Strategic Exploration of Economic Mitigation Potential through Renewables (ExploRE)

Indonesia has committed itself to achieving specific climate targets following the Paris Agreement in 2015 (COP 21). Here, under the Nationally Determined Contributions (NDCs), Indonesia aims to reduce greenhouse gas emissions by 29% by 2030, or even by 41% with international support. Under these NDCs, the energy sector in itself is expected to contribute 314 million tonnes of CO2 reduction.

ExploRE aims to strengthen

• strategic options to increase private sector investment in Renewable Energy (RE);
• Indonesia’s economic and social development options in deploying RE for a reliable, secure, and sustainable energy supply.

While working on the energy, climate and finance sectors, ExploRE also takes a specific focus on coherence and inter-ministerial cooperation. These need to be strengthened to effectively achieve the national climate target under a reliable and least-cost-based electricity supply.

ExploRE bases its strategic approach on the study “Fundamentals for a Successful RE Deployment for Indonesia” commissioned under ExploRE’s predecessor project, i.e. Promotion of Least-cost Renewables in Indonesia (LCORE-INDO), which ran from 2012 to 2018. ExploRE works through studies and innovative pilot projects, capacity building measures and stakeholder engagement and applies them at four different output levels as shown in the image below.

Cooperation opportunities and synergy options for each actor i.e. government stakeholders, financial institutions and private sector are identified and addressed together at each level. Activities in the various outputs combine RE options, their emission reduction potential, and the country’s climate goals. These activities provide all target groups with equivalent experience and necessary data to make planning and strategic approaches to achieve Indonesia’s climate goals.

Following the success of LCORE-INDO, ExploRE steps in and implements the following activities:

1. RE Deployment Strategy

The Project continues its support to the Directorate of Bioenergy of DG NREEC on the development of bioenergy database which will be a basis for bioenergy roadmap and further integration of existing bioenergy power plants to the state-owned electricity company’s (PLN) grid. Moreover, ExploRE is also expanding the “Renewable Energy Deployment Simulation (REDS)” tool to other technologies as requested by stakeholders.

2. Political Instrument and Financing Environment

The activity on “Government Support for the Financing of Renewable Energy and Energy Efficiency” is the main activity of this output. Regular working group meetings involving various government stakeholders have been organised to develop the structure for a government funding mechanism. Furthermore, ExploRE is also assisting banks and the Financial Service Authority (OJK) on the sustainable finance initiative as well as reviewing the implementation of Ministry of Energy and Mineral Resources (MEMR) Regulation No. 38/2016 on private sector participation in rural electrification. The project is also expected to support the improvement of RE projects bankability proposals.

3. Institution Building

ExploRE initiates Biogas Knowledge Sharing (Bio-Share) to provide an exchange platform among biogas stakeholders and to strengthen the role of biogas associations in Indonesia. The Project also supports the development of the national competence standard (SKKNI) for biogas power plants, the CO2 reduction calculation tool for bioenergy projects, and the development of bioenergy reporting mechanism for potential and captive power plants. ExploRE also supports local content (TKDN) identification for solar PV and bioenergy projects.

4. Innovation

Pilot projects are the main activity of this output to showcase technology and business model innovation of RE applications. Together with private partners, ExploRE is implementing a solar PV pilot project in the Karimun Free Trade Zone (FTZ) and a solar PV pilot project for rural electrification in Jambi. In addition, various pilot projects on bioenergy, including Empty Fruit Bunch (EFB) codigestion and alternative utilisation of Palm Oil Mill Effluent (POME) biogas will be initiated.