In 2016 Pondera became active in Indonesia, aiming to accelerate the energy transition in emerging markets. The country has set targets for 23% of renewable energy in its energy mix by 2025. However, plenty interest from renewable energy developers and the availability of financing on attractive terms, the development of renewable energy infrastructure has been slow. Still, it is expected that this might change in the near future. This change could come from the Just Energy Transition Partnership (JETP), that has been closed with the Government of Indonesia. What developments do we see and what opportunities can arise from the JETP for firms active in renewable energy?
On behalf of the Netherlands Enterprise Agency (RVO) and initiated by the Ministry of Foreign Affairs of the Netherlands, we assessed numerous opportunities within the JETP and identified opportunities for Dutch enterprises specifically.
Understanding the challenges
Let’s first look back on why the transition to renewable energy has been slow in recent years in Indonesia:
- The abundance of domestic coal makes Indonesian energy sector relatively immune to foreign influence, fostering a dependence on fossil fuels.
- Subsidies and incentives favour fossil fuels, prolonging reliance and hindering renewables’ competitiveness.
- Carbon taxation does not yet incentivize the use of sustainable alternatives.
Pathway to net zero
Nevertheless, Indonesia remains committed to decrease its emissions and fostering renewable growth. The Government of Indonesia has announced its plan to a substantial reduction in emissions by 2030 and aspirations to reach net zero by 2060. To achieve those objectives, Indonesia will need to retire coal-fired power plants, intensify renewable energy investments, adopt efficient technologies, and modernize its infrastructure.
Just Energy Transition
The Just Energy Transition Partnership (JETP), created during the G20 summit in Bali, aims to help enhance the energy transition. A group of countries, known as the International Partners Group (IPG), together with the Government of Indonesia, have pledged US$20bn to support a Just Energy Transition in Indonesia. Dutch expertise and innovation poised to play a pivotal role across eight key themes:
- Inter-island grid connections:sebsea cables & HVDC technology implementation
- Carbon capture utilization and storage
- Wind power: onshore and offshore
- Floating solar PV and (pumped) hydro
- Sustainability analysis, reporting and taxation
- Sustainable solutions for methane emission reduction
- Offshore floating solar PV
- Renewable energy project procurement
For more information on the themes , check out the infographics below:
