Beijing (MidLand) – Indonesia’s Just Energy Transition Partnership (JETP) is an example of a financing scheme for Indonesia’s energy transition presented at the East Asia Forum 2024, said JETP Secretariat Chief Edo Mahendra.
“Indonesia needs more partnerships, we need more support, but the question is: what? We expect something different, because we want to be part of economic development with low-carbon quality, so we use different standards,” he said in Beijing on Thursday.
JETP is a financing commitment worth US$20 billion (approximately Rs301 trillion) for Indonesia’s energy transition program, agreed on the sidelines of the G20 summit in Bali in November 2022.
JETP financing is established between Indonesia and developed countries that are members of the International Partners Group (IPG), led by the United States and Japan and whose members are Denmark, England, Italy, Germany, Canada, Norway, France and the European Union.
This commitment has even increased to US$21.6 billion, of which US$11.6 billion will come from public funds from IPG countries, while US$10 billion will come from international banks that have joined the Glasgow Financial Alliance for Net Zero (GFANZ) working group.
As of November 21, 2023, JETP’s Comprehensive Investment and Policy Plan (CIPP) contains plans for investment projects that JETP may finance.
There are five areas of focus, namely, transmission development, early cessation of operations of coal-fired steam power plants (PLTUs), acceleration of renewable energy that can be controlled and constant (dispatchable), acceleration of variable renewable energy (weather dependent), and improvement of the renewable energy supply chain.
“In my opinion, JETP is different because it involves partnerships in the private sector and all parties are encouraged to follow the rules,”
he said while speaking at a forum organised by the Asian Development Bank (ADB).
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However, JETP funding is currently even more limited type of club financing not yet as type of syndicated financing. Thus, there are still many who have not yet organized themselves. “If you want JETP 2.0, you need a more efficient synchronization between public and private funding,” Edo explained.
It is known that the composition of JETP funding consists of non-grant funding (US$1.59 billion), grant funding (US$6.94 billion), equity investments (US$384.5 million), grants and technical assistance (US$295.4 million), guarantees (US$75 million), multilateral guarantees (US$2 billion), and other forms (US$270.3 million). This means that the grant share amounts to only about US$300 million, or 1.4% of the total JETP funding commitment.
“The next good example of JETP is the ‘Energy Transition Mechanism’ (ETM) that was implemented to retire PLTU Cirebon-1 in West Java. Without this ETM mechanism, there would be no cessation of operations of PLTU Cirebon-1 and we hope to do the same for other PLTUs,” Edo said.
The Energy Transition Mechanism (ETM) is a program to scale up energy infrastructure development and accelerate the energy transition towards net-zero emissions (NZE) with the principles of equity and affordability in 2060 or faster.
ETM is financed through a form of blended finance. The funding will come from various sources such as government institutions, development banks, commercial banks, climate change funds, equity investors, insurance companies, as well as local and international philanthropists which will be managed by PT Sarana Multi Infrastruktur (PT SMI).
The ETM funding commitment is part of the JETP funding commitment identified by the funder (IPG country), therefore the ETM funding of US$2.559 billion is counted in the JETP funding commitment.
In JETP, ETM is the early termination of operations of PLTU Cirebon-1, West Java, with a capacity of 660 megawatts (MW). The synergy is realized between PT Perusahaan Perusahaan Perusahaan PerusahaanEL Negara (Persero), Cirebon Electric Power (CEP), Asian Development Bank (ADB) and Indonesia Investment Authority (INA).
JETP funding for the early retirement of PLTU Cirebon-1 continues, including with ADB. If implemented, PLTU operations will end in 2035, or seven years earlier than planned.
“The third example of JETP is intergovernmental cooperation, namely the export of clean, low-carbon electricity from Indonesia to Singapore. This breaks the vicious cycle where the construction of new power plants is minimal because there is no demand for electricity with new energy,” Edo said.
Indonesia signed a Memorandum of Understanding (MoU) on cross-border electricity interconnection with Singapore at the Indonesia International Sustainability Forum 2024 on 5 September 2024.
The value of the 3.4 GW electricity export project from Indonesia to Singapore has reached US$20 billion (about Rs301 trillion). Singapore will import 4 gigawatts of low-carbon electricity by 2035, of which 50% of the total required will come from Indonesia.
The Indonesia-Singapore cooperation is a framework to facilitate commercial projects to develop carbon energy and cross-border electricity trade, as well as interconnection between the two countries.
The Energy Market Authority (EMA), Singapore’s energy market regulator, has now given conditional approval to five companies to import 2 GW of low-carbon electricity from Indonesia to Singapore from powered solar power plants (PLTS).
The five companies have conducted feasibility studies, consisting of the Pacific Medco Solar Energy Medco Power consortium with consortium partners PacificLight Power Pte Ltd (PLP) and Gallant Venture Ltd, Salim Group Company, Adaro Green and TBS Energi Utama.
“I think the next government that will take office next month will carry forward all these commitments,” Edo said.
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Reporter: Desk Lidya Natalia
Publisher: Rahmad Nasution
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