Pondera’s research into opportunities for Dutch enterprises in onshore & offshore wind in Indonesia

On behalf of the Netherlands Enterprise Agency (RVO) and initiated by the Ministry of Foreign Affairs of the Netherlands, Dutch consultancy Pondera assessed numerous opportunities for Dutch enterprises in the onshore and offshore wind market in Indonesia.

Indonesia has set targets for 23% of renewable energy in its energy mix by 2025. However plenty interest from renewable energy developers and the availability of financing on attractive terms, the development of renewable energy infrastructure has been slow.

Several reasons can be atributed to this, including the abundance of domestic coal which makes Indonesian energy sector relatively immune to foreign influence, fostering a dependence on fossil fuels, subsidies and incentives favouring fossil fuels, prolonging reliance and hindering renewables’ competitiveness, and carbon taxation not yet incentivizing the use of sustainable alternatives.

Pathway to net zero

Nevertheless, Indonesia remains committed to decrease its emissions and fostering renewable growth. The Government of Indonesia has announced its plan to a substantial reduction in emissions by 2030 and aspirations to reach net zero by 2060. To achieve those objectives, Indonesia will need to retire coal-fired power plants, intensify renewable energy investments, adopt efficient technologies, and modernize its infrastructure.

Just Energy Transition

The Just Energy Transition Partnership (JETP), created during the G20 summit in Bali, aims to help enhance the energy transition. A group of countries, known as the International Partners Group (IPG), together with the Government of Indonesia, have pledged US$20bn to support a Just Energy Transition in Indonesia.

Pondera has studied the potential contribution of the Netherlands to the JETP in Indonesia. In 2016 Pondera became active in Indonesia, aiming to accelerate the energy transition in emerging markets. Pondera’s experience in the Indonesian renewable energy sector reinforce the analysis on planned CIPP projects and strategic (policy) interventions. The study matches project opportunities and unique Dutch expertise.

The most promising opportunities fall under 8 themes. Dutch companies may receive support from Dutch government-funded facilities and are well-positioned to play a key implementing role in these themes, being:

  • Inter-island grid connections:sebsea cables & HVDC technology implementation
  • Carbon capture utilization and storage
  • Wind power: onshore and offshore
  • Floating solar PV and (pumped) hydro
  • Sustainability analysis, reporting and taxation
  • Sustainable solutions for methane emission reduction
  • Offshore floating solar PV
  • Renewable energy project procurement

Onshore & Offshore wind opportunities

The wind energy potential in Indonesia is at least tens of GW for onshore and offshore wind. Currently, only just over 150 MW from 2 utility-scale wind farms is installed and 3 wind farms are in the tender process. These 3 projects are facing significant delays in reaching financial closure. Offshore wind is still at a very early stage, with a few ongoing pre-feasibility studies. A regulatory framework for this technology is also missing. According to Pondera, implementing wind power in Indonesia is mainly hampered by:

  • current regulatory framework on permits, land acquisition, and project tendering
  • a lack of wind and spatial data, and
  • authorities’ limited experience with the technology

The Indonesian government acknowledges these challenges and welcomes support to overcome them. This creates technical assistance opportunities to enhance the regulatory framework, institutional development and project preparation for wind energy development. Expected projects will provide sufficient opportunities for the Netherlands to support Indonesia. Read the full study here.

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