Financing PV/Solar Energy Projects
in Indonesia
Paul Heinemann – Director DEG Office Jakarta
Thorsten Schneider – Senior Project Manager KfW Office Jakarta
May 2014
Bank aus Verantwortung
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DEG - Activities in Renewable Energy
 Financing of private sector investments with a positive development impact
 30 % of annual commitments in climate protection projects including
renewables
 In depth-expertise in renewable energy built-up from a long track-record of
projects globally, comprising hydro, wind, solar, biomass and geothermal
Renewable financing since to date:
- USD 750 million in total
- more than 40 projects globally
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DEG criteria for financing renewable energy/
grid-connected solar/PV (private sector)
Financing
›Equity ratio of appr. 30% with adequate cashflow oriented structure
Promoter/Sponsor
› Sector experienced, being at risk
› Corporate governance, transparency
Construction
›Implementation complexity relatively low, but
EPC contract with completion and performance
guarantees preferred
›Arrangements to cover cost-overrun risks
Operation
›Experienced operator, long-term O&M contract
›Proven technologies from well established
manufacturers/suppliers with warranties/power
output guarantees (insurance-backed)
Sales/Off-take
›Solar still highly relying on subsidies
›Regulatory Framework/Incentives (?):
Feed-in tariff (obligatory dispatch) and/or longterm PPA (bankable, take-or-pay)
›Creditworthiness of off-taker (commercial
attractiveness to use solar)
›Grid connection (who is responsible), grid
management impacts
Energy Resource
›Power generation estimation (solar radiation,
planned losses etc.) to be confirmed by
independent technical engineer same as
adequacy of equipment
Permits/Licenses
›All required permits, rights, licenses etc. in place
including land
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Solar/PV in Indonesia
What we know:
›Government targets to increase renewable
proportion (however, not mandatory), other
interests: increase electrification rate,
substitute expensive diesel
›Announced solar tariff (max. 0,25 USD/kWh,
reverse auction), 20-y PPA
›First tender of around 150 MW in pre-defined
regions was initialized
Challenges:
› Initialized first tender of 140 MW very
scattered
› Small-scale projects due to size difficult to be
financed stand-alone as project finance
› Lack of solar-experienced players in
Indonesia (e.g. JV local (permit) developer
and int. experienced solar developer/investor)
What we still need to understand:
›Current status?
›Bankability of template PPA (e.g. take-orpay?, curtailment risks)
›Specific tender criteria/new concept
(which/when)?
Possible approaches:
› Bundling of projects with funding via holding
(scaling potential), debt or equity
› Initially on corporate balance sheet
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KfW Development Bank - Financing Structures for the public sector
Tailor-made implementation structures for different investment volumes
Government
Government
Utility
Financial Intermediary
(usually)
big investments
(usually) many
small investments
PLN
(usually)
big investments
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1,000 Islands RE for Electrification Program, Indonesia
Increase Electricity Access through RETs and Grid Expansion
› Situation at the Outset
› Low electrification rate, particularly beyond Java-Bali grid structure
› Remote areas with electricity access relying primarily on diesel generation sets,
despite abundant renewable energy resources
› Government priorities: a) increase electrification rate, b) increase RE share
› Approach
› Support governmental efforts in expanding electricity access through least cost
RE technologies and grid expansion
› Objectives/ Impacts (pilot phase)
› Electricity access for 20,000 households
› Reduced GHG emissions and reliance on diesel
› Contribution of FC (pilot phase)
› KfW funds: EUR 65 mil. promotional loan
› Total costs: EUR 85 mil.
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Search KfW Tenders on Germany Trade and Invest
http://www.gtai.de/GTAI/Navigation/EN/Trade/search-kfw-tenders.html
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Contact
Address:
Menara BCA, 46th floor
Jalan M. H. Thamrin No. 1
Jakarta 10310
Indonesia
Phone: +62 21 23 58 74 31/41
Fax: +62 21 23 58 74 40
Jochen Saleth
Director
KfW Office Jakarta
Jochen.Saleth@KfW.de
Paul Heinemann
Director
DEG Office Jakarta
Paul.Heinemann@deginvest.de
Thorsten Schneider
Senior Project Manager KfW (Energy)
Thorsten.Schneider@KfW.de
Bank aus Verantwortung