indonesia clean energy development ii (iced ii) program

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Jow Indonesia Clean Energy Development II (ICED II) Program FY 2016, Quarter 1 Progress Report: October 1 - December 31, 2015 – REDACTED Contract No. AID-OAA-I-13-00019 Task Order AID-497-TO-15-00002 JANUARY 2016 (UPDATED MARCH 2016) – REDACTED This report is made possible by the generous support of the American people through the United States Agency for International Development (USAID). The contents are the responsibility of Tetra Tech ES Inc. and do not necessarily reflect the views of USAID or the United States Government.

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Indonesia Clean Energy Development II (ICED II) Program

FY 2016, Quarter 1 Progress Report: October 1 - December 31, 2015 – REDACTED

Contract No. AID-OAA-I-13-00019 Task Order AID-497-TO-15-00002

JANUARY 2016 (UPDATED MARCH 2016) – REDACTED

This report is made possible by the generous support of the American people through the United

States Agency for International Development (USAID). The contents are the responsibility of Tetra

Tech ES Inc. and do not necessarily reflect the views of USAID or the United States Government.

Indonesia Clean Energy Development II (ICED II) Program

FY 2016, Quarter 1 Progress Report, October 1 through December 31, 2015 REDACTED

Prepared for: Office of Environment USAID/Indonesia

Prepared by: Tetra Tech ES, Inc. USAID Indonesia Clean Energy Development Project II Menara Jamostek, North Tower, 14th Floor Jalan Gato Subroto No. 38 Jakarta Selatan 12710 Indonesia Tel. +62-21-5296-2325 Fax +62-21-5296-2326 www.ICED.or.id

DISCLAIMER

This report is made possible by the generous support of the American people through the United

States Agency for International Development (USAID). The contents are the responsibility of Tetra

Tech ES Inc. and do not necessarily reflect the views of USAID or the United States Government.

iii ICED II Quarter 1 Report, October 1 - December 31, 2015

Acronyms ADB Asian Development Bank BAPPENAS National Development Planning Agency/Badan Perencanaan Pembangunan

Nasional BAU Business as usual BI Bank Indonesia, the central bank of the Republic of Indonesia BKPM Capital Investment Coordination Board/Badan Koordinasi Penanaman Modal CDCS Country Development Cooperation Strategy CED Clean energy development CETIF Clean Energy Technology and Innovation Fund CIRCLE Capacity for Indonesian Reduction of Carbon in Land Use and Energy Project CoE Center of Excellence DANIDA Denmark’s development corporation DCA Development Credit Authority (of USAID) DFAT Australian Department of Foreign Assistance and Trade DG Directorate General DGNREEC Directorate General of New Renewable Energy and Energy Conservation DO Development Objective DO3 Development Objective 3 EBTKE Directorate General for New and Renewable Energy and Energy Conservation / Ditjen Energi Baru Terbarukan dan Konservasi Energi ESRA Environmental and social risk analysis EUPP Energy Utility Partnership Program FGD Focus group discussion FiT Feed-in tariff FS Feasibility study GHG Greenhouse gas GIS Geographic information system GIZ Gesellschaft für Internationale Zusammenarbeit (Germany’s international donor agency) GOI Government of Indonesia ICED II USAID’s Indonesia Clean Energy Development Project II IFC International Finance Corporation IR Intermediate result ISPO Indonesia Sustainable Palm Oil Program KLHK Ministry of Environment and Forestry/ Kementerian Lingkungan Hidup dan Kehutanan LEAP Long-Range Energy Alternatives Planning System M&E Monitoring and evaluation MCA I Millennium Challenge Account Indonesia MEMR Ministry of Energy and Mineral Resources MER Monitoring, evaluation and reporting MoU Memorandum of understanding MSW Municipal solid waste

iv ICED II Quarter 1 Report, October 1 - December 31, 2015

MW Megawatt NRE New renewable energy OJK Indonesia’s Financial Services Authority/Otoritas Jasa Keuangan P2EBT Acceleration Team for New and Renewable Energy PETDes Clean Energy for Rural Electrification/

Pengembangan Energi Terbarukan untuk Listrik Desa PLEA Planning for Energy Access Initiative of ICED II PLN State electricity company/Perusahaan Listrik Negara PPA Power purchase agreement PTPN X PT. Perkebunan Nusantara X PV Photovoltaic RAD-GRK Local Action Plan for Low Emission Development/

Rencana Aksi Daerah Gas Rumah Kaca RAN-GRK National Action Plan for Low Emission Development/

Rencana Aksi Nasional Gas Rumah Kaca RE Renewable energy RPJMN National Medium-Term Development Strategy RUED Regional Energy Plan/Rencana Umum Energy Daerah RUEN National Energy Plan/ Rencana Umum Energy Nasional RUPTL PLN’s Power Supply Business Plan/

Rencana Umum Penyediaan Tenaga Listrik SDGs The United Nations’ Sustainable Development Goals SEARGIP Sustainable Regional Economic Growth and Investment Programme of GIZ UKCCU United Kingdom Climate Change Unit UNDP United Nations Development Programme UP3KN National Electricity Development Program/ Unit Pelaksana Program

Pembangunan Ketenagalistrikan Nasional USAID United States Agency for International Development USDOC FCS U.S. Department of Commerce’s Foreign Commercial Service USDOE U.S. Department of Energy USG United States Government WWF World Wildlife Fund for Nature

v ICED II Quarter 1 Report, October 1 - December 31, 2015

Table of Contents

Executive Summary 1

Ringkasan Eksekutif

1 Introduction 1

1.1 About the ICED II Project 1

1.2 About this Report 3

2 Summary of Key Activities and Achievements 4

2.1 Component 1: Improve the Enabling Environment for Rapid Co-Investment in Clean Energy

4

2.2 Component 2: Accelerate the Mobilization of Private and Public Sector Co-Investment in Clean Energy

9

2.3 Component 3: Outreach on USAID and USG Inter-Agency Activities in Indonesia’s Energy Sector

14

2.4 Clean Energy Technology and Innovation Fund 19

2.5 Main Accomplishments 19

3 Performance Indicator Results against Targets 21

4 Plans for Next Quarter 27

4.1 Component 1: Improve the Enabling Environment for Rapid Co-Investment in Clean Energy

27

4.2 Component 2: Accelerate the Mobilization of Private and Public Sector Co-Investment in Clean Energy

29

4.3 Component 3: Outreach on USAID and USG Inter-Agency Activities in Indonesia’s Energy Sector

32

4.4 Clean Energy Technology and Innovation Fund 33

5 Problem Resolution 34

5.1 Status of Reserving Problems Described in the Previous Report

5.2 New Problems Encountered Since the Previous Report

6 Draft Success Stories 37

Annexes

A ICED II Technical Assistance 40

B Reference Information for Performance Indicators and Results 45

C ICED II Clean Energy Project Pipeline 63

vi ICED II Quarter 1 Report, October 1 - December 31, 2015

Executive Summary

The period October through December 2016 saw a heightened demand for ICED II’s services, particularly from national and regional units of the Government of Indonesia, which are seeking increased technical assistance, collaboration and capacity building services from the project. Thus, in addition to our provision of policy, project, and training assistance, the quarter can be characterized for its planning activities to ensure that ICED II provides the best possible assistance within its resource limitations. Our assistance received formal recognition from PLN on November 25, when PLN’s Corporate Planning Director and USAID/Indonesia’s Environment Office Director signed a memorandum of understanding on ICED II’s future technical assistance to and cooperation with the national utility. Similar MoUs are anticipated to be signed by the Ministry of Energy and Mineral Resources (MEMR) and USAID, and BAPPENAS and USAID in mid-January 2016. Enabling Environment Activities We assisted several national clean energy and climate change programs this quarter and continued to identify potential support for new national energy sector initiatives. Our activities with BAPPENAS included: ▪ Assisting in the revision of the guidelines provincial governments use to calculate their

GHG emission reductions, and to report their monitoring, evaluation and reporting (MER) documentation on these reductions in the energy sector

▪ Assisting in the revision of a business-as-usual baseline training module for provincial energy sector officials

▪ Coaching on MER for the energy sectors in Southeast Sulawesi and North Kalimantan. ICED II assisted MEMR by: ▪ Facilitating the process for preparing the National Energy Plan (RUEN) ▪ Providing inputs to the Acceleration Team for New and Renewable Energy (P2EBT)

during the incubation of the new National Energy Fund, the Clean Energy Center of Excellence, and the Clean Energy for Rural Electrification Program

▪ Providing inputs to the New and Renewable Energy and Energy Conservation Directorate on the revision of the solar PV utilization and power purchase regulations

▪ Assisting the Task Force for the Implementation of the National Electricity Development Program (UP3KN) in devising a strategy to achieve a 25% share for renewable energy in the 35,000 MW of additional generating capacity slated for 2020.

For OJK, Indonesia’s Financial Services Authority, ICED II completed the ▪ OJK Guideline for Understanding Environmental Permits in Clean Energy – Handbook for

Financial Services Institutions.

vii ICED II Quarter 1 Report, October 1 - December 31, 2015

ICED II also began rolling out its Planning for Energy Access (PLEA) Initiative with a focus on Nias. This quarter we developed the methodology, collected and processed data, and prepared analytic software for this Initiative. Bappeda, Distamben and PLN Wilayah of North Sumatra have expressed interest in participating in PLEA and have appointed staff to serve as counterparts to the ICED II team.

Investment Mobilization Activities ICED II consulted with 19 private sector partners involved in clean energy project development this quarter and completed 3 project memoranda. The ICED II Clean Energy Project Pipeline as of the end of December 2015 included:

▪ 143 clean energy projects▪ Generating capacity: equivalent of 1,088 MW▪ Investment of $2,240 million▪ 4,479,498 tons of CO2e emission reduced per year▪ 11,860,673 persons with access to clean energy.

In addition, it trained over 413 people in various technical areas, and profiled 31 Indonesian training institutions that conduct clean energy capacity building.

Outreach and Coordination Activities ICED II staff attended 19 events sponsored by government, the private sector, and donors this quarter. In addition, its website received 1,556 unique visits (3,237 page views) from more than 10 countries. The project distributed over 75 project fact sheets, 50 achievement summaries, and 35 success stories, as well as 26 copies of the ICED Clean Energy Handbook.

