Financial Support for the Energy Transition in the Residential Sector

Jakarta, June 9, 2022 – The potential for the use of rooftop PV in the residential sector is one of the largest in accelerating the energy transition and achieving Indonesia’s renewable energy mix target. Appropriate policy instruments and attractive financial support are some of the supporting factors in encouraging the massive adoption of rooftop solar PV in Indonesia.

Andriah Feby Misna, Director of New and Renewable Energy, stated that Indonesia has several national targets, i.e achieving a 23% renewable energy mix by 2025, reducing emissions by 29% with own efforts and 41% with foreign assistance by 2030, and achieving net zero emission by 2060.

“For this reason, the Ministry of Energy and Mineral Resources has developed various strategies such as green RUPTL at PLN and encouraging the use of rooftop solar in the household sector and including them in national strategic programs. As support (on rooftop PV), we issued the Minister Regulation No. 26/2021,” she explained. 

Feby added that the current number of rooftop solar customers is 4,377 households, and there has been significant growth since the issuance of a ministerial regulation that regulates PLN customers who install rooftop PV in 2018.

Feby does not deny that currently there are still barriers in the implementation of the MEMR Regulation No. 26/2021, but she said that her party is currently trying to find a win-win solution so that the regulation can take effect immediately.

In addition to regulations that are still not optimal, another obstacle to the use of rooftop solar in the household sector is the initial investment which is still relatively large for the community. However, there is still a large market potential in the household sector.

Fabby Tumiwa, Executive Director of IESR, explained that based on a gradual market survey conducted by IESR since 2019, the market potential for rooftop solar PV in the residential sector in a some big cities in Indonesia such as Greater Jakarta, Surabaya, Central Java and Bali reached 34 – 116 GW.

“The potential of the energy transition market in the household sector is huge. Those who fall into the category of early followers and early adopters need to be caught. Because they are quite familiar with their products (rooftop PV) and have the intention to install them, but are constrained by a large initial investment,” Fabby explained.

Respondents of the survey expect credit products from banks with a tenor range of 24-48 months with low interest.

Veronika Susanti, Digital Lending Division Head of OCBC NISP bank explained that the renewable energy sector is one of the concerns of the banking sector to obtain funding.

“Currently we have a solar panel financing program with two schemes. First, 0% credit card installments and cash loan for a maximum of 36 months,” said Veronika.

She added that her party was collaborating with solar panel service providers to make it easier for customers to access this rooftop PV financing scheme as well as to learn about technology so that they better understand the risks and opportunities of rooftop PV.

Fendi Gunawan Liem, founder and CEO of SEDAYU Solar also emphasized that the potential for the residential sector to grow and develop is enormous.

“The residential sector is the sector that has the latest solar panel installation regulations, but has the largest customer growth compared to other sectors,” said Fendi.

Banks as financial institutions need to see rooftop solar as a low-risk asset, for that it is necessary to study rooftop solar power technology so that they can make accurate risk analysis. Thus, banks can design more friendly credit schemes with more diverse tenors and lower interest rates.

Indonesia Needs not only Energy Transition, but The Accelerated One

Jakarta, May 31, 2022 – The geopolitical conflicts that have occurred in the last few months have affected a number of global situations, one of which is the condition of energy supply. European Union countries that feel the impact of the disruption in energy supply have begun to look for various alternatives, both in the short and long term. As a long-term solution, the European Union issued a new energy policy entitled “REpower EU”. Under this policy, the European Union plans to increase its renewable energy capacity to 740 GWdc by 2030 to reduce their dependence on Russia’s fossil energy and ensure its energy security.

Fabby Tumiwa, Executive Director of IESR, at the MGN Media Summit on Tuesday, May 31, 2022, stated that the current global geopolitical situation is indeed not favorable for the energy transition not only in Indonesia but in various countries in the world. However, after several months of ongoing geopolitical tensions, a number of countries have begun to use this momentum to break away from dependence on fossil energy and accelerate their renewable energy. Indonesia should also be able to do the same thing for instance by ensuring that the regulations made to support the acceleration of renewable energy such as the Minister of Energy and Mineral Resources Decree number 26/2021 are implemented.

“The weakness of this country is that the plan has been made but its implementation and enforcement is still weak, for example the Minister of Energy and Mineral Resources Regulation 26/2021 regarding rooftop PV,” Fabby explained.

Fabby explained that the MEMR Ministerial Regulation number 26/2021 had not yet been implemented by PLN because several issues were still hampered, one of which was the Ministry of Finance’s compensation for PLN, whose regulations had not yet been made.

“Then maybe the DPR RI can summon the Minister of Finance and the Minister of Energy and Mineral Resources to explain the situation and ask them to immediately design a compensation scheme for PLN,” he added.

The energy transition situation in Indonesia itself is not very encouraging. Having a renewables mix target of 23% in 2025, data from the Ministry of Energy and Mineral Resources in February 2022 shows that the target has only been achieved around 11.5%. Sugeng Suparwoto, Chairman of Commission VII DPR RI which handles energy, admitted that it was difficult to pursue the renewable energy mix target, but that did not mean it was impossible.

“I have to admit this is hard, but with our extra hard work together, I am still optimistic that we can achieve it,” explained Sugeng.

PLN as a key actor, especially in accelerating renewable energy, stated that apart from providing energy, the demand side for energy must also be ensured.

“We also need to ensure that the demand for renewable energy is available. PLN itself will rely heavily on existing technology to pursue net-zero emission (NZE) and energy mix targets,” Cita Dewi, EVP Planning & Engineering for EBT at PT PLN (Persero), explained.

Cita added that his party cannot work alone to execute the acceleration of renewable energy on its own. It takes collaboration of various parties to ensure this energy transition runs.

Daniel Purba, Senior Vice President, Strategy & Investment, PT Pertamina (Persero) stated that our fossil reserves are not as large as they used to be. In terms of consumption, even though at this time fossils still dominate, in the future it will definitely change.

“Even though now, for example, fuel dominates people’s consumption, in the future electric vehicles and alternative fuels such as hydrogen will be widely used,” he said.

With this phenomenon, corporations have a need to diversify and even transform their business so that the company can be sustainable, and gain the trust of both investors and consumers.

“Pertamina itself has started to diversify its business by starting to develop hydrogen and using solar power in our operational offices,” added Daniel.

Highlighting energy policy in Indonesia, Djoko Siswanto, Secretary General of the National Energy Council, stated that Indonesia has quite complete policy instruments, starting from road maps, targets, and plans. However, according to him, it is important to measure whether we are on the right path of the various policy instruments that exist in Indonesia and if Indonesia energy security is resilient.

“Various policy schemes that currently exist put our energy security index in the ‘resistant’ category. We haven’t been able to reach the ‘very resilient’ category because of several things, including our energy (oil) imports are still high, our energy infrastructure (grid) still needs to be improved, and our NRE mix is ​​still low,” Djoko explained.

Djoko added that the government needs to resolve these issues to ensure Indonesia’s energy security and to reduce GHG emissions from the energy sector. In this way, Indonesia’s commitments to various international agreements are fulfilled.

C20 Indonesia Urge for a Just Energy Transition

Jakarta, 30 June 2022 – Energy transition is one of the priority issues of Indonesia’s 2022 G20 presidency. This role as the leader of the G20 countries is certainly a strategic momentum for Indonesia to show its commitment to the energy transition. The Paris Agreement in 2015 agreed to limit the earth’s temperature increase to no more than 2 degrees Celsius, even trying to keep it at the level of 1.5 degrees. For this reason, all parties must reduce their emissions from high-emission sectors such as energy and achieve carbon neutral status by the middle of this century.

