Enabling Energy Efficiency

in Indonesia

Bagus Mudiantoro March 19, 2013

Contents

ADB Program in Indonesia

ADB’s Clean Energy Program

Potential for EE in Indonesia

ADB’s EE Program in Indonesia

ADB’s Program

in Indonesia

1. Inclusive Growth

• Infrastructure and connectivity enhancement

• Human resources development: Improved vocational education for higher productivity and wages

• Financial sector development: long-term finance, access to finance for SMEs and in emerging areas

• Decentralized public management

ADB Indonesia Country Strategy

Pillar 1

2. Environmental sustainability with climate change mitigation and adaptation

• Renewable energy & energy efficiency

• Improved water supply & sanitation

• Natural resources management

• Environmental safeguards in all operations

ADB Indonesia Country Strategy

Pillar 2

ADB has invested over $27 billion since 1966

Largest shares in cumulative lending:

Public sector management (19%)

Agriculture and natural resources (15%)

Finance (14%)

Energy (13%)

In 2012, $1.2 billion in lending operations

ADB Operations in Indonesia

ADB’s

Clean Energy Program

1. Promoting Energy Efficiency (EE) and Renewable Energy (RE)

• Develop renewable energy projects

• Improve EE from both the Demand Side and Supply Side

• Identify EE options and prepare financial assistance and guarantee

ADB’s Policy in the Energy Sector

(1)

2. Maximizing Access to Energy for All

• Sustainable rural electrification

• Focus on remote communities

• Encourage cleaner technologies

• Support the financing of natural gas-based power plant

• Support installation of modern transmission and distribution system

ADB’s Policy in the Energy Sector

(2)

3. Promoting Energy Sector Reforms

• Assist the establishing competitive electricity market

• Encourage the adoption of tariff structures that promote energy conservation and penalize peak hour and peak season consumption

• Capacity development in the Energy Sector

ADB’s Policy in the Energy Sector

(3)

EE Market in Indonesia

Historically, demand side energy efficiency projects in Indonesia have not been successful because of

low tariffs and low tariff of awareness

• Residential and commercial buildings offer large opportunities for EE measures

• Sector’s total energy consumption is 60% of total electricity usage

• Industrial sector has huge demand for EE

• Some private companies have undertaken EE measures

• Public Private Partnership (PPP) on EE is possible through energy service companies (ESCO)

EE in Indonesia

1 Indonesia Energy Sector Assessment Worldbank

The potential for EE improvements remains significant, such that about

181,180 GWh of electricity consumption could be saved by 2025.

ADB’s

EE Program in Indonesia

1. CTF - Global Climate Partnership Fund Indonesia Investment Program

2. Exim Bank/ADB EE Program

3. Retrofitting municipal street and substation lamps

ADB’s EE Program in Indonesia

The CTF Investment Plan prioritizes investments that:

• Improve EE, especially in heavy industries including cogeneration and cleaner production

• Improve EE in existing and new commercial and residential buildings

• Support the reduction of GHG emissions in developing countries through RE and EE investments

• Establish FI business lines through aggregators of private sector EE and RE investments

1. CTF - Global Climate Partnership Fund Indonesia

Investment Program

USD $50 million investment allocation from the Clean Technology Fund (CTF) to support

financial sector investments in EE and RE (ADB-GOI co-investment)

• Eximbank to promote the financing of EEPs, as one of its lending products in Indonesia, by providing:

• EE Financing Products

• Capacity Building

• ADB is providing $30 million loan to Eximbank for EE Lending, and $0.8 million for consultations

2. Exim Bank/ADB Energy Efficiency Program

• Develop pilot for energy efficient street lighting management

• Implement the street lighting management system (limited area in Medium-Big Cities in Java)

• Evaluate the piloting of energy efficient street lighting

• Develop pilot project for Street Lighting Management for two cities in Java

3. Retrofitting municipal street and substation lamps

• Lack of available financing schemes from banks

• Lack of qualified energy auditors and/or ESCO

• Lack of success stories in Indonesia

• Low electricity tariff

Barriers to EE in Indonesia

• Develop policy frameworks for EE, particularly for the government agency

• Encourage private banks to finance EE programs

Enabling EE in Indonesia

www.adb.org

Thank You

www.adb.org