Our donor coordination activities involved extensive consultations with/assistance to:

▪ AFD, the French development agency, on its request that ICED II review loanproposals to Bank Mandiri

▪ International Finance Corporation/World Wildlife Fund on training needs assessmentand capacity building for OJK

▪ USAID’s Development Credit Authority in its credit guarantee facility negotiationswith Bank BRI.

Clean Energy Technology and Innovation Fund Activities The final version of the Fund’s Management Plan and Grants manual was submitted on December 23 and approved by USAID.

viii ICED II Quarter 1 Report, October 1 - December 31, 2015

The ICED II Pipeline as of December 31, 2015

ix ICED II Quarter 1 Report, October 1 - December 31, 2015

Ringkasan Eksekutif Pada period Oktober sampai dengan Desember 2015, kami melihat peningkatan permintaan

terhadap layanan ICED II, khususnya dari unit-unit pemerintah daerah dan pemerintah pusat,

membutuhkan lebih banyak bantuan teknis, kolaborasi dan layanan pengembangan kapasitas dari

proyek ini. Dengan demikian, selain daripada penyediaan bantuan kebijakan, proyek dan teknis,

kwartal ini juga dapat dikarakterisasikan sebagai kegiatan-kegiatan perencanaan untuk menjamin

ICED II menyediakan bantuan sebaik mungkin di dalam sumber dayanya yang terbatas.

Bantuan kami mendapatkan pengakuan formal dari PLN pada tanggal 25 November 2015, ketika

Direktur Perencanaan Korporat PLN dan Direktur Kantor Lingkungan Hidup Indonesia/USAID

menandatangani nota kesepahaman mengenai bantuan teknis dan kerjasama ICED II dengan utilitas

nasional ini. Nota kesepahaman yang serupa diperkirakan akan ditandatangani oleh Kementerian

Energi dan Sumber Daya Mineral (ESDM) dan USAID, dan BAPPENAS dan USAID di pertengahan

Januari 2016.

Aktivitas Yang Bersifat Memampukan Kami membantu beberapa program nasional di bidang perubahan iklim dan energi bersih pada

kuartal ini dan dilanjutkan untuk mengenali potensi dukungan kepada beberapa inisiatif sektor

energi nasional baru. Aktivitas kami dengan BAPPENAS seperti:

• Membantu di dalam revisi pedoman pemerintah daerah yang digunakan untuk menghitung

penurunan emisi Gas Rumah Kacanya (GRK), dan digunakan juga untuk melaporkan

dokumentasi dari pemantauan, evaluasi dan pelaporan terhadap penurunan emisi dari

sektor energi ini.

• Membantu di dalam revisi modul pelatihan Business-as-usual baseline (garis dasar pada

kondisi bisnis-seperti-biasa) untuk pejabat-pejabat sektor energi di tingkat provinsi.

• Melatih topik pemantauan, evaluasi, dan pelaporan untuk sektor energi di Sulawesi

Tenggara dan Kalimantan Utara.

ICED II membantu ESDM dengan:

• Memfasilitasi di dalam proses penyusunan Rencana Umum Energi Nasional (RUEN)

• Memberikan masukan kepada Satgas Percepatan Pengembangan Energi Baru Terbarukan

(P2EBT) di saat inkubasi Dana Energi Nasional yang baru, kepada Pusat Unggulan (Center of

Excellence) Energi Bersih, dan kepada Program Energi Bersih untuk Elektrifikasi Pedesaan.

• Memberikan masukan kepada Direktorat Energi Baru dan Terbarukan dan Konservasi Energi

di dalam revisi regulasi pemanfaatan energi matahari dan regulasi pembelian tenaga listrik.

• Memberi bantuan kepada Unit Pelaksana Program Pembangunan Ketenagalistrikan Nasional

(UP3KN) dalam penyusunan sebuah strategi untuk mencapai target 25% porsi energi

terbarukan di dalam program 35.000 MW kapasitas tambahan yang dijadwalkan untuk

tahun 2020.

Bagi Otoritas Jasa Keuangan (OJK) Indonesia, ICED II telah menyelesaikan

• Pedoman OJK untuk Memahami Ijin-Ijin di bidang Energi Bersih – Buku Saku bagi Lembaga

Jasa Keuangan.

x ICED II Quarter 1 Report, October 1 - December 31, 2015

ICED II juga telah memulai menggulirkan inisiatif Perencanaan untuk Akses Energi (PLEA) dengan

fokus ke Nias. Pada kuartal ini kami mengembangkan metodologinya, mengumpulkan dan mengolah

data, dan menyiapkan software analitis bagi inisiatif ini. Bappeda, Distamben dan PLN Wilayah

Sumatra Utara telah menunjukan minat mereka untuk berpartisipasi di dalam PLEA dan telah

menunjuk staf mereka yang akan menjadi mitra kerja dari tim ICED II.

Aktivitas Mobilisasi Investasi ICED II telah berkonsultasi dengan 19 mitra sektor swasta yang terlibat di dalam pengembangan

proyek energi bersih di dalam kuartal ini, dan telah menyelesaikan 3 memorandum proyek.

Distribusi Proyek Energi Bersih dari ICED II sampai dengan akhir Desember 2015 meliputi:

• 143 proyek energi bersih

• Membangkitkan kapasitas: setara dengan 1.088 MW

• Investasi sebesar $2.240 juta

• Emisi sebesar 4.479.498 ton CO2e berkurang per tahunnya

• Memberikan akses energi bersih kepada 11.860.673 penduduk.

Selain daripada itu, ICED II telah melatih lebih dari 413 orang di dalam beragam pelatihan teknis, dan

memprofil 31 lembaga pelatihan Indonesia yang melakukan pengembangan kapasitas di bidang

energi bersih.

Aktivitas Penjangkauan dan Koordinasi Staf ICED II telah menghadiri 19 acara yang diselenggarakan oleh pemerintah, sektor swasta dan

organisasi donor di dalam kuartal ini. Selain daripada itu, website ICED menerima 1.556 kunjungan

unik (3.237 page views) dari lebih dari 10 negara. Proyek ini telah mendistribusikan lebih dari 75

lembar fakta proyek, 50 rangkuman pencapaian dan 35 kisah sukses dan juga 26 salinan ICED Clean

Energy Handbook (Buku Saku Energi Bersih ICED).

Aktivitas koordinasi lembaga donor kami melibatkan konsultasi ekstensif dengan/bantuan kepada:

• AFD, badan pembangunan Perancis, meminta ICED II untuk memeriksa proposal pinjaman

kepada Bank Mandiri.

• International Finance Corporation/World Wildlife Fund mengenai penilaian kebutuhan

pelatihan dan pengembangan kapasitas bagi OJK.

• USAID’s Development Credit Authority di dalam negosiasi fasilitas jaminan kreditnya dengan

Bank BRI.

Aktivitas Dana Inovasi an Teknologi Energi Bersih Panduan Hibah dan Rencana Manajemen Dana versi akhir telah dimasukkan pada tanggal 23

Desember dan telah mendapat persetujuan dari USAID.

xi ICED II Quarter 1 Report, October 1 - December 31, 2015

The ICED II Pipeline as of December 31, 2015

1 ICED II Quarter 1 Report, October 1 - December 31, 2015

1 Introduction

1.1 About the ICED II Project

The Indonesia Clean Energy Development II Project (ICED II) is a five-year (May 2015 – May 2020) program funded by the US Agency for International Development. ICED II is designed to assist the Government of Indonesia (GOI) in establishing an effective policy, regulatory and incentive environment for low-emission growth in the energy sector, while simultaneously attracting public and private sector investment in clean energy development. In recognition of USAID/Indonesia’s increased emphasis on science, technology, and innovation, ICED II is also expected to support technological and human capacity advancements in the clean energy space.

ICED II builds on the progress made and lessons learned under USAID/Indonesia’s Clean Energy Development (CED) initiative. CED – which falls under the Agency’s Country Development Cooperation Strategy (CDCS) for 2010-2014 – comprises four projects: 1) Indonesia Clean Energy Development (ICED) Project, 2) Capacity for Indonesian Reduction of Carbon in Land Use and Energy (CIRCLE) Project, 3) U.S.-Indonesia Geothermal Education Capacity Building Program, and 4) the Energy Utility Partnership Program (EUPP) between PLN and Hawai’i Electric Company.

ICED II is viewed as a “follow on” project to ICED, which ended on February 17, 2015. ICED II gives special attention to the status of ICED interventions at the project’s end (as documented in the ICED final report), the changes that have occurred both within GOI partners and the clean energy market, re-engaging with ICED public and private sector partners, and positioning ICED II to take advantage of ICED’s momentum toward achieving ICED II’s objectives and target results.

ICED II directly supports USAID/Indonesia’s Development Objective (DO) 3 of the 2014-2018 CDCS: “Global Development Priorities of Mutual Interest Advanced.” The ICED II Project’s objective and associated tasks are linked to DO3’s Intermediate Result (IR) 3.3: “Climate Change Mitigation and Resilience to Support a Green Economy Strengthened,” and Sub-IR 3.3.1: “Foundation for Low Carbon Energy System Strengthened.”

The overall goal of ICED II is to strengthen the foundation for a low-carbon energy system in Indonesia. Its components contribute to the GOI’s established targets for enhancing access/security within the sector, while concurrently supporting national efforts to curb greenhouse gas (GHG) emissions.

At its completion, ICED II must achieve the following high-level results:

1. At least 4.5 million tons of GHG emissions, estimated in metric tons of CO2e,reduced, sequestered, and/or avoided as a result of US Government (USG) assistance

2. At least US $800 million of investment mobilized from private and public sources for

2 ICED II Quarter 1 Report, October 1 - December 31, 2015

climate change mitigation as supported by USG assistance

3. At least an additional 5 million people with access to clean energy

4. At least 20 institutions with improved capacity to address climate change issues as a result of USG assistance

5. At least 20 laws, policies, strategies, plans, or regulations addressing climate change mitigation officially proposed, adopted, or implemented as a result of USG assistance.

