The future of cleantech in Indonesia

The future of cleantech in Indonesia

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.

Indonesian-focused cleantech

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

Solar

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.

Hydropower

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

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.

Conclusion

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.

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Ref:
https://techcrunch.com/2016/10/14/the-future-of-clean-tech-in-indonesia/

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com