Renewable Energy and

Energy Conservation for

Climate Change Mitigation
Pradeep Tharakan
Senior Energy Specialist (Climate Change)
Indonesia EBTKE ConEx
5 June 2014
Jakarta

Source: MOF green paper, 2009

Indonesias current GHG emissions are dominated by landuse change, forest degradation and peat fires.
Energy sector emissions are rising rapidly, but opportunities
exist to slow this growth through low carbon development.

Asian Development Bank

Founded in 1966
Invested over $ 2
67 members (48 in the region, 41 borrowing
billion in clean energy
members)
in 2013.
Vision: an Asia-Pacific free of poverty
Two-thirds of worlds poor live in the region
1.7 billion live on less than $2 a day

Photos: H+K Architects; Eco-Business

ADB in Indonesia
ADB has invested over $27
billion in Indonesia since 1966
Largest shares in cumulative
lending:
Energy (13%)
Finance (14%)
Agriculture and natural
resources (15%)
Public sector management
(19%)
Reached $1.2 billion in lending
operations in 2012 and about $1
billion in 2013

Lahendong

Ulumbu

ADBs Clean Energy Programming

ADB supports clean energy deployment through its
public and private sector arms
ADB public sector operations loans and
guarantees
ADB private sector operations loans, equity
and guarantees
Implementing arm for global clean energy funds (e.g.
Climate Investment Funds, UKs International Climate
Fund, Funds supported by Government of Japan)
ADB has its own Clean Energy Financing Partnership
Facility (CEFPF) that supports grants for
project preparation, for capital expenditure and
to buy down interest rates

2002: Loan 1982: ADB Renewable Energy Sector

Development Project

$161 million loan to develop

hydropower and geothermal energy
projects in Indonesia

2011: Loan to Indonesia Eximbank to promote

Energy Efficiency
Pioneered energy efficiency
finance through a $30 million
tranche
Supports energy efficiency plant
retrofits and equipment
upgrades by exporters
First loan ($1.3 million) approved
to PT Tiga Pilar recently using
savings as collateral
Energy efficiency improvements
by exporters could cut peak
electricity demand by 2,500 MW

2012/13: Power Interconnections as a way to

lower greenhouse gases from the power sector
West Kalimantan Sarawak
275 kV Import of cheaper
and cleaner hydropower to
displace oil-fired generation
(ADB loan approved in 2013
Subproject 1 / extension of existing substation
(ADB/PLN)

Java-Bali 500 kV crossing to

transfer power from larger,
more efficient power plants in
Java to Bali and displace oilfired generation (ADB loan
approved in 2013)

Subproject 2 / 131 km line

(ADB/PLN)

Subproject 3 / 4 km sea crossing

(PLN)
Subproject 4 / 17 km line)
(PLN)

Subproject 5 / 76 km line
(IsDB/PLN)

Subproject 6 / new substation

(ADB/PLN)

ADB
Strategic
Looking
Priorities

Forward:
2014
- 2020
ADB Indonesia
Sectors
Analytics and
Awareness

Holistic Support
for Energy
in Indonesia

Mainstreaming
Environment and
Climate
Considerations
Financing Green
Growth &
Sustainable
Infrastructure

ADBs Pipeline in Indonesia for 2015-2020 to support over $2

billion in clean energy investments

Highlighting Current ADB

RE/EE Activities
1. Developing Indonesias
geothermal sector
2. Hydro power development
3. Scaling up off-grid energy access
4. Expanding Energy Efficiency

Support to Indonesia Geothermal Sector

Indonesia currently utilizing 4.6% of its
potential geothermal resource
Supporting the government to reform the
current geothermal tariff scheme
ADB is providing combination of policy
support, financing from Clean
Technology Fund, and public and private
sector loans to develop the sector in
Indonesia

330 MW Sarulla Power Project, Sumatra

Assisting PT Geo Dipa, a state-owned
company, to define possible investments
in Java
Exploring additional loans for IPPs and a
large state-owned geothermal developer

Manila HQ
30 field offices

High Hydropower Potential in Indonesia

ADB Hydropower Activities

Base load power for the Eastern
Islands, and peaking power for
Java and Sumatra
ADB developing a multi-tranche
financing facility (MFF) to support
hydropower investments in:
Sorong, West Papua
(Warsamson hydroelectric
project, 46.5 MW)
Malang in East Java [Sutami
(100 MW)]
Kesamben (37 MW)

Initiated Study for Sumatra Pump

Storage Project (~ 400 MW)

Off-Grid Energy Access in Eastern Indonesia

At 80.51%
electrification (2013)
Indonesia lags
behind its neighbors
in energy access
Developed areas,
especially Java/Bali,
have much higher
electrification ratios
than less populated
and more difficult to
access regions,
such as eastern
Indonesia

Government Target: 90% electrification by 2020.

Off-Grid Energy Access in Eastern Indonesia

Ongoing ADB grant program to
scale-up energy access in Eastern
Indonesia (Sumba Island)
RE resource surveys
Spatial least cost
electrification plan
Output-Based Aid program to
pilot solar PV mini-grids
Develop larger energy
programs for financing by
small IPPs and hold investor
forum
ADB developing a report on national rural electrification
policies and programs in Indonesia and analysis of global best
practices

Promoting energy efficiency in Indonesia

Government Targets:
1.
2.

Reduce energy intensity by 1% per year

Reduce energy elasticity to <1 by 2025

Key Sectors:

Industrial sector (15-30%)

Commercial buildings (25%)

Household sector (10-30%)

Other areas e.g. street lighting

ADB Programs:
1. Improved street lighting and upgrading of
lighting in PLNs substations Select
cities in Java and Bali
2. Support for MEPS and related labeling
programs for select household
appliances.

Lessons Learned
Concessional funds alone are not enough need the
right enabling environment policies, government
commitment, inter-agency coordination etc.
Feed in tariffs are increasingly disfavored over ceiling
prices (preferably based on avoided costs) with auctions
(tendering)
In countries where cost recovery-based tariffs dont
exist, need to get the Ministry of Finance and the
government on board to support RE promotion
In cases where there is significant upfront risk or
uncertainty, use of public funds to prove resources,
enable transmission access etc. can help accelerate RE
promotion e.g geothermal energy

THANK YOU
www.adb.org
ptharakan@adb.org