In addition, ICED II has a number of component- (or task-) level objectives and “targeted results.” These are listed in Section 2 of the Annual Work Plan. Note that the “high level” and “targeted” results are described in more detail in the ICED II Monitoring and Evaluation (M&E) Plan. Each year’s expected contributions to the life-of-project results are contained in the Annual Work Plan. ICED II is implemented through three parallel and complementary components:

▪ Component 1: Improve the enabling environment for rapid co-investment in clean energy

▪ Component 2: Accelerate the mobilization of private and public sector co-investment in clean energy

▪ Component 3: Outreach on USAID and USG inter-agency activities in Indonesia’s energy sector.

ICED II also operates a Clean Energy Technology and Innovation Fund that is used to augment project interventions. The purpose of the Innovation Fund is to be a flexible means, where necessary and/or useful to the project’s objectives, to encourage participation and/or collaboration of private sector and local entities toward the achievement of ICED II’s components and tasks. ICED provides a combination of short- and long-term technical assistance to the Ministry of Energy and Mineral Resources, PLN (the national utility), and selected provincial and regency (kabupaten) governments, BAPPENAS (the national planning agency), OJK (the Financial Services Authority), other sectoral ministries and authorities, and the private sector. ICED uses both subcontracts and grants under contract to implement activities, take advantage of unforeseen opportunities, and provide additional support that would be more effectively or efficiently implemented by local or international institutions (e.g., universities, research institutes, industry associations, professional societies).

3 ICED II Quarter 1 Report, October 1 - December 31, 2015

1.2 About this Report

This report covers the three-month period from October 1, 2015 to December 31, 2015 (Quarter 1 of the US Government’s fiscal year). Section 2 describes ICED II’s activities for the quarter by component; its main accomplishments are summarized in Section 2.5. Section 3 shows the progress ICED II has made toward achieving its target results, which are measured by 11 performance indicators. The project’s plans for next quarter are laid out in Section 4, while the main problems/ roadblocks it has faced and proposed solutions are presented in Section 5. Section 6 contains the success stories prepared this quarter. The annexes provide quantitative data on ICED II’s technical assistance for the quarter (Annex A), reference information for performance indicators and results (Annex B), and the ICED II Pipeline of projects (Annex C).

4 ICED II Quarter 1 Report, October 1 - December 31, 2015

2 Summary of Key Activities and Achievements

2.1 Component 1: Improve the Enabling Environment for Rapid Co-Investment in Clean Energy

Task 1.1: Increase Capacity for Low Emissions Energy Sector Planning and Implementation Support to BAPPENAS. ICED II assisted the Secretariat of the National and Provincial Action Plans for the Mitigation of Greenhouse Gases (RAN/RAD-GRK Secretariat) at BAPPENAS’ Environmental Directorate in evaluating the nationwide implementation of the current RAD-GRK and preparing for the next round of revising the provincial RAD-GRK. Our contributions included: 1) preparing general guidelines for monitoring, evaluating and reporting (MER) on RAD-GRK in the energy sector, 2) preparing technical guidelines for calculating the results of GHG emission reduction activities in the energy sector, 3) revising the training module on the business-as-usual (BAU) baseline for the energy sector, and 4) giving a presentation on MER in the energy sector at a capacity building event for BAPPENAS and GIZ. Support to the Planning Bureau of the Ministry of Energy and Mineral Resources (MEMR). ICED II continued to assist the Bureau in revising the Draft National Plan for Energy (RUEN) by 1) providing expert services, 2) providing facilitators for nine sub-teams on the household sector, transportation sector, industrial sector, commercial and other sectors, environment and GHG emissions, electricity and new renewable energy (NRE), energy as development capital, technology and local content, and model synchronization, and 3) co-sponsoring a focus group discussion on renewable energy resource development. Support to the Directorate of Various Energy of the MEMR.1 This quarter, ICED II began assisting this Directorate, which is within the Directorate General of New and Renewable Energy and Energy Conservation (DGNREEC), in revising MEMR Minister Regulation 17/2013 on electricity purchases from solar photovoltaic power generation. Our work encompasses researching the generation cost of all grid systems in Indonesia and the load characteristics of local grids to assess the appropriate PV penetration level for each location. Support to the Task Force on the Acceleration of New and Renewable Energy (P2EBT) of MEMR. ICED II continued supporting P2EBT on the development of three new national initiatives: 1) the Indonesia Energy Security Fund (Dana Ketahanan Energi), 2) the Center of Excellence for Clean Energy (CoE Indonesia), and 3) the Clean Energy for Rural Electrification (PETDes) Program.

1 The Various Energy Directorate encompasses solar, wind, hydro, and ocean energy.

5 ICED II Quarter 1 Report, October 1 - December 31, 2015

During the quarter, ICED II provided consultation services to the P2EBT team on the Indonesia Energy Security Fund, in which collects levies on fossil fuel usage (a fossil fuel depletion premium) that will be allocated to the state budget and used to support fossil fuel exploration and clean energy development. Our advice to P2EBT included: 1) addressing the enabling environment factors in clean energy investment in the Fund's implementation, 2) stressing the importance of cultivating clean energy projects (the demand side of the financial market), based on ICED II’s observation on the over-liquidity of the Fund, which makes it more difficult for financiers to disburse monies due to the small number of viable clean energy projects in the Indonesian market, and 3) lessons learned from PIP (the Indonesia Investment Agency), a similar public funding mechanism whose funds disbursement has been disappointing due to regulatory hurdles. Based on a request from USAID and USDOE, ICED II began exploring the possibility of supporting the development of the CoE Indonesia, which is intended to be a hub incorporating national efforts in clean energy development as well as a channel for regional and international support. It will address technology development and innovation, as well as facilitate investment and business participation in accelerating clean energy development. Because the Center and ICED have similar objectives and activities, ICED II shared information on its project structure, policy and project-level activities, and insights on the Indonesia clean energy sector. PETDes aims to provide electricity access to remote villages using off-grid power from indigenous renewable energy sources. ICED II’s inputs to the PETDes concept design concerned: 1) its role and scope relative to other rural electrification programs such as LisDes and Desa Mandiri Energi in MEMR as well as infrastructure programs in other ministries, 2) assessments of sub-national data availability and quality, and 3) insights from PLEA Nias (an ICED II initiative). Support to the Task Force on the Implementation of the National Electricity Development Program (UP3KN) of MEMR. ICED II has been supporting UP3KN in developing a strategy for achieving 25% of the 35,000 MW of additional generating capacity mandated by 2020. Our inputs included: 1) the potentially significant contribution of solar PV systems, including in hybrid configuration, taking into account the five-year timeframe and economics of the system, and 2) the institutional and regulatory framework to support the process, which includes changes in procurement processes and implications for independent power producer (IPP) contracts. Support to Regional Governments. ICED II responded to requests from Southeast Sulawesi and North Kalimantan provinces this quarter for technical assistance on the monitoring, evaluation and reporting of GHG emission reductions in the provinces. We also began rolling out ICED II’s Planning for Energy Access (PLEA) initiative, which focuses on Nias Island. ICED II developed a methodology, collected and processed data, and prepared analysis software. The Bappeda, Distamben and PLN Wilayah of North Sumatra expressed interest in participating and appointed staff members to serve as counterparts to the ICED II team.

6 ICED II Quarter 1 Report, October 1 - December 31, 2015

Utility Resource Planning. Several existing ICED II activities are expected to contribute towards improved resource planning in Indonesia. The PLEA Nias initiative, for example, is expected to support a national clean energy electrification program, which includes PETDes and rural electrification in North Sumatra. ICED II is also assisting PLN and UP3KN in developing a strategy to achieve the government’s target of a 25% share for renewable energy in the 35 GW electricity capacity expansion program over the period 2015-2019/20. The 25% contribution is also expected to be applied in PLN’s RUPTL, which covers a 10-year timeframe. In a presentation to UP3KN, ICED II recommended that solar PV be considered as a high-priority renewable resource given the short project development timeframe (1-2 years) and other Asian countries’ ability to add gigawatts of solar PV annually.

Task 1.2: Policy and Regulatory Reform Support for Clean Energy Project Development Specific Incentives Development. ICED II provided input to P2EBT on the development of the concept note for the Indonesia Energy Security Fund. We also provided inputs to the MEMR’s Directorate of Various Energy on revising MEMR Minister Regulation 17/2013 on the Feed-in Tariff (FiT) from solar photovoltaic power generation. Energy Sector Dynamics Support. Indonesia is playing an active role in a new international initiative called “Mission Innovation,” which was launched in Paris on November 30, 2015, by the governments of 20 countries, including Indonesia and the United States. Mission Innovation aims to reinvigorate and accelerate global clean energy innovation in order to make clean energy widely affordable. P2EBT has been advocating for a more intensive alignment with Mission Innovation in accelerating clean energy development in Indonesia. ICED II is scoping a strategy and its potential support to P2EBT, taking into account our existing work plan and priorities. Given the current historic low price of oil, as well as declining natural gas and coal prices, PLN has become more reluctant to purchase electricity from renewable energy IPPs with fixed purchase prices (based on MEMR feed-in tariffs), which are higher than PLN’s current average generation costs. The new mini-hydropower FiT for green field projects, as well as for those with signed PPAs, is considered to be above PLN’s average system costs (by region). Without PLN being able to recover this in the annual subsidy, it issued a letter to the Ministry of Energy, Ministry of Finance, and Ministry of State Owned Enterprises detailing the expected losses PLN would incur if it signed PPAs at the new FiT. UP3KN presented to ICED II a proposed reorganization of the power sector that would provide for a new entity to serve as “off-taker” for renewable energy IPPs, so that the this entity would receive a government subsidy (see the figure below).

7 ICED II Quarter 1 Report, October 1 - December 31, 2015

Support to PLN on GOI Policy Implementation.2 ICED II provided inputs to PLN to modify the current standard power purchase agreement (PPA) on hydro in response to the new MEMR Regulation 19/2015 on the FiT for mini-hydro. We also held a series of discussions with PLN and UP3KN on the possibility of ICED II support for developing the strategy to achieve the GOI’s target of a 25% renewable energy share in the 35 GW electricity capacity expansion program. During the quarter, ICED II scoped out its activities in support of PLN’s implementation of MEMR Regulation 19/2015 on the FiT for mini-hydro and MEMR Minister Regulation 17/2014 on Purchases of Electricity from Geothermal Power Plants by PT PLN.

Support to GOI Sustainable Finance Initiatives. ICED II continued to support Indonesia’s Financial Services Authority (OJK) in implementing the Indonesia Sustainable Finance Roadmap 2013-2019. The initiative aims to contribute to a change in the current national economic development outlook, from a perspective on near-term profit to one of longer-term investment through sustainable finance.

2 ICED II’s scope of work states that it is to provide assistance on two issues in this area: 1) the purchase of excess power from third-party generators and 2) the development and implementation of best practices for renewable energy, such as structuring and executing renewable IPP transactions, developing standard bankable PPAs for small-scale renewable power producers, and developing a standardized application procedure for renewable energy developers that could be implemented by PLN regional units and local governments.

Subsidiary PLN as Off-Taker for New and Renewable Energy

Enterprise Off-Taker for New and Renewable Energy

(subsidiary of PLN )

Mini and Micro Hydropower

PT PLN (Persero)

Ministry of Finance

Sales of electric power corresponding set tariff

(e.g., FIT)

Electricity subsidy allocation for RE

Pass through of subsidy allocation for RE

Sales of electric power in accordance tariff specified by the Director General of Electricity

Geothermal Solar PV WindNew Energy (e.g.

Coal Slurry

Payment of electricity subsidies ( including subsidies for RE)

Ministry of Energy and Mineral Resources

8 ICED II Quarter 1 Report, October 1 - December 31, 2015

We also advised OJK and Bank Indonesia (BI) on hydropower loans. BI’s data on loan balances during the second half of 2015 show an increasing level of non-performing loans, including those for hydro projects in North Sumatra. In a meeting with OJK and BI North Sumatra, ICED II was asked to provide insights on hydro projects in the province. We found that most project delays are the result of poor planning and technical studies, which lead to delays in commissioning and revenue realization. BI has learned from interviews with hydro developers and lenders that 1) poor-quality technical studies lead to non-performing loans, 2) banks are restructuring their hydro pipelines to reduce non-performance, and 3) many hydro projects are waiting for PLN to sign their PPAs (lenders that have approved financing for hydro projects often cancel their loan offers due to the uncertainty surrounding the signing of a PPA). Each year, OJK holds international seminars to promote and advocate sustainable finance. In line with its 2016 theme of aligning OJK’s Sustainable Finance Roadmap with the Global Sustainable Development Goals, its November 23 International Seminarvon Sustainable Finance focused on clean energy, sustainable fisheries, green bonds and ASEAN collaboration. USAID/Indonesia’s Environment Director John Hansen was a speaker at the seminar. He discussed USAID’s support for the development of clean energy through ICED II. The seminar’s main conclusions were that: 1) OJK has been consistent in implementing the Roadmap (launched in 2014), 2) the Roadmap has been a focal point in leveraging private sector engagement in climate finance, and 3) OJK is determined to develop alternative funding through green bonds to support Indonesia’s climate change financing.

ICED II presented its Guideline for Understanding Environmental Permits in Clean Energy – Handbook for Financial Service Institutions at the seminar. It was introduced by Mulya Siregar, OJK Deputy Commissioner and Prof. Sang Nasri Awang, Ministry of Environment & Forestry Directorate of General Spatial Planning and Environmental Governance, who also wrote the book’s forewords. The guide covered: 1) regulations related to environmental permits and licensing, 2) environmental governance in Indonesia, 3) key aspects of environmental and social risk assessment (ESRA), and 4) using ESRA in financial institution loans or investment reviews. The Ministry of Environment and Forestry supported the development of this book by providing resource materials on environmental and forestry regulation. Two other books were launched at the seminar:

1) UNIDO’s Guideline for Energy Efficiency in Industrial Sectors and 2) GBIC’s Guideline for Green Buildings.

9 ICED II Quarter 1 Report, October 1 - December 31, 2015

John Hansen hands over the Handbook to

Muliaman Hadad, OJK Chairman

Another sustainable finance initiative is The First Mover Banks in Implementing Environmental & Social Governance (ESG) Principles, a project managed by the World Wildlife Fund (WWF). It assists banks in implementing ESG principles in their operations and adopting them in their standard operating procedures. It will

mount pilot programs with eight banks, which will begin with the signing of commitment letters with OJK. The program will focus on financing for the agriculture sector, in particular, the palm oil industry. ICED II has been asked to support the program in the clean energy area. In future, OJK’s sustainable finance initiatives will align with the United Nations’ Sustainable Development Goals (SDGs), so its activities will also need to be aligned with these goals. Indonesia’s SDG initiatives are managed by BAPPENAS under the Deputy Minister for Natural Resources and Environment. Because the United Nations Development Programme (UNDP) supports BAPPENAS’ SDG work, ICED met several times with these two organizations to determine the status of SDG activities in Indonesia. We concluded that: 1) BAPPENAS is still developing a platform for the adoption of SDGs in the existing national development plan (RPJMN 2015-2019), 2) the Office of the Vice President will lead SDG initiatives, 3) the President’s advisors are working to align Indonesia’s Nawa Cita with the SDG, 4) the UNDP is conducting an Indonesia country assessment related to SDG goals and targets, and 5) SDG activities are expected to come on line after March 2016. National and Regional Government Coordination Support. ICED II has been scoping the GOI’s plan to develop the Sub-National Energy Plan (RUED) as a follow up to its work on the national plan (RUEN). This activity has been postponed because the RUEN has not been launched yet.

2.2 Component 2: Accelerate the Mobilization of Private and Public Sector Co-Investment in Clean Energy

Task 2.1: Advanced Project Development and Investment Promotion Clean Energy Project Database Development. ICED II continued its work fromlast quarter to develop GIS spatial data for mini-hydro projects in Indonesia. To obtain additional data, ICED held a meeting with PLN SULSELRABAR (South, Southeast, and West Sulawesi), and discussed the need to generate watershed data and conduct spatial analyses on the watersheds for the Sangirhulu, Manipi, Situmulya, and Lebak Tundun mini-hydro projects for future ICED II technical assistance. Future cooperation in developing 20 kV geospatial

10 ICED II Quarter 1 Report, October 1 - December 31, 2015

mapping for South Sulawesi was also discussed.

ICED II also developed geospatial data to prepare for its Planning for Energy Access (PLEA) NIAS Initiative. Our activities this quarter included:

1. Identifying unelectrified villages in Nias based on PODES 2008 and 2014 data fromBPS and PLN Data 2012

2. Generating a 20 kV map of Nias based on PLN Data 2012 (this will need to beupdated further)

3. Exploring Network Planner software (internet-based) and HOMER software asrenewable energy analysis tools.

Project developers, banks and financial institutions also provided ICED II pre- and feasibility studies on hydro projects, which were incorporated in the project’s pipeline. A total of 7 projects (all hydro power) were added to the ICED II pipeline database during this quarter.

Technical Assistance to the Private Sector. ICED II assisted in reviewing a 16 hydro projects

sponsored by banks/financial institutions or project developers this quarter (see Table 1).

We also conducted site surveys and assessments in South Sulawesi, Banten and West

Sumatra.

Through meetings and consultations with hydro project developers, banks and investors, ICED II learned that its technical assistance is having a positive impact, as banks and financial institutions (e.g., BRI, BNI, IIF, Green Investment) and project developers are using our advice in making decisions on loan and related business risks. In addition, we learned that there seems to have been something of a shake-out of developers: those with no or only limited capital are exiting the business. This development may be related to PLN policy changes, where deposits must be made for place holding in obtaining a PPA. Thus, the development costs are such that only serious developers will move projects forward.

ICED II also met with several renewable energy project developers that are key players in the clean energy market, in order to determine their current issues. A list of consultations is included in Appendix A.

Technical Assistance to Banks and Financial Institutions. ICED II began providing technical assistance to [REDACTED] and [REDACTED] this quarter on project memos for hydro project proposals. We supported a loan syndication of [REDACTED] and [REDACTED], which are working on the [READACTED]. [REDACTED] wants to build a 90 MW hydro power plant in South Sulawesi; its estimated investment cost is [REDACTED].

ICED II also processed requests for technical assistance from [REDACTED]. They are in the process of signing non-disclosure agreements and would like support from our project. [REDACTED] also asked for support for its loan facility with [REDACTED]. Since its technical assistance ended in December 2015, [REDACTED] has encountered difficulties in conducting technical reviews of its hydro pipeline. AFD is thus seeking ICED II’s

11 ICED II Quarter 1 Report, October 1 - December 31, 2015

collaboration in supporting Bank Mandiri. (See Task 3.5 for more detail.) Technical Assistance to PLN. This quarter, ICED II facilitated the signing of an MoU between USAID (Environment Office Director) and PLN (Corporate Planning Director), after the draft MoU submitted to PLN last quarter was approved. The signing ceremony was held in PLN’s office on November 25, 2015. Following the signing, ICED II and PLN continued discussions on areas where our two organizations can work together. Some of the planned activities agreed so far are a 5-day training on solar PV and PV/diesel hybrid technology, development of hydropower feasibility study (including interconnection study) review, and support to PLN in reviewing applications for price renegotiations of geothermal IPP projects.

Table 1. Mini/Hydro Projects Assisted from October 1-December 31, 2015

[REDACTED] Facilitating Partial Loan Guarantees for Mini-Hydro Projects. After assisting USAID’s Development Credit Authority (DCA) in conducting due diligence on Bank BRI during FY 2016 Quarter 4, ICED II helped it in the negotiation process for the credit guarantee facility during Quarter 4. Negotiations were conducted from Washington, DC via emails and conference calls. Unfortunately, BRI failed to sign the guarantee agreement because it could not reach agreement on the utilization fee level. We met several times with the Australian Department of Foreign Assistance and Trade Australian (DFAT) to update its staff on this transaction and observed that 1) the fee negotiation was conducted a bit late, making it difficult to reach this critical decision in a limited time, 2) communications hurdles arose as negotiations were led from abroad, and 3) perceptions of values differed as BRI compared the DCA credit guarantee for renewable energy projects with the existing local credit guarantee for the agricultural sector. ICED II also learned of two other banks – Bank Syariah Mandiri and Bank Muamalat – that are interested In the DCA partial loan guarantee, and spoke to them about basic guarantee mechanisms. Before we engage with them further, we will align our efforts with DCA.

