Greater contribution: Workers set steel bars on a building under construction in Jakarta. Indonesia is pushing donors behind the Just Energy Transition Programme to include more grants in their pledges. — AP
JAKARTA: Indonesia’s Just Energy Transition Programme (JETP) can move ahead even without much grant support, says Standard Chartered, one of the banks under the Glasgow Financial Alliance for Net-Zero (GFANZ) that have pledged its support for the initiative.
Standard Chartered corporate and investment banking co-head Sunil Kaushal said grant aid was not a prerequisite for an energy transition programme such as the JETP.
“Grants, of course, will be welcome if they come in to reduce overall costs. But is it a prerequisite? No,” said Kaushal in Jakarta last Friday.
He said that grants were needed to accommodate costly energy transition projects, such as the early retirement of coal power plants, but the same requirement did not apply for standalone, commercially viable projects.
“I think it depends also on what sort of assets you’re retiring, what sort of remaining life they have. The higher the remaining life, the more the cost of retiring it,” said Kaushal.
Concurring, Standard Chartered cluster chief executive officer for Indonesia and Asean markets Rino Donosepoetro said that grants were needed but “that’s not the answer for all of this”.
He acknowledged that “quite a lot of” JETP projects, such as early coal power plant decommissioning, were “definitely not fully commercially viable, but are needed by Indonesia”.
However, as a case in point for the viability of clean energy projects, Rino said the Cirata floating photovoltaic power plant in Purwakarta, West Java, was fully funded by the private sector, including Standard Chartered.
Expected to generate enough electricity to power 50,000 households, South-East Asia’s largest floating solar farm was inaugurated by President Joko “Jokowi” Widodo last November.
The JETP for Indonesia’s energy transition, which has been over a year in the making, includes US$10bil in pledges consisting of grants and concessional loans from multilateral development banks, as well as the International Partners Group, led by the United States and Japan.
The remaining US$10bil derives from investments by private financial institutions coordinated through the GFANZ.
However, Indonesia has been pushing donors behind the JETP to include more grants in their pledges, as it has so far seen less than US$300mil in grants, about half of which has been earmarked to finance technical assistance instead of the actual projects.
The government has previously urged international donors to set aside money for the grid, as most pledges were currently earmarked for renewable power plants only, which are deemed more profitable.
Rachmat Kaimuddin, undersecretary for transportation and infrastructure in the Office of the Coordinating Maritime Affairs and Investment Minister said on July 15 that many renewables were located far away from demand centres in urban areas, stressing that the power they produced would not be able to reach consumers without a grid.
State-owned electricity company PLN previously estimated the country would need to build a transmission network nearly 50,000 km to realise renewable energy distribution, with a projected cost of US$25bil.
Standard Chartered’s Rino said US$20bil “is nowhere near enough” to realise the archipelago’s energy transition programmes but that amount served as a “catalyst” to attract more funding from the private sector further down the line. — The Jakarta Post/ANN
