With its projected population of more than 1.4 billion by 2025, and its economy ripe for becoming Southeast Asia’s next big technology hub, Indonesia presents unique challenges in the form of renewable energies. Indonesia currently lacks significant infrastructure capable of supporting such expansion, with its mobile-first economy only being able to provide so much support for structured growth.
However, if capitalized correctly, Indonesia has the potential to harness clean technology into a vehicle for prosperity. The Indonesian government is just beginning to make changes to focus on resource efficiency and management, with both established companies and startups working together with Indonesia’s utilities to provide innovative solutions.
Investment in Indonesia’s renewable energies sector
Indonesia has attracted record amounts of renewable energy investment within the last several years, announcing certain deregulations to help encourage FDI. Early 2015 saw Indonesia cutting its consumers’ fuel subsidies, with the intent being to manage oil/gas resources more efficiently. This, in turn, attracted attention from the Asian Development Bank in late 2015, which approved $500 million in loans for Indonesia to help stimulate investment in the country’s emerging clean technology sector. Indonesia’s Energy and Mineral Resources Ministry also announced in early 2016 that it had attracted more than $325 million in renewable energy investment, further driving the cause of cleantech in Indonesia.
Kopernik, a former startup seeing unprecedented growth since its inception in 2010, established its headquarters in Ubud, with the goal of bringing cleantech to Indonesia. With funding partners, including tech incubator Inotek, and asset management firm Russell Investments, Kopernik has developed multiple internal projects to accomplish this goal. One of its best-known initiatives includes the “Wonder Women” program, where women from rural villages are empowered and trained to become Tech Agents, establishing Tech Kiosk micro-stores to sell cleantech appliances on commission. With exclusively designed products, including the micro-solar BrightBox energy system and the CO2-reducing CH-2300 cookstove, Kopernik is bringing affordable clean technology to rural areas, encompassing all sorts of renewable energies in Indonesia.
Indonesia has showcased its ability to not only grow its cleantech industry, but also thrive in it.
Another company emerging from its startup roots and becoming a true industry power in Indonesian cleantech is Fluidic Energy. With more than $150 million invested (including an undisclosed Series D round with Caterpillar as the majority investor in 2015 and Series C funding of more than $20 million from Chevron Energy Solutions and Madrone Capital Partners in 2011), Fluidic Energy’s rechargeable zinc-air battery technology has drawn intense interest from the energy investment community.
The 2015 announcement of the “500 Islands” project has Fluidic promoting both rural development and increasing renewable energy usage to Indonesia’s weak power grid environment. Fluidic has so far delivered energy to more than 90 villages in the archipelago nation, making its efforts one of the region’s largest rural electrification projects. With more than 40MWh of energy storage worldwide, Fluidic Energy leverages its zinc-air energy storage technology to bring sustainable energy to developing regions, such as Indonesia, bolstering the growing cleantech market in this nation.
Renewable energy in Indonesia
The solar industry in Indonesia currently faces certain framework and developmental challenges. However, with government involvement in clean technology growing alongside privately funded projects, the solar realm seems to be gaining ground on the road to industry maturity.
The government has taken huge strides in addressing concerns about the Indonesian solar market, with the Ministry of Energy and Mineral Resources taking on both large and small projects, providing funding for rooftop solar systems at airports and government buildings and funding more than 500 solar PV mini/microgrid projects. Additionally, the Indonesian government has created new regulations to support solar systems for utilities, furthering the future of Indonesian cleantech.
Indonesia is among the top 10 countries with the biggest hydropower potential in the world. As Indonesia’s dependency on fossil fuels rises, clean technology is becoming increasingly focused on by consumers, the government and private sector alike.
Micro-hydro power, producing about 5KW to 100KW of electricity, has seen a growth rate of more than 700 percent since 2000, with more than 450 MW of electricity currently coming from micro-hydro power in Indonesia. The government has set goals to quintuple this number by 2025, developing partnerships and funding through the domestic economy utilizing feed-in tariffs. These are payments to ordinary energy users for the renewable electricity they generate, which incentivize Indonesians to pursue hydroelectric power, among other cleantech initiatives.
Wind power is another form of renewable energy that Indonesians must capitalize on. With help from the U.S.-based Overseas Private Investment Corporation (OPIC), UPC Sidrap Bayu Energi has secured funding to build a $120 million wind farm, providing 70 MW of wind-generated electricity to Indonesians in South Sulawesi. UPC Sidrap Bayu Energi, a joint venture between UPC Renewables and Binatek Energi Terbarukan, is further looking at adding more than 1,000 MW of wind energy to Indonesia in the next five years. With this project being the first utility-scale wind power, Indonesia’s goal of increasing its amount of renewable energy from 6 percent in 2016 to 23 percent by 2025 is becoming increasingly more realistic.
Given the unprecedented growth in the Indonesian renewable energy space in the last several years, Indonesia has a prosperous road ahead for cleantech. With viable solutions through solar, hydro and wind platforms, combined with successful implementations of these solutions through organizations like Kopernik and Fluidic Energy, Indonesia’s weak grid environment is emerging as one of its potential strengths.
Indonesia has showcased its ability to not only grow its cleantech industry, but also thrive in it, given the proper combination of governmental support, strategic partnerships between startups and established energy and financial organizations and technological know-how. Indonesia’s renewable energy industry is one that is on track to thrive and drive investment in this country for many years to come.
Featured Image: Nala Rinaldo, Getty Images/Getty Images