Task 2.2: Increased Local Capacity of Science, Technology, Innovation and Human Resources for Clean Energy Growth Renewable Energy and Energy Efficiency Technology Innovation. ICED II continued discussions with key stakeholders (national/subnational government entities, PLN and industry associations, hotels) to identify specific renewable energy and energy conservation technology innovations that will be crucial for the deployment of domestic clean energy capacity. Table 2 lists the meetings pursued in this quarter.

12 ICED II Quarter 1 Report, October 1 - December 31, 2015

Table 2. Meetings with Key Government Partners Regarding Renewable Energy Technology and

Energy Conservation Development

Institution Directorate/Department Date Topics

PLN Planning Bureau September 15 Finalized MoU

MEMR UP3KN October 15 Land acquisition for mini-hydro

MEMR R&D Agency October 26 Scoping of CoE activities

MEMR R&D Agency November 24 Scoping on possible cooperation in CoE

for clean eergy

GIZ, ADB Donors December 13 Coordination meetings on solar PV

regulation inputs

MEMR DGNREEC December 15 Minimum energy performance

standards and street lighting programs

MEMR UP3KN December 15 Mini-hydro development

MEMR DGNREEC December 22 Coordination of energy effiency

program

MEMR Clean Energy Center of Excellence (CoE). Following the USAID agreement to coordinate USG support on the CoE, which will be located in Bali, ICED II continued discussions and coordination with MEMR and donor partners (especially GIZ and ADB). In light of the GOI’s plan to hold a Bali Clean Energy Forum on February 11-12, ICED II and other donors have planned a workshop for MEMR on solar PV technology. This event will be used to mark the launch of both the CoE and the GOI’s 500 MW, [REDACTED] Solar PV Program. The GOI also plans to promulgate a revised regulation on PLN Electricity Purchases from Solar PV Power Generators prior to the event.

Training Programs Inventory. Last quarter, ICED II produced a list of 25 education/ training institutions; this quarter it added 6. Local/national institutions have been the focus to date. For a more detailed inventory, ICED II conducted a second round of research, which included specific topic areas of training and the types of participants each targets in the energy sector to find the best match for each ICED II training program. Once the inventory is final, we will update information on the training information offered by these institutions and place it on the project’s website. We have also begun collecting information on the training modules offered by MEMR’s training center and PLN’s Renewable Energy Academy as a basis for review.

Environmental and Social Risk Analysis in Clean Energy Training for Banks and Financial Institutions. As part of its support to OJK, ICED II conducted two batches of ESRA training for banks and financial institutions this quarter. Batch 8 batch was conducted in Bandung on October 5-8 and batch 9 in Medan on November 16-19. The latter training was the first time we held a site visit to a large hydro power plant, the Asahan I Hydro Electric Power Plant, with an installed capacity of 180 MW. While over 75% of the Bandung training participants surveyed were satisfied with the training and the materials provided, they found that a session given by the Ministry of Environment on PROPER and required environmental documents was too short. This was improved by developing a supporting module on the environmental documents, which was launched on November 23 as part of OJK’s International Sustainable Finance seminar.

13 ICED II Quarter 1 Report, October 1 - December 31, 2015

OJK plans to develop an advanced training program in order to create more standardized and institutionalized training. For that purpose, it will conduct a training needs assessment and develop training modules in the near future. To support it, to improve their training deliverables and ensure the sustainability of capacity building, ICED II began seeking potential collaborations with educational institutions to develop standardized training modules for ESRA training in clean energy. ICED II hired the Institute for Economic and Social Research at the University of Indonesia’s Faculty of Economics (LPEM-UI) this quarter to conduct ESRA training for banks. It has invited experts from LPEM-UI to become involved in the Medan training as guest speakers and facilitators. ICED II plans to work with the team preparing the modules and gradually hand over training arrangements and implementation to the institution, under OJK’s supervision. Seminar on Renewable Energy Utilization and Energy Use Technology in the Refrigeration and Air Conditioning Sector. On October 16, ICED II and ASHRAE held a one-day seminar at the International Indonesia Seafood and Meat Expo 2015 as part of ICED II’s scoping energy efficiency program in the industrial sector. DGNREEC’s Director of Energy Conservation and the Director of Machinery and Agriculture Equipment of the Ministry of Industries gave the opening remarks. The first panel session featured speakers on energy efficiency from ICED II and GIZ’s Green Chiller Program (HEAT). The second panel session’s speakers came from ASHRAE, the University of Indonesia, and OPCON Energy Systems; they discussed renewable energy and energy efficiency technology. The seminar attracted 101 participants from universities, the private sector, and government institutions. ICED II arranged for speakers, while ASHRAE and Expo Eo prepared the meeting package and other logistics. MER Assistance and Evaluations in 34 Provinces. ICED II co-sponsored a second training session on MER assistance and evaluation in Lombok on November 2-5, 2015. The training was designed for all 34 provinces’ RAD-GRK working groups, in an effort to facilitate their completion of MER calculations and reporting. We provided the main facilitators for the energy sector session and support for the provision of participant training kits. Two hundred nineteen people participated in the event. Technical Assistance in Data Verification/Analysis. BAPPENAS implemented a consultation process during 2015 to monitor and evaluate the actions local and national government bodies took from 2012 through 2014 to reduce GHG emissions. This activity involved extensive data collection, verification, and processing to compare the effects of various GHG reduction plans and to review the achievements cited. Data verification was limited to reports only; no field assessments were involved. Based on the findings of this process, BAPPENAS and various ministries revised the methodology used to plan and calculate GHG emissions from a number of sectors. The adjustments were incorporated in a revised guideline for provincial-level application in 2016. ICED II assisted BAPPENAS’ RAN/RAD-GRK Secretariat in this process for the energy sector.

14 ICED II Quarter 1 Report, October 1 - December 31, 2015

2.3 Component 3: Outreach on USAID and USG Inter-Agency Activities in Indonesia’s Energy Sector

Task 3.1: Assist an Annual Coordination Forum of USG Agencies Engaged in Indonesia’s Climate Change Mitigation and Clean Energy Activities In consultation with USAID, it was agreed that the USG Annual Coordination Forum would take place in Quarter 4 of FY 2016 (July-September 2016). In the meantime, ICED II offered to give a presentation to the USG Working Group on Energy (led by the State Department) at one of its regularly scheduled meetings.

Task 3.2: Develop a System to Document, Track and Monitor the Progress of Projects Assisted Under Previous USAID Clean Energy Programs and the ICED II Pipeline In December, the project completed an update of the ICED pipeline and migrated it to the ICED II pipeline; this involved verifying that a project is still active as well as it current status. In addition, 7 hydropower projects were added to the pipeline this quarter. When these projects begin operating, they would account for 136 MW of capacity.

Task 3.3: Manage, Improve and Expand the Clean Energy Website Developed by the ICED Project The upgrade of the ICED website (www.iced.or.id) was completed this quarter. This mainly involved improvements to the “back end” of the site to make updates and interactive maps easier to post. Updates were made on government regulations, the US Government’s announcement on grants from the Environment Office, and new issues the Minister of Energy raised regarding the proposed Energy Security Fund. ICED also featured the signing of the PLN-USAID memorandum of understanding. In addition, ICED II began to feature news items related to clean energy and low carbon development in Indonesia, such as the issuance of new regulations or power plant development milestones. Previously, the website only featured news related to ICED II achievements. From the site’s launch at the end of October through December 2015, it received 1,556 unique visits (3,237 page views) from more than 10 countries; most were from Indonesia and the United States.

15 ICED II Quarter 1 Report, October 1 - December 31, 2015

Task 3.4: Identify Areas of Collaboration with Other USAID Environment Programs and Develop Joint Initiatives No activity took place this quarter.

Task 3.5: Identify Areas of Collaboration with Other Donors/International Finance Institutions and Develop Joint Activities Donor Mapping in the Clean Energy Sector. In December, ICED II met with AFD, the French development agency, which had a loan facility dedicated to clean energy (both renewable energy and energy efficiency). The facility provided free technical reviews of loan proposals to Bank Mandiri, in addition to capacity building. After this facility closed in 2015, AFD approached ICED about providing these services, so Bank Mandiri can continue making clean energy loans. We also added a description of AFD’s work to our donor mapping database, along with information on the ADB, GIZ, and UNDP support to MEMR on the Center of Excellence in Bali. Donor Collaboration to Support OJK’s Sustainable Finance Initiatives. At the November 23, 2015 International Seminar on Sustainable Finance to Support Sustainable Development Goals, Indonesia’s Financial Services Authority (OJK) launched the Guideline for Understanding Environmental Permits in Clean Energy. Designed for banks and financial institutions, the guideline was developed by ICED II, with support from OJK and the Ministry of Environment and Forestry. The guideline was signed by Deputy Commissioner of Banking Supervision Mulia Siregar and given to the first eight banks in Indonesia that have committed to green financing. ICED II also collaborated with the IFC and World Wildlife Fund (WWF) to support OJK in organizing this seminar. Our work with the IFC included 1) a training needs assessment to improve OJK’s existing training programs and pilot programs on environmental and social risk assessment (ESRA, see Task 1.1 for more detail) and 2) a communications strategy for sustainable finance, at OJK’s request. Our work with WWF involved collaborating to optimize our two organizations’ support to banks. Training Needs Assessments. We assisted the IFC in conducting training need assessments of 10 banks/financial institutions and in developing a communication strategy for sustainable finance initiatives. IFC plans to procure subcontractors for this work, and ICED II helped it develop terms of reference, provided information on potential candidates, and shared insights on capacity building for banks.

Task 3.6:

16 ICED II Quarter 1 Report, October 1 - December 31, 2015

Support USAID and GOI Clean Energy Working Group Established under the CDCS BAPPENAS and USAID are slated to sign the US-Indonesia Assistance Agreement in mid-January 2016. The agreement concerns USAID’s technical assistance to BAPPENAS. The specific types of assistance ICED II will provide under the Agreement will be determined by the Clean Energy Working Group under the GOI’s technical committee, Tim Teknis). BAPPENAS held its first meeting of the Tim Teknis on October 19; it focused on administration. While BAPPENAS is to coordinate all Tim Teknis projects, not all of this committee’s members have been nominated (they will come from such agencies as MEMR’s DGs of Electricity, New and Renewable Energy and Energy Conservation, Energy Research and Development, Human Resources Development, and the Secretary General; the Ministries of Environment and Forestry, and Maritime; and OJK. It is anticipated that nominations will be final by January 15, at which point the Tim Teknis can begin making decisions. MEMR and USAID have also prepared a MoU on USAID’s support to several of the Ministry’s units. MEMR’s Planning Bureau will coordinate all ICED II activities with the MEMR under the MoU. It is now anticipated that this MoU will also be signed in mid-January.