To explore various perspectives on energy transition, the Civil 20 engagement group held a workshop entitled “Making a Just Energy Transition for All” inviting other engagement groups i.e: Think 20 (T20), Science 20 (S20) and Business 20 (B20). Also present as a panelist, Widhyawan Prawiraatmadja, former governor of Indonesia for OPEC.

From the ongoing discussion, all the speakers agreed to put the human aspect as the axis of the energy transition. Vivian Sunwoo Lee, International Coordinator of C20, said that C20 continues to urge the importance of immediately shifting from fossil-based energy systems to renewable energy-based energy systems.

“There are a number of risks, especially from a financial and economic perspective, from fossil energy infrastructure that has the potential to become a stranded asset if we don’t hurry to make the energy transition,” he said. Vivian also highlighted the large fossil energy subsidies that are still being provided by the G20 countries.

Professor Yunita Winarto, co-chair of Task Force 5 S20 stated the importance of an interdisciplinary approach in planning and implementing energy transitions.

“The interdisciplinary approach will shift the paradigm from exploitative-extractive to environmentally friendly-resilient, from a linear economy to a circular economy, and from good governance to proper governance. That way, a balance will undoubtedly be created according to the principles of the planet, people, & prosperity for all,” Yunita explained.

Moekti H. Soejachmoen, Lead co-chair of Task Force 3 T20, explained the importance of the carbon economic value instrument in the context of energy transition.

“The growth in energy demand will definitely continue to grow. It is inevitable, so we have to look for various ways to fulfill this energy need, but on the other hand our need to reduce emissions is also achieved. So this carbon economic value instrument is important,” explained Moekti.

Moekti also added that it was important for Indonesia to ensure that the issues pushed in this year’s G20 presidency would still be discussed in the following years. Given the energy transition is a long process and takes years.

The energy transition will completely change the face of Indonesia’s energy sector. Oki Muraza, Policy Manager of the Task Force Energy Sustainability and Climate, B20, explained that the affordability factor should be one of the main considerations in making the energy transition.

“We have to ensure that the affordability factor of energy during this transition process can be maintained. In addition, we also need to pay attention to people who are currently working in the hydrocarbon sector, how they can be trained so they don’t lose their jobs in the energy transition,” explained Oki.

Widhyawan Prawiraatmadja reminded that it is necessary to harmonize perceptions, rules and policies at the ministry level related to energy transition and the achievement of Indonesia’s commitments in the international level such as NDC. This is in addition to accelerating the achievement of national and international targets, as well as to give the same signal to investors.

“If the signals sent to investors are mixed, the perception of investors is that the risk of investing in Indonesia is high, and it is not impossible to make them reconsider investing,” said Widhyawan.

South Korea Supports Indonesia to Reach Its Renewable Energy Target

Jakarta, 19 May 2022 Renewable energy is seen as a quick win to secure a global temperature rise of no more than 2 degrees Celsius, according to the Paris Agreement. Indonesia whose emission reduction targets 29% on self-effort and 41% by international assistance by 2030 is actively seeking a more effective way to secure its target. The remaining time to achieve the target is only around 8 years. Yayan Mulyana from the Foreign Policy Strategy Agency of the Ministry of Foreign Affairs Indonesia admitted that it’s hard but Indonesia is optimistic to achieve it.

Gandi Sulistiyanto, Indonesian Ambassador for South Korea, during his keynote speech in the webinar “Enhancing Investments from South Korea for Renewable Energy Development in Indonesia” hosted by the Ministry of Foreign Affairs Republic Indonesia on Thursday, 19 May 2022, said that both countries develop momentum and mutual interest in renewable energy investment. 

“Indonesia embassy in Seoul ready to support the Government’s target to have 23% of renewables in 2025. Meanwhile, South Korea aims to have 35% renewable shares in 2040. Both countries are in intense communications to develop EV battery manufacturers to support EV ecosystems that start penetrating the Indonesia market,” Gandhi said.

