Investment and Finance 

for Indonesia’s 
Coal-to-Green Transition

Connecting The Industry Digitally

24 - 27 November 2020

- Market Background in Indonesia:

 

  • Growth of electricity demand at pace of 4.5%-5.5%

 

  • Reduced reliance on fossil fuels, while pushing renewable energy as priority

  • National renewable energy capacity to reach 23% of overall energy mix by 2025, with solar and wind representing 6.5GW and1.8GW respectively

 

 

- PLN’ attitude towards renewable energy

  •  Renewable energy as first priority under MEMER’s request

      There will be no big coal fired plants under pipeline nor equity injection plan

 

  • Re-introducing the Feed-in-Tariff program for projects below 10MW

      For projects larger than 10MW, it will be conducted in direct selection. Also the PLN is considering tender        in large bulk to boost investment interests

 

  • Projects lining in Sumatra, also the eastern part of Indonesia

      Economic growth in the two parts is high compared with Java, while the energy demands are often                underserved. Solar storage or hybrid projects are considered with huge potential

  • Highlighting local partnership at the center of project development

      In consideration of land, law and permitting shall be prioritized in every project development

  • Continue supports for local manufacturing growth whereas providing duty cuts to reduce LCOE

      Preferential duty cut policies to reduce LCOE cost caused by local content requirements

 

- Challenges in Eyes of Developers and Financiers:

  • Unreputable and inexperienced sponsors

      The construction rate is very low, only less 20% are under construction

  • Some of the potential of NRE is in the conservation area

  • Exploration costs and Funding Source Issue

      It is very expensive cost, with about 6-7 million Rupiah. and no one can ensure that extra capacity equal        to potential capacity.

- Key investment considerations:

  • Regulatory framework: Seeking a regulatory environment and clear energy policy; revenue certainty and quality of the revenue agreement.

 

  • Rigorous risk allocation and de-risking of projects: Early stage risks; Successful partnerships to optimize risk mitigation; Adequate construction risk mitigation. (Construction risk, and operating risk are more concerned by investors/banks)

  • Efficient financing: Optimized cost of capital, Stable capital structures, Current disruptions in the financing markets to abate

  

- Sources of funding:

 

     Five different sources: Tied ECAs, United ECAs, MLAs, Project Bonds, Commercial Banks.

 

  • The size of the project is bigger, developers/ owners should choose latter approaches.

  • International banks play more important role in Indonesia than national banks

  • Best type of financing for green power plants: Few hundred million dollars fund (30-50MW solar plants, 70MW wind farms), banks of high level of appetite.

  • Minimum solar project finance: Financing 10MW to 75MW solar plant could be find a way to amortize transaction cost from legal standpoint, technical due diligence standpoint (25MW is the minimum capacity. If a solar project lower than 25MW, the cost of the plant will be higher.).

HOST SPONSOR

.png

​PowerChina

PRESENTER

Teguh Widhi Harsono

Vice President, Corporate Finance

PT PLN

  • LinkedIn社交圖標

Daniel Mallo

Head of Energy, Infrastructure and Metals & Mining, Asia Pacific

Societe Generale Asia Limited

  • LinkedIn社交圖標

Zou Han

General Manager, APAC

Powerchina Huadong

  • LinkedIn社交圖標

Audience Reach