Obama effect hits Asian green energy

By Terry Lacey

(June 30, Jakarta, Sri Lanka Guardian) Walter North, Deputy Head Mission, US Embassy to Indonesia, says the US, will back climate change and renewable energy in Indonesia and Asia.

North was speaking to the first Indonesia Clean Energy Investors Forum organized with the Private Finance Advisory Network (PFAN), showcasing its services to over 130 project developers and associates in its first public event, Thursday, in Jakarta.

Peter du Pont, PFAN team leader, announced it would focus increasing project support and financial brokering on China, Thailand, Philippines and Indonesia.

Participants welcomed that Indonesia was now a top priority for new US support for renewable energy and climate change projects in Asia.

North had said earlier this month to the Indonesian Renewable Energy Society (METI) that the US was “back in the game” on climate change for a planet in peril.

The US House of Representatives narrowly passed the climate change bill. Obama said he was very “frank and blunt” with Mrs Angela Merkel, the German Chancellor, recently in Washington, that it would take a while to turn the US into a world leader on climate change.

The House of Representatives subsequently passed the bill by only 219 votes in favor to 212 against it, with eight Republicans for and 44 Democrats against. A hard-fought but important victory for President Obama and House Speaker Nancy Pelosi.

North confirmed the Obama administration expects to re-jig the role of US international agencies including USAID, the Import-Export (Exim) Bank, the supporting role of the US Department of Energy (DOE), and private sector support mechanisms, to help Indonesian and Asian renewable energy developers to develop their projects.

The US hopes soon to upgrade the remit of the Overseas Private Investment Corporation (OPIC) to work better in Indonesia. It already works well in India. North said this meeting of the PFAN network in Jakarta was an important first step.

Du Pont, based in Bangkok, but planning to do more work from Jakarta, explained that the gap between project developers and project finance was technical, presentational and conceptual. PFAN targeted projects mostly needing investments from US$1 million to $50 millions.

The job of PFAN “Was to identify the fruit, wash it, polish it and present it on a platter to the investors”, so PFAN gave technical help to project developers on how to put their case and access funds. This was part of the Climate Technology Initiative (CTI) in cooperation with the UNFCCC Expert Group on Technology Transfer.



Eight Indonesian project developers presented their case for investment during the meeting to a board of judges, and others plan to do so in future.



The judges awarded first prize for the best bid to Selo Kencana Energi with a 7.5 MW mini-hydro plant. PT Gikoko came second with a proposal to expand their landfill methane gas technology to more sites. PT Tiara Energi came third with a proposal for a 10 megawatts (MW) rice husk fueled power station in Makassar, in Sulawesi. PFAN will help these firms complete bankable proposals and mobilize funds.



The competition was judged by Dr Indra Darmawan, director of planning for agribusiness and natural resources at the Investment Coordinating Board (BKPM); Niki R Joenoes, vice president and head of investment banking of PT BNI Securities; Dr Ir Arnold Soetrisnanto, head of nuclear project development at PT MedCo Power Indonesia and Dr Ir Verana J Wargadalam, coordinator of the renewable energy group at the Energy and Mineral Resources Ministry.

A panel of speakers discussed the barriers facing renewable energy projects in Indonesia and Asia, including the need for better adaptation of regulatory frameworks, the needs for improved power purchase agreements taking more account of appropriate risk sharing for renewable energy technologies, more incentives for green energy, and removal of subsidies on fossil fuel which hold back development of renewable energy.

Du Pont said PFAN would pursue further cooperation with the National Development Planning Agency (BAPPENAS), the Investment Coordinating Board (BKPM), the Energy and Mineral Resources Ministry, the state electricity utility (PLN) and other agencies, banks and private sector stakeholders, backed by a regional networking capacity, to support Indonesian renewable energy project developers.

Terry Lacey is a development economist who writes from Jakarta on modernization in the Muslim world, investment and trade relations with the EU and Islamic banking.

-Sri Lanka Guardian