He added that in accordance with sustainability and human development, his office focuses on four sectors i.e: human development, science and technology, sustainable finance development, and national energy security.

Fabby Tumiwa, the Executive Director of IESR said that energy transformation is the heart of climate change mitigation. 

“Energy consumption in Indonesia is projected to increase 7-8 times than the current rate as a consequence of massive electrification of transportation and other home appliances, we have a double consequence of the situation i.e to replace the current fossil energy with renewable and to fulfill the growing demand at the same time,” he said.

Indonesia’s LTS LCCR document projects that there will be rapid emission reduction after 2030 if power generation is supplied by renewable 43% by 2050. It tries to be translated into the current PLN’s RUPTL that shows the government’s eagerness to deploy more renewable energy in the power sector in Indonesia. A study has shown that Indonesia is technically feasible and economically viable to achieve zero emissions by 2050 using 100% renewable energy. 

“IESR Deep decarbonization of Indonesia’s energy system study presents a step by step roadmap to achieve net zero in 2050 covering transportation, power sector, and industry,” Fabby added. 

Solar, whose residential potential – reaches up to 655 GWp will be the backbone of the renewable-based energy system.

Minho Kim, Komipo Korea State-Owned Company said that as a businessman, his company sees Indonesia as a potential market as well as a partner for renewable energy considering the abundant resources available. 

“Komipo already has operations in Indonesia for geothermal and hydropower projects. Later on, we plan to develop green hydrogen/ammonia as well,” Minho said.

Minho added that the emergence of the carbon market makes renewables a new hot commodity because it is needed. “As more companies join the RE 100 initiatives, the demand for clean energy is higher, therefore providing clean energy is no longer an option but a must as it is what is needed by the industry and demanded by customers,” he concluded.

Climate Emergency Should be the Main Consideration of Energy Policy

The race to address climate change is getting tighter and more challenging. Each country is demanded to revisit its energy policy on time basis and align it with the Paris Agreement i.e to limit global temperature to no more than 2 degrees Celsius in 2050. The energy sector, as one of the most polluting sectors, is under the spotlight to reduce its greenhouse gas emissions, one of which is by choosing the most suitable less polluting power plant to supply energy needs. 

The nuclear power plant is in a debatable position related to its ability to provide clean energy. For years, countries like France, Germany, and Japan have relied on nuclear power to fulfill their  energy demand. However, there are haunting challenges such as the long construction period, relatively high cost, and the most alarming is the safety issue of the generator. The world notes at least two major nuclear accidents i.e Chernobyl in 1986 and Fukushima in 2011. Even the Chernobyl accident in 1986 still lingers in our mind as its impact is still happening today.

Commemorating the Chernobyl accident, on April 26th 2022,  Unika Soegijapranata and Masyarakat Rekso Bumi (Marem) hosted a webinar, titled “Reflection on Chernobyl Accident and Nuclear Option for Indonesia Power Sector”,  reflecting on the accident three decades ago and its correlation on Indonesia’s discourse to have nuclear power plant to provide reliable energy supply and to seize the net-zero emission target by 2060. 

Herman Darnel Ibrahim, a member of Indonesia’s National Energy Council, stated that Indonesia is still able to fulfill the net zero emissions target without having nuclear power plants. 

“By maximizing all kinds (variable) of renewable energy in Indonesia, especially solar and wind whose cost is continuously declining, we may not need nuclear to be net-zero,” Herman said.

Herman continued to explain that the global capacity of nuclear power keeps declining. New nuclear power plants coming online are fewer than those decommissioning. Besides that, there is also a concern about construction delays. 

“There are generally delays on construction of nuclear power plants up to 3 years, even more, this is, of course, adding up the construction cost and LCOE.”

The lengthy construction period became the concern of Mycle Schneider, an international nuclear consultant, who emphasized the time urgency in deciding the energy policy.

“Please keep in mind that the state we are in now is a climate emergency, which means it includes time pressure. To address this of course we need fast and relatively cheap solutions,” Mycle said.

