New incubation facility from Climate Policy Initiative (CPI) provides opportunities for Indonesian commercial and industrial sector to mature rooftop solar project plans, improve creditworthiness, and get financed.
- Despite the impact of COVID-19, the Indonesian government remains committed to the ambitious target of achieving 23% renewable energy mix by 2025.
- Country-wide rooftop solar installation of up to 2.14 gigawatts (GW) is an essential step to meet that target
- The government is taking numerous steps to mobilize engagement across the solar sector to help reach this goal, including higher private sector investment.
- One key issue that has stymied commercial and industrial (C&I) development of rooftop solar projects is the perception of high investment risk.
- To resolve this challenge and support the government in accelerating the growth of rooftop solar investment, CPI is launching an incubation facility where prospective solar project owners in Indonesia’s C&I sector can convene with a team of service providers to mature solar project plans, improve commercial viability, and expand funding opportunities.
Bali, November 12, 2022 – In a bid to deliver on its pledge of achieving 23% renewable energy mix under Indonesia’s National Energy Grand Plan (RUEN), the government has set the target of installing 3.61 GW solar power capacity by 2025. With merely 154 MW of installed rooftop solar at present, this ambitious target requires participation from all key industry players to drive up investment, including for buildings and facilities of state-owned enterprises (742 MW), businesses (624.2 MW), households (648.7 MW), social group customers of state electricity firm PLN (68.8 MW), and government agencies (42.9 MW).
In support of this target, Climate Policy Initiative (CPI) has announced the launch of a Rooftop Solar Investment Accelerator Facility during the BNEF Summit in Bali.
Addressing the main issue of high-risk perception that has stymied investment growth of rooftop solar projects in the C&I sector, this Facility aims to lower financier’s perceived risk by incubating potential project plans to be more commercially viable and creditworthy. During the incubation period, reputable service providers—including technology companies, business consultants and legal expert—will provide prospective project owners with commercial feasibility studies, engineering design support, monitoring & evaluation frameworks, and impact assessment.
“Despite the huge potential for Indonesian rooftop solar capacity, funding is still scarce. A major contributing factor is the high-risk perception of rooftop solar for investment. Leveraging years of climate incubator experience, CPI is launching the Rooftop Solar Investment Accelerator Facility to help incubate rooftop solar project plans in Indonesia and get them commercially viable enough for funding,” said Dr. Barbara Buchner, Global Managing Director of CPI.
The growth of rooftop solar in Indonesia’s C&I sector is also not as strong as in the residential sector. The latter has experienced quite a boom in the last two years due to specific credit facilities for retail consumers provided by big commercial banks such as BCA, BNI, BRI, and Bank Mandiri.
“We need to push for more efforts to support rooftop solar investment in the C&I sector. Our investment accelerator facility provides investors and prospective project owners with de-risking support in the form of a seed fund as part of guarantee mechanism for the project financing,” Dr. Ery Wijaya, Senior Analyst at CPI added.
Following this launch, the facility can be accessed by financial institutions and project developers to support potential project owners in developing more commercially viable rooftop solar projects. Application period for project incubation is planned to open by Q3 next year and the facility will be operated until the end of 2025 to support national renewable energy growth, particularly rooftop solar investment in Indonesia.
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