buildingfor FI and FI supervisors
Bali Center for Sustainable Finance (BCSF) Sustainable Finance
Pilot Projects
Link to Project PipelineTechnical Assistance
to FI
Alternative Finance Mechanism
Participation in International Fora
The core of OJK program is issuing series of policy, including supporting documents such as guidelines and SOP.
Policy Development
Second layer is implementing the policy trough capacity building for awareness, pilot projects and monitor results
Policy Implementation
The last layer is policy support, all activities to support both policy development and implementation, such as R&D, forum coordination and industry engagement
Policy Support
USAID ICED Support
FOOTER GOES HERE
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Example of ICED Technical Assistance for Banks and Financial Institution
§ Basic Project Description§ Check List & Assessment on
Permitting / Licensing§ Review on Hydrology§ Review on Engineering Design§ Review on Technology Selection§ Review on Equipment Specification§ Review on Cost and Investment§ Review on Economic FeasibilityO
utlin
e P
roje
ct M
emo
§ Mini Hydro Power Plant§ Biomass Power Plant§ Biogas Power Plant§ Solar PV Project§ Wind Farm ProjectP
roje
ct
ICED Project Memo! Pembangkit Listrik Tenaga Biogas PLTBG ____________ – Lampung
Project Sponsor : Bank BNI Date Report : February 2012
Disclaimer
Statements made by ICED-Tetra Tech relating to the information, and all surveys, forecasts, recommendations and opinions in
any report, presentation or deliverable are made in good faith on the basis of information available at the time. Forecasts,
recommendations and opinions are not representations, undertakings or a warranty as to outcome or achievable results. The
user therefore releases and discharges Tetra Tech from all liability, direct and indirect, in any way connected to the report,
presentation or deliverable
ICED Project Memo! Pembangkit Listrik Tenaga Mini Hydro PLTMH ____________ – Sumatera Utara
Project Sponsor : Bank BRI Syariah Date Report : August 2012
Disclaimer
Statements made by ICED-Tetra Tech relating to the information, and all surveys, forecasts, recommendations and opinions in
any report, presentation or deliverable are made in good faith on the basis of information available at the time. Forecasts,
recommendations and opinions are not representations, undertakings or a warranty as to outcome or achievable results. The
user therefore releases and discharges Tetra Tech from all liability, direct and indirect, in any way connected to the report,
presentation or deliverable
ICED Project Memo! Pembangkit Listrik Tenaga Mini Hydro PLTMH ____________ – Jawa Barat
Project Sponsor : Bank BRI Syariah Date Report : July 2012
Disclaimer
Statements made by ICED-Tetra Tech relating to the information, and all surveys, forecasts, recommendations and opinions in
any report, presentation or deliverable are made in good faith on the basis of information available at the time. Forecasts,
recommendations and opinions are not representations, undertakings or a warranty as to outcome or achievable results. The
user therefore releases and discharges Tetra Tech from all liability, direct and indirect, in any way connected to the report,
presentation or deliverable
ICED Project Memo! Pembangkit Listrik Tenaga Mini Hydro PLTMH ____________ – Sumatera Utara
Project Sponsor : Danareksa Capital Date Report : March 2012
Disclaimer
Statements made by ICED-Tetra Tech relating to the information, and all surveys, forecasts, recommendations and opinions in
any report, presentation or deliverable are made in good faith on the basis of information available at the time. Forecasts,
recommendations and opinions are not representations, undertakings or a warranty as to outcome or achievable results. The
user therefore releases and discharges Tetra Tech from all liability, direct and indirect, in any way connected to the report,
presentation or deliverable
ICED Project Memo! Pembangkit Listrik Tenaga Biomass PLTBM ____________ – Kalimantan Barat
Project Sponsor : Nusantara Infrastructure Date Report : September 2012
Disclaimer
Statements made by ICED-Tetra Tech relating to the information, and all surveys, forecasts, recommendations and opinions in
any report, presentation or deliverable are made in good faith on the basis of information available at the time. Forecasts,