Compared to other available options such as renewables or energy efficiency, nuclear power plant construction is considered the slowest option, which makes it irrelevant to address the provision of clean energy to align with the net-zero target.

Mycle added that even the nuclear industry cannot really forecast the future of the nuclear power plants. One in eight nuclear reactors that finished the construction never made it to the grid. 30 of 55 nuclear reactors currently under construction are behind schedule. In general, there is an increasing gap between nuclear perception and (nuclear) industrial reality. 

“In the coming years, decision making for energy policy should not be based on economics only, but should be based on feasibility and industrial reality,” Mycle concluded in his presentation.

The Russia-Ukraine Conflict and Its Impact on Indonesia’s Energy Sector

Jakarta, April 14, 2022 – The military conflict involving Russia and Ukraine is still ongoing. A number of direct and indirect impacts have begun to be felt by a number of countries, especially European countries because Russia is one of the main suppliers of gas and oil for a number of European countries.

Russia’s political attitude which continues to carry out military action has put the ‘customers’ of Russian oil and gas in a dilemma. If they continue to buy oil and gas from Russia, they are indirectly contributing to the financing of the war. If they don’t buy the oil and gas, their energy security is threatened. Gas and oil currently available have also increased in price, which means higher costs.

Will the Russia-Ukraine war situation have an impact on Indonesia? The Clean, Affordable, and Secure Energy for Southeast Asia (CASE) project held a public discussion entitled “The Geopolitics of Energy Transition” to examine the impact of the Russia-Ukraine war on the global energy system and lessons learned for Indonesia’s energy transition.

Fabian Hein, analyst of energy statistics and scenarios, Agora Energiewende explained that currently European Union countries such as Germany, are trying to reduce dependency on fossil energy, especially gas.

“There are two approaches to dealing with this crisis. The first is a short-term approach by replacing gas with coal and oil. Second is a long-term strategic plan by increasing the capacity of renewable energy in the energy system,” Fabian explained.

Dependence on fossil energy does not only occur in Germany, or the European Union countries. Indonesia also has a large dependence on fossil energy for both electricity generation and fuel for the transportation sector.

Widhyawan Prawiraatmadja, a lecturer at SBM ITB, warned Indonesia to be careful in viewing and responding to this geopolitical issue.

“The issue of the current energy crisis is not only an imbalance between supply-demand, but there are other factors, namely war, so that energy commodity prices fluctuate and in the Indonesian context the government is in a difficult choice between providing more subsidies or increasing energy prices such as fuel,” Widhyawan explained. .

The choice of the Indonesian government to maintain the share of fossil energy and even provide subsidies through various policies is increasingly irrelevant in these times. The Executive Director of the Institute for Essential Services Reform, Fabby Tumiwa, stated that the lesson that can be drawn from the impact of the Russia-Ukraine conflict mainly on European countries is that dependence on one commodity is a threat to the energy security of a region.

“The IEA also criticized that European countries failed to implement the first principle of energy security, namely supply variation. Apart from depending on one type of commodity, Europe is also very dependent on one country as a supplier, this is vulnerable to the security of energy supply there,” he said.

Fabby continued, that the Russia-Ukraine conflict had a significant global impact on energy development. Renewable energy is more resilient in terms of price and supply due to its local nature. So developing renewable energy in Indonesia is increasingly becoming a necessity in the future to ensure energy security.

Looking for Funding Schemes and Readiness of Solar PV Project Development

Workshop Financing Solar Energy - Indonesia Solar Summit

Jakarta, 20 April 2022– The issue of financing is still one of the big obstacles in developing renewable energy such as rooftop solar power plants in Indonesia. There is a large gap between the government’s agenda to accelerate solar penetration and access to funding for both developer and household projects. Difficult access to funding can also be a challenge for the development of solar energy in Indonesia.

