Policy Brief Small-scale IPPs in Indonesia

The document outlines the role of small-scale Independent Power Producers (IPPs) in Indonesia's energy transition, highlighting their ability to reduce state budget pressure and increase renewable energy capacity. It identifies significant barriers to growth, including financing difficulties, complex permitting processes, and grid instability in remote areas, and recommends a policy package of technical and financial support to enable the sector to expand.

• Small-scale IPPs are critical for Indonesia's power planning, with PLN anticipating that small-scale renewable capacity will add over 3,000 MW by 2020, representing more than 25% of the total anticipated renewable capacity of 11.7 GW.
• IPPs offer several systemic benefits to Indonesia, including the use of private investment to alleviate pressure on the state budget, the provision of energy access to rural or remote areas via solar PV, mini hydro, and biomass, and the reduction of greenhouse gas emissions.
• The growth of the small-scale IPP sector is hindered by three primary challenges: finance (difficulty obtaining bank loans due to inadequate feasibility studies and high collateral requirements), permitting (delays caused by a lack of coordination across national, provincial, and district authorities), and operation (grid instability in remote locations and a shortage of technical personnel for maintenance).
• While the Ministry of Energy and Mineral Resources (ESDM) has implemented a feed-in-tariff (FIT) to make projects feasible, further government intervention is needed through a policy package providing technical, financial, and procedural support to IPPs, banks, and government officials.

APA

Hekkenberg, M., & Cameron, L. (n.d.). Policy Brief Small-scale IPPs in Indonesia. Climate and Development Knowledge Network. https://cdkn.org/sites/default/files/files/ECN-Policy-Brief-Indonesia-small-scale-IPPs.pdf

Chicago

Hekkenberg, Michiel, and Lachlan Cameron. Policy Brief Small-scale IPPs in Indonesia. Climate and Development Knowledge Network, n.d. https://cdkn.org/sites/default/files/files/ECN-Policy-Brief-Indonesia-small-scale-IPPs.pdf.

Wikipedia

{{cite report |last1=Hekkenberg |first1=Michiel |last2=Cameron |first2=Lachlan |title=Policy Brief Small-scale IPPs in Indonesia |publisher=Climate and Development Knowledge Network |url=https://cdkn.org/sites/default/files/files/ECN-Policy-Brief-Indonesia-small-scale-IPPs.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{hekkenbergndpolicy, author = {Hekkenberg, Michiel and Cameron, Lachlan}, title = {{Policy Brief Small-scale IPPs in Indonesia}}, institution = {Climate and Development Knowledge Network}, url = {https://cdkn.org/sites/default/files/files/ECN-Policy-Brief-Indonesia-small-scale-IPPs.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }