Norwegian Climate Investment Fund Makes First Direct Investments in Indonesia
In a strategic move to combat climate change and reduce coal dependency, the Norwegian Climate Investment Fund, steered by Norfund, has unveiled its first direct foray into renewable energy projects in Indonesia. This launch, an investment of USD 29.6 million, underscores Norway’s commitment to supporting Indonesia’s energy transition in a just and sustainable manner.
The initiative was announced during the visit of Norwegian Minister of Energy, Terje Aasland, highlighting the deepening energy collaboration between Norway and Indonesia. “For over thirty years, Norway and Indonesia have been partners in energy cooperation. The Climate Investment Fund is a key player in elevating this partnership. Thanks to our collective efforts and expertise in renewable energy, along with our Indonesian counterparts, we aim to enhance the country’s energy security and significantly cut emissions,” Aasland elaborated.
In 2022, under its G20 presidency, Norway, in alliance with the G7 countries, the EU, and Denmark, pioneered the Just Energy Transition Partnership (JET Will) with Indonesia. The partnership’s ambitious plan is to funnel USD 20 billion into fast-tracking Indonesia’s shift to renewable energy, expecting to leverage USD 10 billion from private financing. Norway has committed up to USD 250 million through the Climate Investment Fund as part of this initiative.
“Indonesia, with its heavy reliance on coal, represents a critical market for our Climate Investment Fund. Our goal is to make meaningful investments that can significantly affect the country’s energy landscape,” expressed Anders Blom, Norfund’s Senior Vice President of Renewable Energy.
The focus of today’s investment announcement involves partnerships aimed at advancing rooftop solar projects, incorporating combined solar and battery solutions, and developing a hydropower project. These endeavors endeavor to cut nearly half a million tons of CO2 emissions annually.
Empowering Indonesia with Norwegian Hydropower
Tinfos, a seasoned Norwegian hydropower enterprise, has teamed up with Norfund to spearhead the development of small-scale hydropower ventures in Indonesia. Through this collaboration, Tinfos has set an objective to achieve 1TWh of hydroelectric capacity by 2032, aiming to contribute substantially to Indonesia’s renewable energy capabilities.
With a history of hydropower development since 2007 in Indonesia, Tinfos brings valuable expertise and experience to the table, currently developing multiple small hydroelectric plants across the nation.
Revolutionizing Commercial Energy with Rooftop Solar
A substantial chunk of the Climate Investment Fund, USD 25 million, is earmarked for Xurya, an enterprise providing solar PV rental solutions to commercial and industrial sectors. This innovative approach allows businesses to transition towards renewable energy without the hefty upfront costs, potentially avoiding around 370,000 tons of CO2 emissions annually.
“Xurya is our first direct beneficiary in Indonesia under the Climate Investment Fund. We are eager to see how our investment will cultivate the company’s growth and contribute positively to Indonesia’s renewable energy landscape,” said Blom.
Renewable Energy across Indonesia’s Archipelago
The geographical spread of Indonesia, encompassing over 17,500 islands, poses unique challenges for consistent electricity supply, particularly for remote areas outside the national grid’s reach. In response, the Just Energy Transition Partnership includes plans to upgrade over 4,000 outdated, fossil-fuel based mini-grids with modern, renewable solutions.
To address this, Empat Mitra Indika Tenaga Surya (EMITS) has forged an alliance with Norfund to create combined solar and battery storage solutions for remote islands. This project promises to provide reliable, sustainable electricity to isolated communities and is a vital step toward Indonesia’s cleaner energy future. “We are optimistic about the potential that this partnership holds and look forward to uplifting remote communities with sustainable energy,” concluded Blom.
This wave of investments by the Norwegian Climate Investment Fund in Indonesia marks a significant milestone in the global effort to transition towards renewable energy sources. It not only highlights the pivotal role of international collaboration but also serves as a beacon of hope for a sustainable, low-carbon future.
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