17 ICED II Quarter 1 Report, October 1 - December 31, 2015

Task 3.7: Annual Renewable Energy Power Update (additional activity) No activity took place this quarter.

Task 3.8: Other ICED II Outreach Activity (additional activity) ICED II participated in several events this quarter, including USAID’s reception and exhibition, which was held on November 11 in Jakarta. The event showcased USAID/Indonesia’s projects to USAID Assistant Administrator Jonathan Stevers during his visit to Indonesia.

Bill Meade (ICED II) and John Hansen (USAID/Indonesia Director

of Environment) with Mr. Strevers (right)

The project featured prominently in OJK’s November 23 International Sustainable Finance Seminar, where the ICED II-developed Guideline for Understanding Environmental Permits was launched as part of OJK’s green lending model reference series. ICED II opened an exhibition desk where many seminar participants were exposed to ICED activities and its support to the Sustainable Finance Roadmap. Following the seminar, ICED website visits increased by more than 50%. In addition, ICED II was featured in several external events organized by other parties, as shown in Table 3.

Table 3. ICED II Participation in Local and International Events, Quarter 1, October - December 2015

Event Date Location ICED II

Participation

Organizer

Evaluation of RAD-GRK

in 17 Provinces

October 1-2 Jakarta Attended event MOHA Dit Regional

Development

Green Planning

Budgeting

October 1 Jakarta Attended event MoF & LCS-UKCCU

18 ICED II Quarter 1 Report, October 1 - December 31, 2015

Table 3. ICED II Participation in Local and International Events, Quarter 1, October - December 2015

Event Date Location ICED II

Participation

Organizer

Australia-Indonesia

Commercial Building

Collaboration

Workshop

October 6 Jakarta Attended event

and developed

six project ideas

Climate Works

Australia, with Jakarta

Property Institute, GBCI,

ITB, and ICLEI

FGD on RAN RAD-GRK

Review (Energy Sector)

October 6 Jakarta Attended event BAPPENAS

MER RAN-GRK

Finalization

October 15-17 Bogor Provided

speakers

MEMR, DGNREEC

Bank CEO Breakfast,

part of OJK+WWF

Sustainable Bank

Champion Program

October 16 Jakarta Attended event OJK + WWF

Focus group on

Technical Guidelines for

Room Air Conditioners

October 23-24 Bogor ICED’s COP

attended

MEMR’s Energy

Conservation Division

Focus group on

Renewable Energy and

Urban Sustainability

October 23 Jakarta Attended event Danish Embassy

Electricity Day –

Conference and

Exhibition

November 3-4 Jakarta Attended event MKI (Indonesia

Electricity Society)

Conference on

Decentralized PV-

Systems: Opportunities

and Developments in

Indonesia

November 3 Jakarta - Attended event Ekonid

Indonesia International

Infrastructure

Conference &

Exhibition (IIICE)

November 4-5 Jakarta - Attended event BKPM, Menko-Ekuin,

KADIN

RAD-GRK MER Update November 10 Bandung - Attended event MEMR, DGNREEC

USAID Partners’

Showcase and Assistant

Administrator Strevers

Reception

November 11 Jakarta - ICED exhibited its

activities &

publications

USAID/Indonesia

Roundtable on Women

and Sustainable Energy

Development

November 12 Jakarta - ICED II provided

speakers

Kopernik - IIEE

Indonesia Wind Forum

2015

November 17 Jakarta - ICED II’s DCOP was

a speaker, other

staff attended

WHyPGen

OJK International

Seminar on Sustainable

Finance

November 23 Jakarta Attended event

and exhibited

OJK

19 ICED II Quarter 1 Report, October 1 - December 31, 2015

Table 3. ICED II Participation in Local and International Events, Quarter 1, October - December 2015

Event Date Location ICED II

Participation

Organizer

ICED II project and

publications

Workshop on Life Cycle

Analysis Research

November 24 Jakarta Attended event ILCAN

4th National Energy

Efficiency Awards

November 24 Jakarta Attended event DG NREEC – MEMR

Focus Group on

Mobilizing Funding for

Climate Change

November 26 Jakarta Attended event BAPPENAS

2.4 Clean Energy Technology and Innovation Fund This quarter, ICED II resubmitted the second draft of Clean Energy Technology and Innovation Fund Management Plan and Grants Manual, after being revised based on USAID’s feedback.

2.5 Main Accomplishments Component 1: Improve the Enabling Environment for Rapid Co-Investment in Clean Energy ICED II’s main accomplishment for Component 1 was its significant substantive contributions and coordination on the development of the following publications:

▪ BAPPENAS General Guidelines for MER of RAD-GRK ▪ BAPPENAS Technical Guidelines on the Calculation of GHG Reduction in RAD-GRK

Implementation ▪ OJK Guideline for Understanding Environmental Permits in Clean Energy – Handbook

for Financial Services Institutions. Component 2: Accelerate the Mobilization of Private and Public Sector Co-Investment in Clean Energy The main accomplishments for this component were:

▪ 19 consultations with private sector partners involved in clean energy project development (see Annex A)

▪ 3 project memos developed and completed ▪ Over 413 people trained, of which 26% were female (Annex A).

20 ICED II Quarter 1 Report, October 1 - December 31, 2015

▪ 31 training institutions conducting clean energy capacity building were profiled.

The ICED II Clean Energy Project Pipeline as of the end of December 2015 included:

▪ 143 clean energy projects ▪ Generating capacity: equivalent of 1,088 MW ▪ Investment of $2,240 million ▪ 4,479,498 tons of CO2e emission reduced per year ▪ 11,860,673 persons with access to clean energy.

Table 4. ICED II Pipeline as of December 31, 2015

[REDACTED]

Component 3: Outreach on USAID and USG Inter-Agency Activities in Indonesia’s Energy Sector ICED II produced two success stories this quarter, one on the improved capacity of banks and financial institutions to conduct due diligence on clean energy projects, and another on the signing of the MoU between USAID and PLN on November 25. Additionally:

▪ More than 50 persons visited the ICED II information desk at OJK’s International Seminar on Sustainable Finance, November 23

▪ 75 copies of ICED II fact sheets were distributed ▪ 50 copies of ICED I achievement summaries were distributed ▪ 35 copies of ICED success stories were distributed ▪ 26 copies of the ICED Clean Energy Handbook were distributed.

Clean Energy Technology and Innovation Fund

ICED II resubmitted the second draft of Clean Energy Technology and Innovation Fund Management Plan on November 5 as well as the Grants Manual on November 13. The final version was submitted on December 23, 2015 and was approved by USAID.

21 ICED II Quarter 1 Report, October 1 - December 31, 2015

3 Performance Indicator Results against Targets

ICED Indicator 1: (GCC Indicator 4.8.7)

Tons of greenhouse gas (GHG) emissions reduced (avoided) as a result of USG assistance in energy, industry, urban, and/or transport sectors Units: Metric tons of CO2e reduced or avoided

Performance Indicator Values

Results Data FY 2015 FY 2016 Project To Date

(Accumulative)

Life of Project Total

Q1 Total

Target (Annual basis as of PMP) 100,000 250,000 350,000 4,500,000

Actual

Project related results

[REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED]

Subtotal 53,969 32,391 32,391 86,360

Programmatic related results

NA 0 0 0

Subtotal 0 0 0 0

Total Actual 53,969 32,391 86,360 140,329

To be included in this table, a project must have installed capacity that is operating, and thus is reducing emissions

ICED Indicator 2: (GCC Indicator 4.8.2-10)

Amount of investment mobilized (in USD) for climate change as supported by USG assistance

Unit: USD millions

Performance Indicator Values

Result Data FY 2015 FY 2016 Project To

Date (Accumulative)

Life of Project Total Q1 Total

Target 4.1 20 24.1

800

Actual

Private

Subtotal 0 0 0 0

Public

Subtotal 0 0 0 0

Total Actual 0 0 0 0

ICED Indicator 3: (GCC Indicator 4.4.1-31) Number of beneficiaries with improved energy services as a result of USG assistance Number of beneficiaries with improved energy services as a result of USG assistance

Unit: Number of people

22 ICED II Quarter 1 Report, October 1 - December 31, 2015

Performance Indicator Values

Result Data FY 2015 FY 2016 Project To

Date (Accumulative)

Project TD Q1 Total

Target 100,000 300,000 400,000

5,000,000

Actual

[REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED]

Total Actual 0 0 0 0

* This project is a captive project and not connected to the grid. The direct beneficiary in this case is the company and its workers. The number of workers has not yet been calculated.

ICED Indicator 4: (GCC Indicator 4.8.2-14)

Number of institutions with improved capacity to address climate change issues as a results of USF assistance

Unit: Number of Institution

Performance Indicator Values

Results Data FY 2015 FY 2016 Project To

Date (Accumulative)

Life of Project Total Q1 Total

Target 3 6 9

25

Actual

Total Actual 0 0 0 0

ICED Indicator 5: (GCC Indicator 4.8.2-28) Number of laws, policies, strategies, plans, or regulations addressing climate change mitigation officially proposed, adopted, or implemented as a result of USG assistance

Unit: Individual laws, policies, strategies, plan, or regulations

Performance Indicator Values

Results Data FY 2015

FY 2016 Project To Date

(Accumulative) Project TD

Q1 Total

Target 0 5 5

20

Actual

[REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED]

Total Actual 0 4 4 4

ICED Indicator 6: (GCC Indicator 4.8.2-32)

Clean energy generation capacity installed or rehabilitated as a result of USG assistance

Unit: Megawatt (MW)

Performance Indicator Values

Results Data FY2015

FY 2016 Project To Date

(Accumulative) Project TD

Q1 Total

Target 3 10 12.05 400

23 ICED II Quarter 1 Report, October 1 - December 31, 2015

Actual

Project related results

[REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED]

Subtotal 2.05 3 3 5.05

Program related results

Subtotal 0 0 0 0

Total Actual 2.05 3 3 5.05

ICED Indicator 7: (GCC Indicator GNDR-3) Proportion of females who report increased self-efficacy at the conclusion of USG supported training/programming

Unit: Percentage of female (%)

Performance Indicator Values

Results Data FY 2015

FY 2016 Project To Date

(Accumulative) Project TD

Q1 Total

Target 70% 70% 70% 70%

Actual

NA NA NA NA

Total Actual 0 0 0 0 0

Note: This indicator has not been implemented to date.

