Despite recent efforts by the Government of Indonesia to promote renewable energy investments, fossil fuels continue to account for around 90% of the national power generation mix. High financing costs and low power purchase agreement tariffs have been identified as major roadblocks for renewable energy investments in the country. This report examines how an Energy Resilience Fund can be designed to overcome the investment challenges by providing financial incentives for renewable energy developers. It makes recommendations for the fund's scope, structure, institutional design, function, and operation. Potential funding sources are also assessed.

This book is the first of two volumes that review various approaches and instruments that have been tried, tested, and utilized to scale up clean energy development in Asia and the Pacific. This volume examines clean energy investment needs and financing gaps in the region and reviews existing financing options and approaches, including examples of how these have been applied. Innovative solutions for mobilizing private finance and managing risks associated with clean energy investments are also discussed.

This report proposes a renewable energy subsidy mechanism for Indonesia to close the gap between the costs of renewable and conventional power generation. It takes into account the additional economic benefits of renewable power and considers how the government can support its rapid deployment in the power sector. The report emphasizes the need for Indonesia to adopt international best practice for planning, procurement, contracting, and risk mitigation to reduce the financial costs of renewable energy development. To achieve this, implementation of the subsidy should be part of a broader inter-ministerial electricity policy reform program.

This book examines clean energy financing and approaches in hydropower and demand-side energy efficiency projects. It presents policies and strategies on energy, based on the experiences in South Asia. This is the second of two volumes that reviews tried and tested approaches and instruments in scaling up clean energy development in Asia and the Pacific.

To achieve the target of 23% renewable energy by 2020, Indonesia has been actively exploring options to loosen its dependence on fossil fuels. While biofuels have been developing fast and remain a priority for the government, wood-based energy also holds great potential. This report is a first attempt to assess its state of development and feasibility. Wood-based energy could be based on the high-profile large-scale industrial tree plantation program in Indonesia. This is one of the largest in the world with millions of hectares planted, but it has failed to achieve all of its public objectives. The government envisions its revival, with bioenergy as an alternative to the mature pulp and paper market. To do so, a flagship feed-in tariff policy has been put in place as an incentive for power plants to using biomass (or biogas material). Our research – based on intensive interactions with stakeholders at all levels, secondary data and three case studies – leads to one straightforward message that this source of energy is not going to represent a significant share of the energy mix for a long time. Major obstacles include the difficulty in establishing and managing large-scale tree plantations dedicated to energy production with recurrent claims and conflicts on the ground, the inability of the feed-in tariff policy to compensate investors for the risks of shifting to a new type of energy, the absence of subsidies provided to the state-owned electricity company that sees little interest in buying relatively expensive power, and the lack of proof of concept that lowers the probability of significant investments in this field.