PROJECT: Technical Assistance for a Supported NAMA in Indonesia
Project Reference: TAAS-0035
This project developed a concept for a supported nationally appropriate mitigation action (NAMA) for small and medium scale (1-10 MWe) renewable energy initiatives in Indonesia on a national and province level, with two pilot provinces. The concept was developed by The Energy research Centre of the Netherlands (ECN), government partners and local experts.
The support provided by CDKN expanded the scope from North Sumatra (funded by German government-BMU) to include West Nusa Tenggara (NTB) – a province with less developed power sector infrastructure and less experience with IPPs. This provided a contrast to the more developed North Sumatra and allowed the impact of provincial context on NAMA design to be explored. At the provincial level this included data gathering on potentials and plans; stakeholder meeting to discuss local barriers and work to scope the possible benefits for off-grid systems that the NAMA could provide – as off-grid generation is a pressing issue in NTB.
The renewable energy (RE) NAMA describes three government actions to support independent power producers (IPPs) to invest in Indonesia’s rapidly growing electricity sector. First, a Clearing House for IPPs, which is of assistance to the sector through coordination of knowledge and information, technical expertise, and lending for improved feasibility studies. The second component is a grid compensation mechanism that assures producers income stability even when the grid cannot ‘off-take’ their production due to stability issues. The third component consists of a choice of financial instruments that aim to improve access to appropriate finance, including direct public loans; credit lines and partial risk guarantees for banks; and equity and mezzanine debt for developers.
The eventual design of the RE NAMA had a national focus, with the two provinces proposed as pilot locations.
Through the project, CDKN achieved the following results:
- A substantial improvement in the commitment of national and provincial government stakeholders to mitigation actions and their understanding of these was noted by the end of project. At the completion of the project in March 2014 the concept note was validated at the national level and approved. The ESDM presented the mutual work in other government fora (e.g. the NAMA coordination meeting in Feb 2014) and listed the NAMA in the ‘Indonesian NAMA Framework’ that was launched at COP19 in Warsaw.
- Anticipated next steps included making a more detailed plan for implementation and alignment with other support efforts, detailing the financial instruments, exploring alliances with potential sponsors and implementing organisations, and securing implementation finance for the first phase. This work in ongoing with continued support from BMU and other partners.
Policy Brief: Indonesia Feed-in Tariff – challenges and options
Policy Brief: Small scale IPPs in Indonesia
Image Courtesy: Carnemark / World Bank