ICED Indicator 8: (GCC Indicator 4.8.2-33)

Clean energy generation capacity supported by USG assistance that has achieved financial closure

Unit: Megawatts (MW)

Performance Indicator Values

Results Data FY 2015

FY 2016 Project To Date

(Accumulative) Project TD

Q1 Total

Target 0 182.4 182.4

400

Actual

Project related result

Subtotal 0 0 0 0

Programmatic related result

Subtotal 0 0 0

Total Actual 0 0 0 0

24 ICED II Quarter 1 Report, October 1 - December 31, 2015

ICED Indicator 9: (GCC Indicator 4.8.2-34) Projected greenhouse gas (GHG) emissions reduced or avoided through 2030 from adopted laws, policies, regulations, or technologies related to clean energy as supported by USG assistance

Units: Million of metric tons of CO2e reduced or avoided

Performance Indicator Values

Results Data FY 2015

FY 2016 Project To Date

(Accumulative) Project TD

Q1 Total

Target 80,000 900,000 980,000

27,000,000

Actual

Project related result

[REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED]

Subtotal actual* 1,942,882 0 0 1,942,882

Programmatic related result

Subtotal actual

Total Actual 1,942,882 0 0 0 1,942,882

Note: * – From ICED I. ICED II is contractually required to monitor the results of ICED I supported projects. To be included in this table, a project must have installed capacity that is operating, and thus is reducing emissions. For programmatic related results are taken once a policy/program is adopted or implemented.

ICED Indicator 10: (GCC Indicator 4.8.2-6)

Number of people receiving training in global climate change as a result of USG assistance

Unit: Number of people

Performance Indicator Values

Results Data End of Year 1

FY 2016 Project To Date

(Accumulative) Project TD Q1 Total

Target 100 300 400

5,000

Actual

[REDACTED]

[REDACTED] [REDACTED]

Total Actual 296** 413 413

*the number are still waiting for data verification and will be updated on the next quarter. **the number has been adjusted from the previous QPR (Q4 FY 2016) following the re-definition of ICED assistance in form of training/capacity building to include ICED support as trainers provision in partners’ training event.

25 ICED II Quarter 1 Report, October 1 - December 31, 2015

ICED Indicator 11: (GCC Indicator 4.8.2-31)

Expected lifetime energy savings from energy efficiency or energy conservation, as a result of USG assistance

Unit: Gigajoules (GJ)

Performance Indicator Values

Result data FY 2015

FY 2016 Project To Date

(Accumulative) Project TD

Q1 Total

Target 56,000 168,000 224,000

2,800,000

Actual

Project related result

[REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED]

Subtotal 702,019 0 0 702,019

Programmatic related result

Subtotal - 0

Total Actual 702,019 0 0 702,019

Note: ICED II is contractually required to monitor the results of ICED I supported projects To be included in this table, a project must have installed capacity that is operating, and thus is reducing emissions

26 ICED II Quarter 1 Report, October 1 - December 31, 2015

4 Plans for Next Quarter

ICED II has planned the following actions for the quarter beginning on January 1, 2016 to March 31, 2016.

4.1 Component 1: Improve the Enabling Environment for Rapid Co-Investment in Clean Energy Task 1.1: Increase Capacity for Low Emissions Energy Sector Planning and Implementation Support to BAPPENAS. ICED II will continue to support BAPPENAS’s RAN/RAD-GRK Secretariat during the revision of the provincial RAD-GRK. Our assistance will focus more on substance while reducing our involvement in administrative matters of the Secretariat, as a new Energy Liaison Officer has now been hired. The RAN/RAD-GRK Secretariat’s work plan for 2016 is under development. In addition, once RUEN is formally in effect, a new form of assistance will be needed in 2016 to start the RUED preparation process. While RAN/RAD-GRK is under the Directorate of Environment, the RUED process will be under the Directorate of Energy, Mineral and Mining Resources, both of which are under the Deputy of Environment and Natural Resources of BAPPENAS.

Support to Local Governments. ICED II will continue to support provincial governments on the preparation and implementation of RAD-GRK revisions. Technical assistance in electrification planning will be implemented through PLEA Nias, and we are exploring the North Sumatra government’s request for our collaboration on a possible extension of applying the PLEA methodology to other areas of North Sumatra.

Integrated Resource Planning: ICED II’s PLEA initiative in North Sumatra initially focused on Nias Island. We will continue to refine the initiative’s methodology and expand the database on Nias to include villages without access to electricity, clean energy resources potential, as well as economic and financial data. Software such as GIS, LEAP, Network Planner, and HOMER will be deployed to support the analysis. A focus group discussion will be arranged to communicate ICED II’s approach and data analysis results, as well as to obtain feedback from key local stakeholders. Support for RUED Preparation. ICED II will initiate a focus group discussion with MEMR (Data and Information Center, Training Center, Planning Bureau, and DGNREEC), BAPPENAS and other energy planning stakeholders on preparations for the RUED development process, while RUEN finalization is underway. Support to DGNREEC on Solar PV Feed-in Tariff Regulation. We will support the DGNREEC’s Various Energy Directorate in conceptualizing a new regulation for PLN’s purchases of

27 ICED II Quarter 1 Report, October 1 - December 31, 2015

power from solar PV projects. This new regulation will replace PerMen 17/2013. Support to UP3KN on Strategy for Achieving 25% from Renewable Energy Resources and Unversal Access to Electricity. ICED II will respond to UP3KN request to support the legal/regulatory anlaysis of the proposal to create a new PLN subsidiary with the responsibilities for RE targets and micro-utilities operating in unserved areas.

Task 1.2: Policy and Regulatory Reform Support for Clean Energy Project Development

Specific Incentives Development. ICED II will continue to provide inputs to P2EBT and MEMR for further elaboration of the Energy Security Fund (DKE) and participate in preparations for implementation. Energy Sector Dynamics Support. We will continue to provide inputs to P2EBT on the design of the institutional and regulatory frameworks for the Indonesia CoE and PETDes. We will explore required adjustments to the framework to support the 25% target of clean energy’s share in the 35 GW Program. Support to PLN and DGNREEC on Power Purchases from Renewable Energy. A series of workshops and meetings are planned with several PLN and MEMR units, and PLN regional offices to discuss ICED II’s support on programs related to renewable energy power purchases. An immediate priority will be on singing PPAs with mini hydropower projects under MEMR Regulation #19, 2015 and price renegotiation of geothermal IPPs for PLN under MEMR Regulation #17, 2014. Support to OJK’s Sustainable Finance Program. We will update the list of policies and regulations applicable to renewable energy projects, and make other preparations to continue training for banks. ICED II plans to explore possible collaboration with WWF on its First Mover Banks in Implementing Environmental & Social Governance Principles initiative. National and Regional Government Coordination Support. ICED II will contact the North Sumatra Government on the upcoming national process to review RAD-GRK, RUED and PLEA. Our work will include revisiting the current RAD-GRK and draft RUED, and holding follow-up discussions on the scope and terms of collaboration with potential partners.

28 ICED II Quarter 1 Report, October 1 - December 31, 2015

4.2 Component 2: Accelerate the Mobilization of Private and Public Sector Co-Investment in Clean Energy

Task 2.1: Advanced Project Development and Investment Promotion Clean Energy Project Database Development. We will review the structure and content of the ICED II Clean Energy Project Database and engage a programmer to make the necessary changes.

Technical Assistance to the Private Sector. ICED II plans to continue providing technical assistance on hydropower and solar PV projects to banks, project developers and project investors. Assistance to other types of renewable energy projects will be “on demand,” based on opportunities presented through our main private sector partners. Technical Assistance to PLN. ICED will be initiating a number of technical assistance activities with PLN next quarter. The proposed areas of support during the next quarter include solar PV and PV diesel training, grid connected solar PV penetration analysis, and geothermal price renegotiations. Technical Assistance to MEMR. While awaiting the signing of the MoU with MEMR, we expect to begin supporting MEMR through UP3KN in responding to concerns regarding the limited number of qualified consultants to perform interconnection analysis and studies. ICED II will begin developing the material and program agenda for a training workshop for consultants on inbterconnecting renewable energy projects to the PLN 20kV distribution system.

Task 2.2: Increased Local Capacity of Science, Technology, Innovation and Human Resource for Clean Energy Growth Training Institution Inventory. ICED II will continue to update this inventory, which also includes renewable energy and energy effiency training and education programs given abroad that Indonesians are eligible to attend.

Data Compilation from ICED Energy Efficiency Projects. ICED II will continue compiling information from ICED-supported energy efficiency projects and proposals for scaling up projects. Examples include street lighting and energy efficiency in hotels, government buildings and schools.

Input to MEMR Clean Energy Center of Excellence. Based on a request from USAID and USDOE, we will provide limited advisory support to the ongoing development of the Center of Excellence (CoE) in Bali. ICED II will map its existing and planned (based on the ICED II

29 ICED II Quarter 1 Report, October 1 - December 31, 2015

Year 2 Annual Work Plan) activities against the proposed scope of services of the CoE. This support is being provided through the MEMR Center for Research and Development (BADAN LITBANG) as the focal point for the CoE. ICED II plans to participate as an exhibitor and organizer of solar PV workshop at the Bali Clean Energy Forum on February 11-12, 2016.