Enthusiasm to develop solar energy is growing rapidly in Indonesia. At the Indonesia Solar Summit 2022, at least 31 parties are committed to installing solar PV with a capacity of up to 2,300 MW. The availability of cheap financing mechanisms can support the achievement of these commitments.

Elvi Nasution, Director of Solutions Initiatives, explained that there is one financing scheme that is not widely available, namely project financing. Project financing is limited financing of a new project that will be carried out through the establishment of a new company (separate from the existing company). The project finance provider can be a bank or a special financial institution (special mission vehicle).

“Compared to Malaysia, Thailand and the Philippines, project financing in Indonesia is relatively expensive. The contributing factors include government guarantees, the amount of debt, and the structure of the electricity business which is currently monopolized by PLN, so developers often encounter difficulties because there is only one offtaker in Indonesia,” explained Elvi.

Jagjeet Shareen, Assistant Director of General International Solar Alliance, in the same forum saw the importance of the role of financial institutions such as banks to participate in accelerating solar penetration.

“Providing training to bank employees is important to make them understand the character of solar business and calculate the financing risk for it. The cost of installing solar PV  may still be relatively expensive, but it’s actually not that expensive because the cost of solar continues to decline,” he said.

Jagjeet shared India’s experience in providing massive training to bank employees which had a significant impact because the bank then became more familiar with PV rooftop projects, their risks and development opportunities.

Both Elvi and Jagjeet agreed that in order to accelerate the penetration of PV rooftop, synergies from various parties, such as financial institutions, need to study the financing structure based on the conditions and potential in each location.

PLN as the single offtaker in Indonesia also needs to transform its business model so that it is relevant to the current situation and in the future where renewable energy will have a larger portion. Especially for solar development, PLN needs to make regular auction plans and finalize the development plan (pipeline). Good and clear project planning will increase the confidence of investors and financial institutions to fund a PV rooftop project for instance.

Prospective users of rooftop solar power plants are more or less aware of the situation of developing solar energy in Indonesia, which still needs a lot of improvement. Erwin Kasim, one of the participants of the Financing Solar Energy Indonesia Solar Summit 2022 workshop, asked about the minimum subsidy for initial installation costs for households who want to install rooftop PV and what schemes can be considered to relieve potential PV rooftop customers.

The bank, as the party that is expected to provide a solution to this initial cost problem, emphasizes the government’s role in making policies that are friendly to all parties in the development of this rooftop solar power plant.

“The use of solar requires government intervention to create financing schemes, protect banks from repayment failures, and incentives for customers,” said a representative of Bank Rakyat Indonesia (BRI) who attended the same forum.

The government’s role in issuing a customer-friendly rooftop PV  financing policy is highly expected. Because at this time, financing through the bank occurs because of a business-to-business agreement between the developer and the bank without any special policy from the government that regulates the financing of rooftop solar power plants by the bank.

Boosting Confidence for Solar Investors in Indonesia

Jakarta, 7 April 2022 – Located on the equator, Indonesia is blessed with abundant yet (unfortunately) untapped solar energy potentials. The Institute for Essentials Services Reform’s study titled, “Beyond 207 Gigawatts: Unleashing Indonesia’s Solar Potential” shows that based on land suitability there are 3 – 20 TWp solar potentials that may generate power up to 4,7 – 27 TWh annually. The huge potential is sadly not followed by proper utilization. The MEMR noted that until the end of 2021 total PV capacity in Indonesia is only around 200 MW. 

Fabby Tumiwa, the Chairman of Indonesia Solar Energy Association and the Executive Director of the Institute for Essential Services Reform, during the South Korea Renewable Energy Investment Forum, said that the solar market outlook looks promising especially since the end of 2021 when PLN announced its recent Business Plan (RUPTL) in which it gives spacious slot for renewable energy.

“Solar becomes government focus in RUPTL to reach the 23% RUEN target in 2025 as well the net-zero emissions in 2060 or sooner. Approaches on various types of PV i.e floating, and rooftop need to be done through the regulation improvement,” Fabby said.

