ClimateWorks Foundation
ClimateWorks Foundation
Scoping of Indonesian Independent Power Producers for Energy Transition Transactions via Sustainable Financing
Partners: Institute for Essential Services Reform (IESR)
Background of the Project/ Challenge
A multi-phased project was designed to assess the feasibility of private sector-led coal retirement and support the actual execution of coal retirement transactions or initiatives by Independent Power Producers (IPPs), as part of broader G20 commitments under Indonesia’s energy transition journey.
What We Did
In the first phase, the engagement consisted of a scoping study to identify opportunities for a private sector-led coal exit. The second phase organized and facilitated dialogues with IPPs to develop coal transition strategies, while the third and fourth phase supported the development of financial models and appropriate structures that were then packaged as commitments to be presented to the Indonesian government.
CSV and IESR completed the following workstreams:
- Grid and Plant level analysis and commercial viability analysis: CSV combined desk research with the IESR-UMD Indonesia Coal phaseout report to develop a preliminary plant and commercial analysis of coal retirement for IPPs. This was used at the informal talks with PLN and IPPs by IESR / CSV.
- Market sounding for IPP-led coal retirement: Over the course of 4 months, IESR led market sounding by engaging in back-end diplomacy efforts and front-end dialogue initiatives to strategically engage and meaningfully push select IPP stakeholders towards considering coal retirement. CSV supported this effort by presenting and discussing Indonesia’s IPP coal retirement landscape and the AC Energy ETM at IPP and PLN meetings / events.
- Announcements and communications:
- Front-end efforts: These leveraged on the growing momentum around energy transition and the G20 summit in Bali, which has set the stage to create a compelling platform to invite bold commitments from IPPs.
- Back-end diplomacy efforts: These leveraged existing relationships and ties with the IPPs and government officials to gain an advisory relationship on the topic energy transitions.
Outcome
- Seeded IPP led coal retirement to largest IPPs, government stakeholders
- Contributed to calls for PLN and SMI to include RE as part of ETM discussions to facilitate genuine transition + value recovery
- Helped drive international attention and scrutiny for Indonesia ETM to keep momentum towards effective transition
- Phase 2 was then undertaken, focusing on establishing a clear pathway for the private sector to participate in Indonesia’s energy transition initiatives through multiple modalities – engaging IPPs to prototype deals, aligning with government stakeholders, and tapping international financial institutions and associations.
Testimonials
Antonio Mariano C. Almeda
National Electrification Administration Administrator
“I want to emphasize that achieving sustainable energy access in off-grid areas is not merely an option, rather, it is an essential step for building resilient communities and ensuring social equity. This pursuit requires the collective effort of stakeholders across various sectors to make it into a reality.”
Mario Marasigan
Department of Energy Undersecretary
“Think bold, act collaboratively and commit firmly. Let us empower our cooperatives, support our investors, and work together to light up every corner of the country.”
Lawrence Ang
CSV Managing Partner
“This project builds on momentum generated by the Department of Energy leadership towards a more ambitious climate goal and complements the government’s work in transitioning the Philippines towards cleaner sources of energy. It also helps ensure that our off-grid islands are not left behind and are given access to more affordable, reliable, and cleaner electricity.”