Training Workshop on Renewable Energy Sectors. Next quarter, ICED II will organize several training workshops, as shown at the Table 6. Table 5 shows training slated with PLN, although dates have not yet been confirmed. Table 6. Training Workshops Slated for Next Quarter (see Table 5 for additional training)

Date Training/Workshop Title Location Partners

January 20 Solar PV and Hybrid System Technology Jakarta Human Resources

Development Agency,

MEMR

January

25-29

Solar PV and Solar Hybrid: Technical Potential

Assessments, Planning, Operations, Best Practices

(training for PLN)

Bali PLN EBT and Planning

Division, Wilayah,

others

Feburary

12

Solar PV workshop held at the Bali Clean Energy Foru Balil MEMR P2EBT

February

16-18

Advancing the Use of Wind and Solar Forecasting to

Facilitate the Integration of Variable Renewable

Energy to the Grid (ICED II will sponsor 4 participants

from MEMR and PLN)

Bangkok USEA/USAID

February

22-25

ESRA Training for Banks and Financial Institutions in

Clean Energy Sector – 10th batch

Padang OJK, KLHK, and IFC

March PLEA Workshop and Launch of ICED II program in

North Sumatra

Medan North Sumatra

Regional Planning

Agency and PLN

North Sumatra

4.3 Component 3: Outreach on USAID and USG Inter-Agency Activities in Indonesia’s Energy Sector

ICED II has finalized the MoU between USAID and the Ministry of Energy and Mineral Resources. The MoU is expected to be signed by the Secretary General of MEMR and the Director of Environment Office of USAID.

We will also organize several outreach programs/events, including:

▪ Exhibitor at the Bali Clean Energy Forum, February 11-12 ▪ Launch of ICED II support to North Sumatra Province through the PLEA Program,

tentatively scheduled for March 31, 2016

30 ICED II Quarter 1 Report, October 1 - December 31, 2015

We will coordinate with other USAID projects such as LESTARI on biomass plantations for energy production, SRUC on guidelines for price renegotiations for geothermal IPP projects, coordination of PFAN support to clean energy projects in Indonesia, and monitoring the results of CIRCLE palm oil mill effluent biogas projects after the project ends in March 2016. We will coordinate with other donors such as GIZ and ADB on solar PV regulations, IFC on sustainable finance, and DANIDA on wind impact studies. In support of overall program administration, ICED II will finalize and prepare for signature an MOU between USAID and MEMR on clean energy support. We will also organize and conduct a workshop with all related Directorates of MEMR on the ICED II Year 2 annual work plan. Finally, we will support USAID in their proposal to BAPPENAS, as executing agency, in forming the technical team (Tim Teknis) for clean energy.

3.4 Clean Energy Technology and Innovation Fund

With the expected approval of the Innovation Fund Management Plan and Grants Manual in January 2016, Tetra Tech will be proposing the following activities to be funded under the CETIF. [REDACTED]

31 ICED II Quarter 1 Report, October 1 - December 31, 2015

Summary of Planned Activities for FY 2016 Quarter 2 (January – March 2016)

Component/Activity January February March

NIAS PLEA including Focus Group Discussion

Input to draft solar PV regulation

Support to UP3KN on proposed PLN EBT

Advisory to banks/FIs

Advisory to RE developers

Work planning for MEMR Center of Excellence

Analysis of gird-connected solar PV penetration

Training workshop on solar PV for MEMR

Training workshop on solar PV and PV diesel hybrid for PLN

Training on integration of wind and solar PV (Bangkok)

Support to PLN on geothermal price re-negotiations (with USAID SRUC)

Interconnection training for consultants

Support to OJK Sustainable Finance

ESRA Training for banks

Coordination with other donors (GIZ, IFC, ADB, DANIDA)

Bali Clean Energy Forum

Coordination with other USAID projects (LESTARI, SLP, SRUC, PFAN)

North Sumatra Launch Event

USAID Program coordination with BAPPENAS

USAID ICED coordination with MEMR

` - On-going activity

- Event

32 ICED II Quarter 1 Report, October 1 - December 31, 2015

5 Problem Resolution

5.1 Status of Resolving Problems Described in the Previous Report

This is the first quarterly report presenting problems.

5.2 New Problems Encountered Since the Previous Report

ICED II has encountered a number of new challenges during the quarter:

1. Delays in finalizing the implementation of the USAID-Government of IndonesiaAssistance Agreement. BAPPENAS, the implementing agency for the GOI, has notsigned the documents that would allow for the convening of the Clean EnergyTechnical Team (Tim Teknis). In addition, this has delayed Tetra Tech’s ability toobtain a work permit (KITAS) for Bill Meade, Deputy Chief of Party.

2. Need to increase ICED II spending. USAID has advised Tetra Tech that the currentspending on ICED II is below expected and needs to increase to reduce the“pipeline.”3

3. Further revisions to the ICED II EMMP. USAID’s Mission Environment Officer has sentback additional comments on the ICED II Environmental Management and MitigationPlan based on his review of the draft ICED II Year 2 Annual Work Plan. Some of thecomments include additional activities that are categorized as “NegativeDetermination with Exceptions.” This implies that ICED II will need to developadditional Environmental Screening Forms for policy and technical assistanceactivities not originally envisioned in the Initital Environmental Examination. Further,since ICED II has been asked to review larger hydropower plants, USAID has askedthat a summary of the environmental impact assessment for these projects beshared with the USAID Asia Bureau Enviromental Officer.

4. Delays in obtaining new subcontract/subcontractor approvals. Tetra Tech identifiedand notified USAID of several new subcontracts that are urgently needed to supportits key GOI partners. These include [REDACTED]. Tetra Tech made several attemptsto otain USAID approval, initially from the Contracting Officer (CO) and later from theContracting Officer’s Representative (COR). All three were originally to be fundedunder the CETIF, which was also experiencing delays in approval due to changingguidance from USAID.

3 The Pipeline is defined as the the total unspent obligated funding divided by the average monthly spending rate. It is expressed in months.

33 ICED II Quarter 1 Report, October 1 - December 31, 2015

4.3 Proposed Solutions to Outstanding and New Problems

1. Delays in finalizing the implementation of the USAID-Government of Indonesia Assistance Agreement. ICED II has prepared several briefings for BAPPENAS on ICED II, but the delays are affecting the entire USAID Environment Program portfolio. ICED II will continue to monitor the progress from USAID and BAPPENAS.

2. Need to increase ICED II spending. Tetra Tech has already increased the use of international short-term technical assistance and has submitted several subcontracts to USAID for approval. Our Year 2 Annual Work Plan has a substantial number of on-going and new initiatives to be undertaken next quarter (see point 7 below).

3. Further revisions to the ICED II EMMP. Tetra Tech plans to meet with the USAID Mission Environment Officer to further clarify the comments on the EMMP. Once clarified, we will make the changes to the EMMP, including environmental screening forms, and initiate training for ICED II staff.

4. Delays in obtaining new subcontract/subcontractor approvals. In December 2015, Tetra Tech met with the CO and COTR to obtain clear guidance on how to obtain approvals for new subcontractors. At that time, the CO indicated that the Task Order would be modified and/or the authorities delegated to the COR would be revised, provided that the COR could approve fixed-price subcontracts up to [REDACTED]. Tetra Tech will continue to follow USAID guidance on subcontract/subcontractor requests for approval; however, delays have caused problems in scheduling ICED II technical assistance activities.

5. ICED II was able to fill the Clean Energy Project Development Manager (responsible for hydropower) position in January 2016. Now Tetra Tech will address the leadership challenges in Component 2, proposing some changes in staffing and a realignment of responsibilities to meet the growing demand and work load.

6. One position has been revised and three new positions have been created in the revised ICED II Year 2 Annual Work Plan. First, the Reporting and Communications Manager has been downgraded to Senior Technical Writer and Editor. The job was advertised and interviews began in January. The new positions created to support ICED II’s principal counterparts are: 1) PLN Liaison, 2) MEMR Liaison, and 3) OJK Liaison. In addition, with the resignation of the Liaison to BAPPENAS’ RAN-GRK Secretariat, ICED II will reformulate this position to work out of the ICED II office more frequently and support the broader ICED II joint activities with BAPPENAS.

7. Tetra Tech learned in early January that the Clean Energy Technology and Innovation Fund Management Plan and Grants Manual was approved by the CO. We will schedule training for the staff, specifically those involved in the CETIF management, in February 2016.

34 ICED II Quarter 1 Report, October 1 - December 31, 2015

8. Tetra Tech has fully mobilized in its new office on the 14th Floor of the Menara Jamsostek building and has notified all of its stakeholders of the new office location. The telephone, fax, e-mail and website contact information remain the same.

35 ICED II Quarter 1 Report, October 1 - December 31, 2015

6 Draft Success Stories

ICED II produced two draft success story in English and Bahasa Indonesia this quarter.

Success Story Component

1 USAID Supports OJK in Strengthening the Environmental Aspects of its Financial Services

1

2 USAID Signed a Memorandum of Understanding with PLN (National Electricity Company) for Renewable Energy Collaboration

2

36 ICED II Quarter 1 Report, October 1 - December 31, 2015

37 ICED II Quarter 1 Report, October 1 - December 31, 2015

38 ICED II Quarter 1 Report, October 1 - December 31, 2015

Annex A ICED Technical Assistance This appendix lists the private, bank/financial, and government organizations ICED II has assisted since its inception in May 2015. Rows shaded in light gray are those assisted this quarter.

[REDACTED]

39 ICED II Quarter 1 Report, October 1 - December 31, 2015

Annex B Reference Information for Performance Indicators and Results This annex gives details on projects that have contributed to ICED II results (Section B.1) and training delivered by ICED II (Section B.2). Even though a project may have been commissioned or begun operating during the first ICED Project, certain results, such as projected GHG emissions reduced or avoided through 2030, can also be attributed to ICED II because their impacts extend to the ICED II project period. Others, such as installed capacity, persons with access to clean energy, and leveraged funding, are attributed to either ICED or ICED II, but not to both projects. Table 7 provides an overview of the projects detailed in Section B.1. They are of two types – renewable energy and energy efficiency – and the results tracked vary somewhat by type. The projects are listed in chronological order by their commissioning or commercial operating date. In the tables that follow, a * indicates that the results were attributed to the first ICED project.

Table 7. Summary of Projects Contributing to Performance Indicators

[REDACTED]

B.1 Projects Assisted

[REDACTED]

40 ICED II Quarter 1 Report, October 1 - December 31, 2015

Annex C ICED II Clean Energy Project Pipeline

[REDACTED]