Renewable Energy Sector Investment Remains Low Until 2022

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Adi Ahdiat 21/02/2023 15:20 WIB

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According to the Ministry of Energy and Mineral Resources (ESDM), Indonesia's renewable energy investment realization in 2022 reached US$1.6 billion, significantly lower than investment in oil and gas

Investment Realization in Indonesia's Energy and Mineral Resources Sector (2017-2022)

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Investment Realization in Indonesia's Energy and Mineral Resources Sector (2017-2022)

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The Indonesian government aims to increase the share of new and renewable energy (NRE) in the national energy mix from 13% in 2017 to 23% in 2025.

However, supporting capital remains minimal. According to a report by the Ministry of Energy and Mineral Resources (ESDM), in 2017, investment in Indonesia's NRE sector reached US$2 billion. Subsequently, it has tended to decline in the following years.

Capital flow for NRE development is smaller than that received by the mineral and coal (minerba) sector, or the oil and gas (migas) sector.

During the 2017-2022 period, investment in the minerba sector was approximately 2 to 5 times higher than that in NRE. Investment in the migas sector was even 6 to 9 times higher, as shown in the graph.

According to the International Renewable Energy Agency (IRENA), to accelerate the energy transition, Indonesia needs US$314.5 billion in investment during the 2018-2030 period, or an average of approximately US$17.4 billion per year.

This investment is needed to boost electric vehicle sales in the domestic market, increase NRE power generation capacity, and build various infrastructures to support the distribution of NRE to consumers.

"A significant obstacle in driving Indonesia's energy transition is funding and investment. Funding sources need to be broadened, and local financing capacity needs to be improved," stated IRENA in its *Indonesia Energy Transition Outlook* report released in October 2022.

"In many cases, banks in Indonesia have not yet implemented financing for renewable energy. Developers needing financing for renewable energy projects need to approach international investors or financial institutions," it continued.

*Data on minerba investment realization for the period 2017-2019 in this article has been updated in January 2024, following an update in data from the Ministry of ESDM report.*

Editor : Adi Ahdiat

"Disclosure: This is an AI-generated translation of the original article. We strive for accuracy, but please note that automated translations may contain errors or slight inconsistencies."

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Renewable Energy Sector Investment Remains Low Until 2022

Renewable Energy Sector Investment Remains Low Until 2022

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