UNDP support leads to major deal to develop wind powerAug 19, 2015
JAKARTA (August 19, 2015) – Multi-million dollar deals between the Government of Indonesia and two foreign investors to develop wind power projects worth US$657 million was signed on Tuesday, and UNDP’s support was instrumental in the signing of the Memorandum of Understanding (MOU).
Indonesian President Joko Widodo witnessed the signing of the MOU between the Ministry of Energy and Mineral Resources and PACE Energy and Indo Win Power. PACE intends to develop a 150 MW wind farm in Lebak district, Banten province, and Indo Win Power a 132.5 MW wind farm in Jeneponto, South Sulawesi province and a 21 MW wind farm in Timor Tengah Selatan district, in Nusa Tenggara Timur province.
UNDP and the Government-led Agency for Assessment and Application of Technology (BPPT) supported the establishment of the MOU through its WHYPGEN project, which provided wind measurement data and feasibility studies in 23 potential locations for wind power generation in Indonesia. The results of the feasibility studies assisted the two firms in making their investment decisions.
UNDP has also been supporting the Ministry of Energy and Mineral Resources to develop a feed-in tariff for wind power and has been working with state-owned PT. Sarana Multi Infrastruktur to increase access to innovative sources of finance for wind investment.
UNDP Indonesia Country Director Christophe Bahuet emphasized the role of the private sector in the development of renewable energy sector in Indonesia.
“An enabling environment with attractive policies, financing and reliable data to stimulate investments will greatly assist Indonesia’s renewable energy sector, including wind power,” said Bahuet.
The Government of Indonesia this year raised its target to increase the share of renewable energy in the total energy mix to 23 percent by 2025. Currently, Indonesia uses renewable energy to produce only 6 percent of total existing power
Analysts say the main obstacles to improving the renewable energy sector in Indonesia are the high initial costs; high interests rates for loans for renewable energy projects because they are considered high risk, and a lengthy permit process.
Tuesday’s MOU is expected to accelerate the development of renewable energy sector in Indonesia and to help provinces in the country to be less dependent on fossil fuels for generating electricity.