Eka Satria, CEO of Medco Power Indonesia, shares his perspective on the current energy transition happening in Indonesia. He believes that the success of energy transition should be driven by policy. 

“Energy transition needs a different environment. We cannot just leave it to the market mechanism where people choose what kind of energy they want to have. Especially in the beginning, policy-driven action is needed,” Eka explained.

Eka added that the best practice in countries that have started the energy transition early is always initiated by the Government that sets up a policy to drive both energy providers and energy consumers to shift to renewable energy.

Byeongwoo Jeon, Managing Director of Global Business Department KEPCO KDN, shares his appreciation that renewable energy development in Indonesia is gaining traction yet a set of challenges still follow. 

“Land acquisition is our number one challenge. In the area where energy demand is high, we usually experience land shortages to install solar PV,” he said.

Jeon also highlighted the complex process to get financing for renewable energy projects. The current regulation such as the required local content and the process to get PPA (power purchase agreement)happening in the lengthy process makes renewable projects hard to get financing.

Fabby Tumiwa added that besides the PPA process that should be shortened, consistent regulation is also important to give investors and the business sector confidence in planting their capital in Indonesia’s renewable energy projects. 

“PLN must also implement the recent Ministerial Regulation number 26/2021 about rooftop solar customers to accelerate rooftop PV adoption,” he said.

The current MEMR’s regulation no 26/2021 about rooftop solar PV contains some improvements from the previous MEMR regulation no 49/2018 such as the 1:1 export-import tariffs, a longer reset period, and a shorter period to obtain approval for construction, but is not yet implemented by PLN though it is officially released by the Ministry of Energy and Mineral Resources as per January 2022.

Russia’s Invasion May Affect Energy Transition in ASEAN

Jakarta, 5 April 2022 – Russia’s invasion of Ukraine for the past month has been steering up the global reaction, especially on energy security issues. Russia is known for its oil and gas global exporter, with the invasion going on, global leaders are taking stands in giving sanctions not to buy gas from Russia. Is this good or bad? We may need a longer time to see the impact, but one thing’s for sure, Russia’s sanction has become one of the triggers for European Union Countries to accelerate their energy transition and  seal emergency securities as well as reduce their reliance on fossil fuels.

Fabby Tumiwa, the Executive Director of the Institute for Essential Services Reform (IESR), said that EU action to ensure their energy security is accelerating the transition.

“EU countries try to reduce their reliance on fossil fuel by developing technology such as green hydrogen to ensure their energy security. This is such good news for the EU region yet it has a spillover effect as countries like Germany commit to supporting energy transition in emerging countries like Indonesia. The current situation may affect the speed and funding for the energy transition in emerging economy countries,” he explained.

Sufficient funding is crucial for decarbonizing the whole energy system. Enough funding means the government will be able to build modern low-carbon energy infrastructure. As most of the emerging countries lie in the Southeast Asia region, this area has become the hotspot for decarbonization. As one of the most populated regions, Southeast Asia’s energy demand is constantly growing. Ensuring the region has sufficient funding to transform its energy system into a cleaner one will be one of the determining factors of global decarbonization.

Consisting of ten countries, ASEAN has different characteristics in developing its energy transition mechanism based on the national priorities of each country. The various situations create different opportunities, one thing in common is that renewable energy sources, especially solar, are available abundantly in the region. Fabby added that soon solar energy will be a commodity just like oil and gas at the moment. 

“Therefore, it is important for ASEAN to have its manufacturing facility (for solar panels). To make sure the operation of the manufacturing facilities technology transfer from the main producer is a must,” Fabby said.

Sara Jane Ahmed, Founder, Financial Futures Center Advisor, Vulnerable 20 Group of Finance Ministers, added that partnership will be the key for ASEAN countries in accelerating the energy transition.

“In this time, China can actually play a bigger role by providing funds and transferring its technology to ASEAN countries,” she said.