recommendations and opinions are not representations, undertakings or a warranty as to outcome or achievable results. The
user therefore releases and discharges Tetra Tech from all liability, direct and indirect, in any way connected to the report,
presentation or deliverable
DeliverablesTechnical Assistance ICED Bank / FI Partners
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Example of ICED Capacity Building for Banks and Financial Institutions
§ Introduction to Mini Hydro Power Project
§ Key aspect in assessment Hydro project proposal
§ Due diligence check list for Hydro project
§ PPA and Legal aspect in Hydro
§ Risk assessment for Hydro Project
§ Lesson learn from practitioner
Out
line
Trai
ning
§ One or two days training§ Material are tailored to banks
needs§ Site visit to Mini Hydro
Projects§ Real case study
Con
cept
DeliverablesActivities ICED Bank / FI Partners
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USAID ICED I & II Publication on Sustainable Finance
2013 2014 2015 2016
20172016 2016 2016 2018
2016
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US$ 352 MILLION
Total approximate investment needed Expected Investment ($) Megawatt installed capacity from projects pipelineExpected Installed Capacity (MW)
64 Hydro; 1 Solar PV, 6 Energy Efficiency; and 7 Bio Energy projects pipeline from banks & financial institutions
Clean Energy Projects
14 banks and financial institutions actively received ICED technical assistance
Banks and Financial Institution 14 Institutions80 Projects
633 MWUS$ 1,102 million
US$ million reach financial closed from assisted projectFinancial Closed ($)
ICED Technical Assistance to Banks & Financial Institutions Result as of March 2019
Indonesia Sustainable Finance Regulatory Framework
Indonesia commitment to reduce GHG by 2020 from 2010 BAU baseline is 26% from own effort, 41% with International Support
Indicative cost for the mitigation plan on emission reduction needed is approximately IDR 100 to140 trillion per annum, it is expected 46% from
public and 54% from private
Public SectorMinistry of Finance
Private SectorFinancial Institutions Authority
Regulate Supply of
Fund
• Coordinate and register all donor’s funding• Appoint Center for Climate Change and
Multilateral as National Designated Authority (NDA)
• Green budget tagging• Issuance Green Sukuk, Gov’t Green Bonds
• Issued OJK Regulation on Sustainable Finance in 2017, as umbrella regulation;
• Increase green portfolio in financial institutions• Monitor and supervise green portfolio• Promote development of innovative financing
mechanism
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International fund pledged for Indonesia period 2009 to 2019
• Source: CBD International
Donor FacilityProgram Modality
KFWBMU
World BankGEF
FIP / FCPF
USAIDMCC
DFID
REDD
JICAJIBC
AFD
DFAT
§ All donor registered to ministry of Finance;
§ CCPL (Climate Change Program Loan)
§ ICCTF (Indonesia Climate Change Trust Fund)
§ (IGIF) Indonesia Green Investment Fund
§ Norway Indonesia Letter of Intend
§ Bilateral / multilateral program support
Soft Loan, $2,932
Technical Assistance, …
Grants, $2,296
US$ Million
Multilateral, $911
French, $800
Australia, $128
Japan, $1,017
USA, $836
Norway, $1,000
UK, $100
Germany, $427
EU, $24
US$ Million
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Public Sector Climate Finance
Bank Loan74%
Fin Services8%
Capital Market4%
Bonds10%
FDI4%
• Banking – dominates, providing around 74% of external financing to the private sector.
• Financial inclusion – Large share of firms without access to formal financial services.
• Equity markets growing rapidly, bond markets more slowly.
• Foreign investors hold nearly two thirds of tradable stocks listed in the Indonesian Stock Exchange (IDX)
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Source of Financing in Indonesia
Bank’s lending is dominating Indonesia private sector financing
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In 2012 total green financing from banks represents 1.2% from total bank’s lending
Syariah Bank Lending IDR 56 Trillion
Conventional Bank Lending IDR 665 Trillion
Green FinancingIDR 9.3 trillion
Mini Hydro27%
Other RE2%
Geothermal26%
Sustainable Agriculture
19%
Eco Label5%
Others21%
1.1%
2,85%
In 2012, Bank Indonesia conduct green lending survey to largest 24 commercial banks and 5 syariah banks, where their assets represents approximately 80% total national asset.
