Investor Presentaiton
RENEWABLES FINANCE
Most IPPs find difficulty in getting renewables finance
From 11 IPPs surveyed, 73% agreed that securing finance for renewables projects in Indonesia is
difficult. Local banks still perceive renewables projects as risky, thus require high interest rates for
the projects. For small-scale developers, the collateral requirement (typically 120% - 140% of
project costs) is difficult to fulfill and the need to have a creditworthy project sponsor is challenging
to meet. Debt to equity ranges from 60:40 to 70:30 and local banks rarely offer project finance for
both large and small scale renewables projects.
90% of IPPS surveyed considered current regulatory framework for renewables finance insufficient
to incentivize renewables development in Indonesia. For instance, current tariffs benchmarked
against the cost of generation (BPP) are deemed discriminatory as coal which dominates the
electricity production in Indonesia receives subsidies and price interventions (price cap at USD 70),
making the BPP lower than it should have been and creating unlevel playing field for renewables.
The majority of IPPS surveyed were also pessimistic that the trends will be getting better in 2019.
Considering the presidential election that will be held in 2019, many IPPs predict that there will be
no fundamental changes next year. The IPPS, thus, tend to wait and see.
Ease of Getting Finance
Difficult
73%
Easy
27%
Regulatory Framework
Sufficient
11%
IESR (Institute for Essential Services Reform) | www.iesr.or.id
Insufficient
89%
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