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Observers urge progress in JETP to keep energy transition going
Amid the government's impending discussions on PLN's new 2024-2033 RUPTL and JETP stakeholders' ongoing negotiations toward a June 30 deadline, energy experts are urging the scheme's projects to get off the ground before interest flags.
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Smoke and steam billow on July 11, 2020 from a coal-fired power plant owned by Indonesia Power in Suralaya, Banten. (Reuters/WILLY KURNIAWAN)
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rojects in Indonesia’s Just Energy Transition Partnership (JETP) must get moving as soon as possible, experts say, before hope wears thin for the effort to expedite the country’s shift to a greener economy as red tape and lack of funding hold it back.
Fabby Tumiwa, executive director of the Institute for Essential Services and Reform (IESR), said that despite its flaws, the JETP had played a unique role in Indonesia’s energy transition efforts so far, and stressed the importance of maintaining momentum in implementing the scheme.
“I encourage the [International Partners Group/IPG] to immediately deliver on the grants, ready the project pipeline and set a target. For example, they could announce a target to [add] 1 gigawatt of renewable power generation [capacity] in 2024,” he suggested. “This way, the government and the IPG members could prove that JETP is working,” he told The Jakarta Post on Friday.
Led jointly by the United States and Japan, the IPG is comprised of several developed economies that have vowed to support the country’s energy transition under JETP Indonesia.
Fabby added that the government could consider a larger state capital injection (PMN) for state electricity company PLN to build more renewable power plants under the scheme’s Comprehensive Investment and Policy Plan (CIPP), because these projects required both debt and equity funding.
“Today, PLN’s financing ability to provide equity is limited, which is one of the obstacles to implementing the renewable energy projects,” he continued.
“Then, for cheap funding, the government could provide around US$2 billion to $3 billion to PT Sarana Multi Infrastruktur [SMI] or Indonesia Infrastructure Finance [IIF] to fund renewable energy generation projects. If the money comes from us [Indonesia], it should be concessional. There are many [financing] mechanisms that can be considered,” said Fabby.