South East Asia New Investment Clean Energy, by country (USD Billion)
0.37 0.26
1.08
0.23 0.12
1.77
0.05
0.56
1.03 0.21
1.12
1.22
1.35 1.33
0.54
1.26
1.25 0.71
0.13
0.02
0.33
0.18 0.73
0.95
2.26
0.20 0.31
0.40
0.11
0.03
0.14
0.11
0.03
-
-
0.70
0.40
0.43
0.21
0.31
0.21
0.11
0.13
1.17
1.93
2.87
2.20
2.51
3.40
3.70
2.02
2.75
2009 2010 2011 2012 2013 2014 2015 2016 2017
Indonesia
Thailand
Phillipine
Malaysia
Vietnam
Lahendong & Ulubelu 40MW Geothermal $0.6B
Muaralaboh 80MW Geothermal $0.9B
Sarula 330 MW Geothermal $1.7B
Sep 18
Sidrap 75MWWInd $0.7B
1.01
Clean Energy Investment Opportunity in Indonesia
21.7 GW0.9 GW
2.8 GW 6.4 GW ProposalPPAConstructionOperation
Large Hydro$36.7B
Geotherm
al$4.9B
Mini Hydro$2.6B
Wind $1.9B
PV $1.6 B
Bioenergy$0.3B
$0.9B
$0.5B
$0.5B
$50 billion $2 billion
On Grid Clean Energy Project Status as of April 2018, (in GW)
Size of investment by type of technology
Investment Opportunity
• Data derived from PLN (national electric utility)
• Hydro projects dominate market
• Despite declining costs, Solar PV development is low
Lack of project implementation results in negative perception from investors *)
Dec 2016
Dec 2017
Dec 2018
Oct 2019
70 PPA signed
15 PPA reached financial close
7 PPA reached financial close
48 PPA have not reached financial close
4 Project terminated19 Projects unclear
4 projects reach COD
• 96% of respondents believe that the PLN’s Electricity Supply Business Plan (RUPTL) was not designed to adequately anticipate and respond to the current and future challenges in the power sector
• 94% of respondents believe that regulatory uncertainty is a major barrier to investing in new large-scale power generation
• 71% of respondents believe that the lack of standard bankable PPAs with appropriate risk allocation is also a major barrier to investing in new large-scale power generation
• 75% of respondents believe that there is a lack of transparency and 89% said there is insufficient predictability in the procurement of new power capacity in Indonesia
New MEMR Regulation 50/2017
*) PWC Indonesia Power Survey 2018
Jakarta, CNN Indonesia -- Kementerian Energi dan Sumber DayaMineral (ESDM) menyatakan masih ada 19 proyek pembangkit listrik Energi Baru Terbarukan (EBT) yang masih belummendapatkan sumber pendanaan untuk pembiayaan proyek.
Sebanyak 19 proyek ini merupakan bagian dari 70 lainnya yang sebelumnya terancam mangkrak. Diketahui, sepanjang tahun laluterdapat 70 penandatanganan perjanjian jual-beli listrik (power purchase agreement/PPA) EBT antara PT PLN (Persero) dengankontraktor swasta (independent power producer/IPP).
Direktur Aneka EBTKE Kementerian ESDM Harris mengatakanpihaknya sedang mengusahakan agar 19 proyek ini segeramendapatkan pendanaan, khususnya melalui skema PembiayaanInfrastruktur Non-anggaran Pemerintah (PINA) di Badan Perencanaan Pembangunan Nasional (Bappenas).
Harris mengakui ada sejumlah risiko yang akan dihadapi investor dalam membiayai proyek EBT. Salah satunya terkait pengembalianpinjaman dana dari pemilik proyek.
"(Risiko) pengembalian nanti lancar apa tidak ya, kemudianmenarik tidak ya. Melihat dari aspek bank kan punya aturansendiri apa yang diminati," kata Harris.
Sementara, ia mengungkapkan delapan proyek yang sebelumnyaterancam mangkrak akhirnya mendapatkan pendanaan. Namun, belum ada pembangunan konstruksi terhadap delapan proyektersebut.
Kemudian, empat proyek lainnya sudah terminasi atau takdilanjutkan. Hanya saja, ia tak memastikan proyek mana saja yang akhirnya berhenti tersebut.
"Saya tidak hafal, banyak di Sumatra yang terminasi," katanya.
Supply of Fund Intermediary (Market) Project Pipeline(Demand for funding)
• High cost of fund
• Short tenor à mismatch short source of fund to long term infra funding
• Limited source of funds• No alternative risk sharing
financial products
• Limited standardize & consistent policy framework à high uncertainty
• Limited availability and transparency of technical references and data,
• Lack of information in RE procurement process;
• Limited number of good quality projects (feasible & bankable)
• Limitation technical capacity / availability in sector i.e. consultants, project appraisal.
• Limitation of project sponsors both in technicality & equity
• Blending sources of finance to reduce cost
• Develop alternative cost sharing mechanism
• Develop financing hub to match short term funding for long term projects
• Promote standard and solid policy implementation via Energy Planning
• Develop data hub
• Support GOI procurement process
• Promote and develop market via standardization and best practice
• Develop a robust project’s pipeline
• Capacity building• Financial incentives / grants to
facilitate good projects
Summary Challenges in RE InvestmentC
hallengesInterventions